Brett King

Archive for the ‘Internet Banking’ Category

Could SOPA kill a bank website?

In Internet Banking, Media, Strategy on January 17, 2012 at 21:50

The PROTECT IP Act (Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011), is a proposed law with the stated goal of giving the US government and copyright holders additional tools to curb access to “rogue websites dedicated to infringing or counterfeit goods”, especially those registered outside the U.S. Both of these “Acts” would have massive impact globally, and could create absolute chaos. The PROTECT IP Act is a re-write of the Combating Online Infringement and Counterfeits Act which failed to pass in 2010.

SOPA builds on PIPA. Known as the Stop Online Piracy Act or SOPA, is a bill that was introduced in the United States House of Representatives on October 26, 2011, by House Judiciary Committee Chair Representative Lamar S. Smith and a bipartisan group of 12 co-sponsors. The bill, if made law, would expand the ability of U.S. law enforcement and copyright holders to fight online trafficking in copyrighted intellectual property and counterfeit goods.

As proposed, SOPA would allow the U.S. Government the power to block any website from both a DNS Lookup, and eliminate it from search engine results – without needing any court order. Due to the vague nature of the bill being passed through, this could create significant chaos. So what about for banks? Would SOPA/PIPA impact banks at all? Is it in the interest of banks to support or push back against these bills?

Enforcement process

The key problem with SOPA is around enforcement actions available to copyright holders and the US Department of Justice (DoJ). The enforcement actions are unilateral, brutal and extreme. Violators face immediate action against their site and/or business, and up to 5 years in jail for infringement. The fact that you might be in another country and not subject to US law, doesn’t really factor in this process.

If a violation is lodged by a copyright holder, or as SOPA defines it “the owner or operator of such Internet site is facilitating the commission of [copyright infringement]”, the site in question can be blocked at the DNS (Domain Name Server) level and removed from all websites. Payment providers (section (b)(1)) and ad networks ((b)(2)) are required, upon receiving a claim against a site by a copyright holder (section (4)(A)(i)), to cut off all services to the accused site within five days, unless they receive a counter-notification from the operator of the accused site. Note that there is no requirement that the accused be actually notified of the accusation, and thus, they would have no opportunity to provide a counter-notice. Probably the first you’d know about it is when your email stops working, or customers start calling letting you know your site is down.

The only way to provide a counter-notice to a claim or breach is to agree to submit to U.S. jurisdiction (section (5)(A)(ii)) if you are a foreigner, and to state under penalty of perjury that your product does not fit the definition of an “Internet site…dedicated to theft of U.S. property.”

The definition of SOPA around offensive ‘copyright violation’ behavior is as follows:

An `Internet site is dedicated to theft of U.S. property’ if [a portion of the site is US-directed] and is used by users within the United States and is primarily designed or operated for the purpose of offering services in a manner that enables or facilitates [copyright violation or circumvention of copyright protection measures].

This means that YouTube, Facebook, Wikipedia, Gmail, Dropbox and millions of other sites would be “Internet sites…dedicated to theft of U.S. property,” under SOPA’s definition. As far as being ‘US-directed’, any contact form that enables a US consumer to enter their details, would be in violation from this perspective.

There’s an excellent review of much of these specifics around the law and how it ties in with enforcement action on Mashable.

Scenarios to think about?

So what does this mean? To illustrate simply, lets say you post a video of your baby dancing to Beyonce’s new song, filming your kids song and dance routine of their favorite bands song, you post a review of a restaurant or show a photo of a new gadget you’ve purchased. The site you hosted it on would be banned from search engines, advertising companies would not be able to do business with that company and internet providers will be forced to block their customers from accessing those sites and you the uploader would be fined and sentenced to jail for 5 years on a 1st offense.

What about in respect to banks, banking content and possible SOPA violations?

Here’s a few banking specific scenarios that I identified from SOPA that could be problematic for banks:

  • A bank promotes an iPad or iPhone giveaway as part of an offer – unless you had Apple’s permission, you’d be in violation
  • The use of an image of a car or car brand in a motor vehicle insurance advertisement
  • Credit Card Loyalty programs that promote rewards using products would be in direct violation of SOPA
  • A contact form that allows a US citizen to apply for a pre-paid Visa Debit Card on a foreign website before they travel overseas on a trip.

