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Tracking fintech, banking & financial services innovations since 1994
Amazon made headlines around the banking/fintech world this week following a WSJ story Monday about a rumored collaboration with Chase Bank and/or Capital One. The click-bait title, Next Up for Amazon: Checking Accounts (apparently revised from the title embedded in the hyperlink, “Are You Ready for an Amazon-branded Checking”) made it go viral in the United States, at least with news organizations.
The facts were less exciting than the headline. Apparently the ecommerce giant issued an RFP last year seeking suppliers of a “hybrid” checking account aimed at younger and unbanked customers (it’s unclear whether that is a single segment “young and underbanked” or two segments, “young” and/or “underbanked”). And there was no indication that any new product was coming now, or ever.
There is one thing missing in the 100+ stories that appeared in the wake of the WSJ piece:
Amazon already is a bank in everything but the name
Here’s a list of its current financial and payment offerings:
Amazon Pay: Used by 33 million to pay for goods at non-Amazon sites
Amazon Gift Cards: Available at brick & mortar retailers all over the country (I’ve bought more of those than all other gift cards combined)
Amazon Store Card, with financing option on qualified purchases: Issued by Synchrony Bank
Amazon Cash, a virtual debit card which allows cash deposits to the Amazon Pay wallet
Amazon Rewards Visa Signature Card, an affinity card issued by Chase Bank (also Amazon Prime Rewards card; see also March 13 update below)
Amazon Prime Reload, which pays a 2% bonus for cash deposits into Amazon Pay
Amazon.com Corporate Credit Line: A way for businesses to pay for Amazon purchases via monthly consolidated billing, underwritten by Synchrony Bank
Amazon Lending: Which has originated $3B to smaller merchants since 2011 (cited by Bloomberg, sourced to CB Insights)
Credit Card Marketplace: Hadn’t seen that before, includes Amazon co-branded cards along with Discover and American Express
Gift Card marketplace: Hundreds of prepaid gift cards from other retailers along with restaurants, travel, and entertainment providers
Amazon Currency Converter: For purchasing on Amazon.com in local currency
Amazon Allowance: Tool for parents to enable their kids to pay directly (link was broken so not sure the status)
Shop with Points: A number of major banking rewards programs can shop directly at Amazon with their bank-provided points including Citibank, American Express, Chase and Discover
Alexa: Supports banking and payments info (aka skills) from a number of financial institutions including Capital One, US Bank, and American Express
Teen accounts: Amazon allows teens to set up separate logins and make purchases from an allowance amount and/or request approval directly from parents (Source: Business Intelligence).
(Update 29 March 2018) Recent news reports imply that Amazon may be looking at creating additional teen payment options, potentially in partnership with banks
The only major retail banking service missing, a stand-alone debit card (although you can already link a debit card to your Amazon account). Which I’m guessing is the core of the RFP mentioned by the Wall Street Journal.
Update (13 Mar 2018): Bloomberg reports that Amazon is planning on launching a small business co-branded card with Chase, the issuer of Amazon’s consumer card.
Bottom line: Amazon is already deeply involved in banking and payments, as are most major retailers. Gift cards, co-branded credit cards, and SMB credit products are already being used by millions of consumers. Adding a debit card and/or “hybrid checking account” isn’t going to make them any more menacing as a competitor. The prime concern for banks is whether Amazon can move payment volume from bank-issued credit cards, where the industry enjoys healthy profit margins, to debit/ACH with narrow-to-non-existent margins.
Author: Jim Bruene (@netbanker) is Founder & Advisor at Finovate as well as Principal of BUX Certified, a financial services user-experience accreditation program.
By my calculations, I’ve received more than 25,000 emails from financial institutions. But I don’t recall ever getting one, outside of an onboarding message, encouraging me to add an authorized user to my credit card account (see above). So congratulations to Capital One for finding something new to talk about in the last week of the real summer.
And it makes sense to push for new authorized users. It’s win-win. More revenues for the bank and improved convenience for the customer.
Case in point: I’ve been meaning to get a card for my son in college, so I’ll go with Capital One instead of my other options. It will cost the bank $2 for the chip card and mailer, maybe a few bucks for the credit check (though honestly, they don’t need one as I’m backing his spending) and some misc onboarding expenses. But with near-zero additional credit risk, most of the new interchange (and potential revolving) revenues will go right to the bottom. And they have a much better opportunity to turn my son into a long-time customer if they have a card in his hand now.
Bottom line: Capital One could improve the user experience once you click through the email (seeUX analysis here). But overall, it’s a good effort.
Author: Jim Bruene (@netbanker) is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy.
