The biggest banking show of the year, BAI’s Retail Delivery
www.bai.org was
held Nov. 16 to 18 in Las Vegas. Here’s what caught our attention this year.
1. Channel integration: As mentioned on page one, we were
smitten with the “teller assist” hardware from Source Technologies
www.sourcetech.com .
Its vision: teller lines soon look like airport check-in counters, a mix of
touch-screen automation with human support. One teller can do the work of
two or three, as the customers do most of the work feeding deposit items
into a terminal that scans them and displays an image on the screen for
verification. The company says payback is one year.
2. Security issues: Jim Van Dyke Principal of Javelin
Strategy delivered two sessions on the three Fs: fear, fraud, and
phishing. His new safety scorecard even made the Wall Street Journal
the day before he spoke (see WSJ, Nov. 16). Of the 39 banks surveyed
by Javelin, Bank of America came out on top with a 71 score on the
100-point scale (see Table 3 below). One of Van Dyke’s key themes:
eliminating mailed billing and financial statements. It’s the one avenue of
fraud and identity theft that’s relatively easy to avoid while saving the
financial institution a substantial amount in paper and postage. Users
should be allowed to turn off paper statements and should be encouraged to
avoid putting any paper into the system by using debit at the point of sale
and using electronic options to pay bills. You can access a synopsis of the
research at www.javstrat.com
or purchase the entire report for $2500.
Table 3
Top Scoring Financial institutions on Javelin’s Identity Fraud
Scorecard
maximum regular score = 100
Source: Javelin Strategy & Research presentation at BAI Retail Delivery,
11/18/04
*39 financial institutions evaluated by mystery shoppers across 44
criteria; scores ranged from 12 to 70.5,
max=105 including potential 5-point bonus, see below
**Wells Fargo had the top score of 73 across the three evaluation
categories; however they received a five-point deduction for using the
social security number as the default username; financial institutions could
also receive a five point bonus for not allowing nine-digit numerical
usernames (so users couldn’t use social security number); other than Wells
Fargo, we do not know if any of the above financial institution received
bonus additions or deductions. If so that could mean that their component
scores were different that what we deduced above.
3. Account-to-account transfers: CheckFree (see also
number 7 below), Yodlee, and CashEdge were on the floor
discussing their latest improvements to interbank transfers. CheckFree’s new
bill payment platform includes interbank transfers, quick payee setup, and
user-input payment reminders. CashEdge, the leader in the burgeoning A2A
field, even landed another top-10 bank at the show. They now power
Citibank, Bank of America, and several yet-to-be-announced large
banks. By next year’s show, the company expects to be powering A2A for five
of the top 10 U.S. banks.
4. Prepaid cash: American Express and WildCard Systems
www.wildcardsystems.com
along with Visa and MasterCard of course, were on the
floor pitching prepaid gift and travel cards. A great opportunity for online
banking operations to monetize their user bases. To see the future of gift
card delivery online, check out payment processor iPay’s system https://www.billpaysite.com/adv/giftpay/main.asp
5. Branchless banking: Deloitte director Michael Raynor who
co-authored The Innovator’s Solutions with Clayton Christensen, used
ING Direct as an example of a potential disruptive technology in the
area of branchless banking. He said the jury was still out, but banks would
be wise to keep an eye on the ramifications from ING’s success. We couldn’t
agree more. And imagine if an ING Direct-like company sprinkled a few Source
Technologies truly automated tellers (see #1) around town, it could
be a viable business model. One that functioned as a true branchless bank
servicing transaction accounts as well as savings deposits.
6. Automatic savings: ShareBuilder was on the exhibition floor
again, with a nice location. They are really on to something by providing a
low-cost way for investors to get involved in equity markets while
simultaneously introducing them to the power of automated savings.
ShareBuilder is marketing slick new account kits complete with a book, Smart
Money Magazine subscription, and $30 in cash for the first investment (see
screenshot below). It’s a great product to market during the holidays as
parents, grandparents, and others love the ease and value of this
politically correct gift. Wells Fargo and ShareBuilder
have been emailing well-designed holiday sales messages for the past few
years.
Wells Fargo is selling a ShareBuilder “Investor Starter
Kit” which includes a subscription to Smart Money, a Wall Street Journal
book, and $30 cash to invest. Total cost is $24.95, an excellent value.
7. New CheckFree “bill management” platform: CheckFree continues to
improve its widely used platform with the goal of making it a complete “bill
management” center. Additions coming in version 4.1, available in Q2 2005
include:
- user-entered payment reminders
- integrated inter-institution transfers
- quick payee-setup that can be set up with just a payee phone
number - integrated checking account balance
Still lacking: security preferences for setting up a “firewall” around the
user’s payment system.
CheckFree’s consumer site leads with a powerful benefits-oriented graphic
and headline,
”Delete: Paper bills. Add more life.” Then immediately to the right is someone
reading a book on the porch, obviously enjoying their extra leisure time.