Let me illustrate how ridiculous this is.

HSBC in Hong Kong offers a program of rewards for cardholders they call “RewardCash“. Their RewardCash e-Shop shows products like a Mophie Juice Pack, a Panasonic Rechargeable Shaver, Targus USB powered Travel Speakers, Victorinox 22″ Carry-on luggage, etc. Let’s say that one of those companies was trawling the web and found ‘image’ violations of their product, it could be interpreted that HSBC was using credit card ‘rewards’, miles or points as an alternative currency to sell those products and circumvent US distribution chains, and a complaint could be lodged with the Department of Justice. A similar complaint could be lodged if a brand owner feared fake products were being given away from this site. They wouldn’t need proof, just the ‘threat’ of potential impact to a US IP owner.

5 days later, HSBC.com (and other domains) would be removed from the DNS databases in the US and around the world, becoming totally inaccesible. While HSBC would have the right of recourse, the damage would be massive and very, very expensive. Internet banking would be down. The main website would be down. Staff email would be down.

Now, could this scenario really happen? It’s unlikely, but the point is that SOPA would allow such an action to be taken.

Imagine how much fun legal and compliance would have with this legislation?

A disaster

All in all, SOPA simply is a disaster for the future of business, free commerce and innovation. The Whitehouse Administration cautioned in a blog post last week that it would not support any bill that did not “guard against the risk of online censorship of lawful activity and must not inhibit innovation by our dynamic businesses large and small.” While this is not a direct condemnation of the proposed act, it seems probably that President Obama would veto this bill if it was passed into law – and he’d be right to do so.

The MPAA and RIAA lobby groups that have driven this law to Capitol Hill, should not be in a position where foreign banks could be brought to their knees by nonsensical legislation. This is very one-sided legislation.

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Your online marketing and website are broken

In Customer Experience, Internet Banking, Media, Offer Management, Social Networking, Strategy on November 9, 2011 at 12:42

There’s generally a very poor understanding of the dynamics of the role of the website in retail financial services interactions today. There is an acceptance that ‘some’ customers use the web, when deciding on a new financial services relationship, but not of the critical nature of the web in that choice. Let me explain how things are different from a behavioral perspective.

The inertia assumptions

Historically the majority of acquisition in the financial services space was either from brand marketing and/or campaign activity that drove a potential customer to purchase or apply for a Retail FS product/service.  There is an assumption that the web, social media, mobile and other e-channels support that goal as marketing channels where we can extend the brand and campaign paradigm. That is, we can broadcast more messages, perhaps with a tighter demographic or psychographic focus, to an audience that is more diverse in their message consumption.

The problem is that the Internet has been responsible for a significant process shift in buying behavior, namely that the dynamics of buyer response has significantly flattened. In the past marketing stimuli was used to create first awareness, then interest that led to the buyer mentally listing your ‘brand’ on a sort of short-list of providers, and then finally based on further marketing stimuli (promotion, pricing, location, features) the consumer engages with your brand for your product or service. This approach to marketing is all based on the premise that consumer behavior is latent or responds to a marketing message over a defined period of time.

Now with digital interactions being what they are, a consumer can go straight from research to purchase or need to application instantly. So the ‘stimuli’ works differently today, it needs to be a ‘live’ interaction strategy, not a message strategy that waits for a latent response. The loser in this context is the traditional marketing campaign mechanism, because a campaign is a latent stimuli tool, not an interaction tool.

The new engagement model

So in this new world, buying behavior is very different. Assume a customer needs a retail financial services product like a mortgage, a new bank account, a credit card or a personal loan – what does he or she do?

The overwhelming behavior today is to think about how they will apply for that product or service, with the least fuss. They will probably be largely ambivalent to their choice of financial services provider, in that, the fact that they have a bank account with you does not automatically mean they’ll come to you for another product necessarily. What the majority of customers will do is start by looking at their options – and for that they use Google (or perhaps YouTube) as their starting point.