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A paradox of the early digital banking era (1995 to 2007) was: Why is Capital One a laggard? The new company (spun out from Signet Bank in 1994) was widely revered as a data-analytics and marketing master. But it was practically a digital no-show for more than a decade, offering just a minimum level of functionality online. As recently as 2010, Capital One was the last major bank to launch a native mobile banking app.
Fast-forward six years. Capital One owns the innovation mantle, at least in the United States. It has Capital One Labs; it runs an innovation center in the Bay Area; and it now offers the most advanced set of mobile apps in the card-issuing business.
Its latest innovation? The first proactive service from a major issuer that alerts cardholders to deviations in spending with recurring charges. It’s called Second Look, and it certainly deserves one.
I was introduced to the new feature this week when I received a notification on my iPhone alerting me to a spending increase on my power bill (screenshot 1 below). After swiping through it and logging in via TouchID, the app displayed a chart showing how much my bill had increased last month (screenshot 2). And I was asked whether I was OK with the charge or not (bottom of screenshot 2). If not, the bank provided instructions on how to dispute the charge (screenshot 3). Customers can also elect to receive the alerts through email.
Another thing I really appreciated: The bank gave me enough info in the notification to make an intelligent decision whether I even needed to log in. The bane of the mobile-user experience is dealing with (ultimately ignoring) all the false positives you get through most notification services. I clicked through the notice out of curiosity. But thanks to the detail, I already knew that the $14 increase wasn’t a major problem.
Bottom line: This is just one example of a more proactive approach to helping customers deal with day-to-day finances. It’s still a relatively manual user experience, especially if you want to dispute a charge. However, as banks layer AI on top of their data hordes, outside APIs, and location-based info, we’ll see much, much more. Kudos to Capital One for leading the way.
I’ve complained about similar offers before, but since this arrived in my inbox this morning, I figured it’s time to revisit the issue.
Today’s lesson is about third-party offers, where an outside company pays to get in front of your customer base. They are relatively rare in financial services these days because banks and card issuers are wary of being tarred and feathered in social media (or the CFPB) if something goes wrong or the particular marketing permissions were later shown to be lacking.
The offer in question is from Uber. It’s good for $5 off your first 5 rides and requires a Capital One card for payment. That’s a win-win. Uber gets a new customer and Capital One gets its card loaded into the Uber app for years to come.
The problem: It’s only for new Uber customers. I presume Capital One removes cardholders from the mailing who have charged an Uber to its card. But that doesn’t catch people who use another card in their Uber account.
So let’s break down what happens next. Capital One customers get this slick email (see above). They get excited to switch Uber payments over to their Capital One card to grab some $5-off rides. But then, after reading the fine print, or more likely clicking through the message and trying to sign up, cardholders find out they get zip from this deal. Now, they are not happy with Capital One or Uber. What a waste of time and brand loyalty.
Instead, why not give some smaller benefit to existing Uber customers willing to switch their payment card over to Capital One? Even just one $5 off coupon would suffice for most.
Bottom line: Capital One needs to earmark a portion of its commissions from Uber towards existing customers. If there isn’t enough revenue to do that, then it should stop making the offer.
Related: At last month’s Finovate Fall, MX demo’d, and won Best of Show, for an automated solution called Power Switch to automatically enroll your customers’ cards into e-commerce sites such as Uber, Amazon, iTunes, and so on. Get a behind-the-scenes look at how MX produces its award-winning (six consecutive Best of Shows) at FinDEVr in Santa Clara 18/19 Oct 2016 (register here).
I am not a huge fan of the hamburger navigation menu. If you are a smartphone native, I’m sure your eyes go right to the little pack of horizontal lines in the corner. But if you got your first smartphone in your 40s, you probably could use a little more help.
So I applaud Capital One, recently named in Fast Company as one of the best-designed mobile apps (see note 1), which in a 7 September iOS update ditched the so-called hamburger menu for something that’s actually visible on the page. See Fig 1 before and Fig. 2 after. I also learned today that Key Bank made the same decision to ditch the burger, but instead of a lower nav bar, they went with the more web-centric look of a near-the-top nav (Fig 3). (Update 29 Sep: A reader informed me many banks are ditching the hamburger menu in light of Apple’s design advice here, here and here.)
Unless you are Facebook, Instagram, or other apps where customers spend hours every week, you need to make it easy for infrequent users to find their way through your app. And even though mobile banking is relatively simple, many providers make it needlessly hard to navigate with cute, hidden menus.
I understand why designers minimize the navigation, mobile real estate is precious, and even a half-centimeter devoted to on-screen navigation is a lot. But what’s more important, showing more transactions on the main screen or how to actually do something meaningful?
