Social Media and Mobile Are Still the Undiscovered Country for Banks

WASHINGTON, D.C. — The rancor that accompanied last year's BAI Retail Delivery conference wasn't around this year — presenters didn't say they encountered bank protestors on the subway, for example. But the mood is still one of promise unfulfilled, particularly when it comes to using digital channels to give consumers more control over their financial relationships.

Mark Schwanhausser, director of multi-channel financial services at Javelin Strategy & Research, said there needs to be more of a sense of urgency at banks when it comes to applications such as personal financial management (PFM) tools or more advanced digital alerts delivered via mobile and other channels. While many banks have adopted both PFM and alerts, a number of speakers in the conference's first afternoon said there is ample room to use more advanced data sourcing and analytics to include actionable information in alerts and to make PFM more personalized and integrated closely with online banking.

Saying there hasn't been enough of an investment in developing digital financial services tech than can reach broader demographic groups, Schwanhausser said consumers were expecting more control over their financial relationships via digital tools, and that many prevailing online banking and bill payment applications needed to be enhanced with new capabilities in order to allow banks to compete with payments startups and attract new customers. "Alerts and online bill payment have saturated," Schwanhausser said.

U.S. Bank's Dominic Venturo, chief innovation officer at U.S. Bank (USB), said part of reaching new consumers is accumulating and tracking customer data to understanding how they use various channels. He said millennial (or generally people in their twenties), for example, are using email less but are texting more-and that drives how the bank executes marketing campaigns and messaging for that segment.

The bank has been active in trying out new technology to improve user experience and make content more flexible. For example, it has placing watermarks on yearly reports that link to digital content. It is also making a foray into augmented reality. In an address to BAI attendees, Venturo discussed how U.S. Bank is accommodating shorter development cycles for new mobile and other transaction technology by forming an innovation team that looks to identify and spot opportunities to update strategy and develop new tools outside the traditional model of making yearly tech plans. "It's tough to do payments innovation as part of yearly planning," Venturo said.

Measuring Social

Banks are also figuring out how to best take advantage of social media. While most banks are now active-an informal poll at a session on monetizing social media found most banks had at least some nominal social media presence, many are still working on how to gain tangible results from social media.

There's also a sense of urgency with social. Pew Research reports 88 percent yearly growth in use of social media among people from 55 to 64, and said 38 percent have posted brand or product reviews. Frank Eliason, director of global social media at Citigroup (C), said social media can be defined broadly, beyond networking sites such as Twitter, LinkedIn and Facebook. It's something that some firms don't understand, Eliason said-noting that he's run across some firms that bar social media activity for staff, yet the executives have LinkedIn pages, which of course is a social networking site.

He mentioned the bank created a site for people to share information and speak anonymously about struggling to make mortgage payments. "People are going to [other sites] and getting advice from people who say stuff like 'pay me a thousand dollars and I will guarantee a loan modification'. That's not good advice," Eliason said, adding the Citi site was a good way to bring some of the mortgage payment conversation back into the bank.

It's also a good way for the bank to get a sense of the sentiment of mortgage consumers. "People aren't going to call the bank if they are struggling with their mortgage," Eliason said.