This research phase is critical, because it is the empowerment of the customer. Them matching your product to their needs set. What’s critical in this stage is not the features of the product generally, but the utility of the product. Take a mortgage – how quickly can they buy their house, how much do they need to pay each month and how quickly will they own their  home? They don’t start by asking what are the early pay out fees, what’s the rate, and can they change their payment terms or habits midstream.

The concept that this research needs to happen at ‘your bank’ is a holdover from our traditional branch approach to FI product sales. In fact, we build our Internet banking sites just like a branch – assuming that you’ll come, ask some questions and then apply for a product. Most of the time, we won’t let you apply for a product seamlessly through our Internet branch, and we’re aiming to push you to a ‘real’ branch. This is inertia talking and it is counter-intuitive based on behavior today.

The easiest thing to do is simply shift me straight from research to a buying action once I have you online, but the more complex that is, the more chance that I’ll simply leave your Internet branch and go looking online for a faster path to the solution. What won’t happen is that I’ll suddenly be inspired to walk into your branch and start talking to a person after reading your website.

What the new web looks like

The new web we need to build right now is a set of tools to empower customers and help them complete the buying task they are looking for as seamlessly and as frictionlessly as possible. In that environment, the rolling promotions and offers we see dominating many retail FI websites today will be largely gone, relegated to simple landing pages connected to those dying campaigns.

The new website will be rich in imagery and process workflow for the engagement process, heavily personalized around what I already know about you, either through cookies, login or something like your facebook connected profile.

Additionally, the new website will be built from the ground up to be browser agnostic. It will work on a tablet, on a mobile phone, on a laptop with a whole range of resolutions and screen sizes – seamlessly. You won’t build buttons that require a mouse click, you can use your finger. You won’t populate with lots of text or links, when big images or stories will accomplish the same stimuli to an engagement.

Apple's website works as well on Tablet and Mobile, as it does online

Coming out of all of this will be a fundamental shift in marketing budgets and team structures. In just 3 years, 30% of your website visitors will be using a non-PC screen. Social media will represent 25% of your marketing budget driving brand advocacy and participation, and 50% will be on engagement and journeys, and the rest on a supporting framework of traditional media to build broader brand awareness.

The Total Disruption of Bank Distribution – Part 2

In Bank Innovation, Customer Experience, Future of Banking, Internet Banking, Mobile Banking, Technology Innovation on July 7, 2011 at 05:30

Rapid Acceleration of Technology Adoption makes change easier

The rate of diffusion is the speed at which a new idea spreads from one consumer to the next. Adoption is similar to diffusion except that it also deals with the psychological processes an individual goes through, rather than an aggregate market process. Since the late 1800s the rates of technology adoption and diffusion into society have both been steadily getting faster. While the telephone took approximately 50 years to reach critical mass, television took just half that (around 23–25 years), cell phones and PCs about 12–14 years (half again), the Internet took just seven years (half again), the iPod 3 years (half again) and Facebook was able to reach 200 million users in just over 1 year.

A very real part of the acceleration of technology is the application of Moore’s Law, named after Gordon Moore one of Intel’s founders and the individual credited with inventing the integrated circuit. Since 1967 Moore’s Law has predicted that every 2 years the power of a chip will double in processing capacity/speed. That means that the iPad you get in 2 years time, will be twice as fast as the one you have now. To illustrate Moore’s Law the 1Ghz chips now powering smartphones and tablets are exactly 1 million times the speed and capability of the Apollo 11 guidance computer that took Neil Armstrong and Buzz Aldrin to the moon.

Ultimately, this means that consumers are now adopting new technologies and initiatives such as the iPad and Facebook en masse in a period measuring months, not years. As we all become used to this rapid technology improvement, it is taking us less time to adopt these technologies into our lives, and this further increases the magnitude of impact on business. Let me give you an example of how this impacts banks specifically.