The update also included a new restaurant finder to identify popular eating establishments based on transaction data across all Capital One cardholders (Fig 4). It’s reminiscent of the Citigroup/Microsoft/Morningstar joint venture Bundle (F10), which, not coincidentally, was acquired by Capital One four years ago.
1. Only two financial companies were named in Fast Company’s list of 100+ best-designed products or apps in the October issue. The other was RobinHood, the simple, mobile stock-trading app.
For the third year in a row, I traveled from Seattle to the L.A.-area to drop off my son at college. And for the third year in a row, Bank of America declined my card at Target, buying groceries and incidentals for him. And this time it was an EMV chip-card. Thank goodness I had my trusty Capital One card along, because it seems to do a far better job minimizing false positives (for fraud), at least for my account.
Capital One did have its concerns along the way, though. They sent the following email asking for confirmation that these gas-station authorizations were mine. And even though I didn’t respond right away, perhaps 12 to 18 hours later, they never shut off my card.
Bank of America also sent a similar email, but it arrived AFTER the card was declined. I understand the bank’s need to terminate suspicious transactions, but is it really that suspicious? For three years running, I’ve shown up in Los Angeles the last week of August (along with visits in between) and gone on a bit of a spending spree to stock my son’s dorm and now apartment (you’re welcome, boys!). Furthermore, I had already used the card to book an L.A. hotel, make some low-level but consistent charges along the way, coffee at Seatac, lunch in West L.A., and so on. But when I try to buy $150 in groceries at Ralph’s or Target, the card is declined, and worse, completely shut off from further purchasing.
Bottom line: My point here isn’t to complain about one issuer’s fraud-handling (although it felt good to get that off my chest), but to implore once again for more integration with smartphones to reduce false negatives. Specifically:
Talk to me on the most immediate channel. Both banks sent emails, but I’m on the road, not checking emails. Pop a notification on the screen and send me a text message. Also, in instances of two account holders, make sure fraud alerts go to both (BofA emailed only my wife).
Know me better. I get that Target in Tustin is outside my normal spending bubble. But I have a history of making charges in that area for 2+ years, so cut me a little slack.
Better yet, know where I am. How many hundreds of millions could BofA save by tracking cardholder whereabouts in the background? I let Starbucks, Google, Yelp, and so on track my location. The benefits of them knowing where I am outweigh the privacy risks. The same goes for my bank.
Note: Looking forward to seeing everyone at Finovate this coming week. Let me know if there is anything you want to discuss (email@example.com).
Recent email marketing research found that two-thirds of Americans regularly check email via smartphone and a significant number of total opens (as high as 70%) are now opened on a mobile device. Since most emails that look good on mobile look fine on a desktop (but NOT vice versa), you can pretty much disregard the desktop when creating a design template for your email alerts and marketing messages.
Here’s a few examples from my inbox during the past few weeks. Both Capital One and BBVA’s Simple use appropriate font size and a good mobile layout. Simple does an especially good job at grabbing attention with a small animation at the top of the message. In comparison, the BankDirect pitch is not well optimized for mobile, though it’s readable if you work at it. But it does nothing to grab your attention visually.
Bank email samples (viewed on iPhone 6)
First: Business Savings account promo from Capital One
Easy to read opening line and big Open Now buttons on first screen and below the fold
Second: BankDirect to American AAdvantage mileage club members
Harder to read the small type, and call-to-action is below the fold
Third: Simple announces its 100%-no-fee policy change
Grabs attention with small animated graphic at top with big “Hi FirstName” visible on first screen. The remainder of message is in a font easily read on a mobile phone:
Capital OneFinancial Corporation is a financial holding company—subsidiaries include Capital One, N.A. and Capital One Bank (USA), N.A.—with $208.8 billion in deposits and $310.5 billion in total assets as of June 30, 2015. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.
Continuous integration and delivery in a regulated environment Financial institutions are required to comply with numerous regulations. Considering they are responsible for other people’s money, they should. While regulations are often seen as limiting the ability for a company to move quickly, this does not have to be the case. In this talk you will hear that it is possible to continuously integrate and deliver in a regulated environment, ways it can be done, and the lessons learned from an organization that is already making huge strikes in this area.
Continuous integration and delivery are possible in regulated environments
Things to consider if you are regulated and want to make the move to CI/CD
Challenges to be faced internally and with regulators on your journey
Presenter: Gill Haus, Capital One’s Managing VP, Digital Innovation, Retail and Direct Bank LinkedIn | @oronhaus
Haus is responsible for building and sustaining an innovative technology organization while fostering a culture of excellence in software engineering and digital product development.