Internet versus Mobile Banking

The web launched in 1994, but most banks didn’t understand the significance of the web and lagged in the provision of Internet Banking services, waiting until 2000 or 2001. That’s 7 years from the start of the commercial web to the launch of Internet Banking for most banks. The iPhone launched in July of 2007 and in doing so created the market for “Apps” and increased our expectation of mobile interactions. Within a year more than 1 Billion Apps had been downloaded from iTunes, by 2010 that number had exceeded 10 Billion downloads. As a bank, ask yourself whether you could successfully argue for delaying the deployment of a mobile banking solution until 2014; 7 years after the iPhone’s release? Unimaginable.

Mobile Internet Banking is being adopted 300-500% faster than Internet banking was adopted, mobile payments will be even faster again. Thus, if you’re a bank, by 2015 your #1 channel for day-to-day retail banking will be Mobile, then Web, then the ATM, then Call Centre, and at #5 Branch.

Isn’t it ironic that banks today need to ask Google and Apple for permission to allow customers to access their bank through a mobile App? Today, some 17-year-old developer can develop an iPhone App in 2-3 weeks that would rival what it takes a bank 9 months to deploy. We’re increasingly going to find ourselves playing catch up, especially when it comes to new customer experience on devices like the App Phones, Tablets, etc.

It has long been argued that a face-to-face or human based interaction is vastly superior to that of a technology one. There are two issues that undermine this school of thought. Firstly, regardless of whether a face-to-face interaction might be better for a customer, increasingly we’re opting NOT to go the face-to-face route in favor of the simple convenience and utility afforded by technology. Secondly, with the incredible advance in recent times of customer experience, persuasion and interaction design, and the application of usability sciences, the fact is that technology is now competing head-to-head with traditional approaches to customer engagement, and winning.

So what comes next?

The use of gesture-based interfaces such as Oblong’s TAMPER and as demonstrated by various XBox Kinect hacks show that technology is becoming more natural, more intuitive. Image recognition technologies are now allowing digital signage to recognize whether you are male or female, happy or sad, and respond with a real-time offer accordingly. Avatars and voice recognition technologies are being combined to create customer support response systems that are act like a human agent, but are effectively IVR 2.0s.

Itautec's 3D gesture-based ATM and SapientNitro's Happy Smile Ice Cream Vending Machine are two simple examples of rich device experiences

Today, PayPal allows us to transfer money using a mobile phone number or email address, as compared with a routing number, ACH number, SWIFT code or account number, and in doing so provides a vastly superior person-to-person transfer process, especially when compared with a unwieldy branch experience. Very soon even cash, plastic and cheques will be succumb to the mobile phone as P2P and NFC become the norm – not because of technology, but because it is simpler and more convenient. Just as Internet Banking is the preferred channel of choice today.

Banking Everyday, but never at a bank

More than improved interaction is happening though. Social media, geo-location services, augmented reality, and predictive analytics, are forcing us to think about the application of banking and other services contextually. Banks are going to have to offer banking when and where you are, not force you to the branch or the bank’s website as the sole choice of applying for products or services. Banking will be something you do everyday, but not at a bank. Banks won’t be able to compete unless they can fulfill in real-time, as consumers need the product or service that is ‘banking’.

Regardless of what you think of the service proposition of a branch versus multi-channel technology, the fact is, it’s all going to be about context, relevance and delivery. Branch just won’t be able to compete long-term with such expectations driving the experience. Change will happen because you simply can’t defend traditional approaches that turn out to be inferior to the customer experiences that are emerging through technology.

When PFM is no longer enough…

In Customer Experience, Internet Banking, Offer Management, Retail Banking on February 8, 2011 at 13:13

At Finovate Europe last week we saw a lot of what I would generally classify as “me too” PFM efforts. While there were a few stand out examples, such as Meniga and Linxo, I don’t think these platforms are robust enough for where we are going. This says a lot I know, because most banks are still not at this basic stage of having PFM deployed and I’m already talking about what comes next, but if you’re a bank about to invest in PFM – then think about whether it goes far enough.

The fact that there is a lot of activity in the PFM space shows that the time is very quickly coming for some sort of customer relationship footprint aggregation/mobilization. But, it’s going to take more than a few fancy pie charts, a drag and drop goal function, and seeing your account usage on a timeline to pimp out my Internet banking.

The information deluge and filtering

One of the challenges I see moving forward is that a pie chart of your portfolio, or a pie chart of spend patterns, or a fancy presentation of your account statement is only going part of the way. Increasingly I need to be able to filter information quickly and understand the context and relevance of that information to me at a glance. While a pie chart is potentially an effective tool to show me some of that, and might even be central in some scenarios, there is a lot of other relevant information that might be prioritized.

Mint Screenshot

There's always a pie chart in there somewhere...

The following information, for example, is not going to be important everyday, but at certain times, it could be quite useful:

  1. You just got paid your salary
  2. Your mortgage account doesn’t have enough money in it for the next payment
  3. Your phone bill is due tomorrow but you haven’t set up a payment
  4. The $25k you have deposited in a savings account should be deployed in a CD or other instrument to be getting better interest
  5. Your wife just maxed out her credit card (ok, I’m told that she’s allowed to do that…)
  6. A retailer you visited 3 times in the last 3 weeks will give you a 15% discount if you use your bank visa card this month
  7. Houses in your neighborhood have just been revalued upwards
  8. Your anniversary is a week away, and here is a special offer for a romantic night away

Then there is statistical information that is useful:

  1. Spending habits that are good/bad
  2. Progress towards a goal
  3. More efficient use of your money
  4. Spending mix
  5. Portfolio rebalancing based on Risk Profile
  6. Available balance on your credit card
  7. Loan refinancing options

This is a lot of information to show on a pie chart or a single screen, so either the bank will cram this information into a ‘dashboard’, or just not show it at all. The capability to filter this information and give direct, relevant feedback to the customer is essentially missing in most banks today.

Seriously, the key to transforming the relationship of the client of today is firstly to demonstrate your value as a bank in the relationship, and second, to anticipate the client’s needs. At the moment, Internet Banking as a platform probably does neither of those well. PFM is a step in the right direction, but it has a way to go, purely because of the volume of information we’ll need processed and the need for relevance.

Digital Relationship as the new metric

Today I received an email from my relationship manager asking me if I would be happy to recommend her. It went something like this (sanitized to protect the bank):

You may have recently received a letter inviting you to ‘Share your Experience’, and I want to take this opportunity to further highlight the features and benefits of this programme. If you know someone, a friend, family member or colleague who would benefit from having a <bank> relationship, I would really appreciate your referral. By introducing someone to <bank>, you open the door for them to the same high level of attention, international services and financial opportunities that you currently enjoy as a <bank> client.
Email Note from my Relationship Manager

I actually have no problem recommending my RM (Relationship Manager) because she has done an excellent job. But there are a few issues I take with the above communication.

Firstly they sent me a letter…seriously?

Secondly, the assumption is that I perceive their service as they do, i.e. “the same high level of attention”, especially given the fact that their digital presence is significantly sub-par.

I’m logging in to Internet banking, and would be logging into mobile banking (if they had it), something like 5-10 times a week. The average customer is doing something similar each month. I visit their ATMs 2-3 times a week, and I visit their branch about twice a year, if I have no other choice.

So their best place to build a relationship with me is online, but they honestly don’t understand that based on their current platform. That relationship will be built through connecting with me through understanding me, and personalizing the dashboard that interfaces me to the bank.

Data visualization is a great start

Infographics are a great benchmark for customer data visualization

Unless you’ve been living under a digital rock these last couple of years, you may have noticed the very interesting trend to represent data and statistical information in a form called Infographics. These graphical representation of data are an excellent method of taking complex graphs, statistics, and information and filtering it for general consumption. Banks, and others, can learn a thing or two about filtering and data visualization from this trend.

Another great approach is that of the iPad app flipboard which aggregates streams of information in an easy to consume format. Could you provide a more interesting way to display account and credit card usage information, perhaps linked back to offers from specific retailers too?

The last step will be all about management. This is the ability to respond to a trigger, an event or a critical piece of information and proactively suggest a response to the customer that builds trust and the service relationship.

Get these right and you’ll have a relationship dashboard that connects you to the customer in a way that no bank does today…