Neff Hudson is in his office in San Antonio, but his mind is 7,000 miles away. "The first face-to-face video chat with a rep on our website was with a specialist in Kuwait who had gotten her re-up bonus" - payment for re-enlistment - "and wanted to put more money in her retirement account," says Hudson, assistant vice president of emerging channels for USAA. Video chat is just one example of technologies USAA has implemented ahead of many more traditional banks, to accommodate its highly mobile and often highly stressed member base of 9 million military service personnel.

Since its members tend to need remote access to financial products earlier and more often than civilians, USAA dives into new technology by necessity. Much the way World War II sped the development of things like plastic and radar, USAA tried innovations such as mobile check deposit and Web banking early on to bring financial management and transactions to soldiers in the field. The firm has a long-standing tradition of early adoption, and was a quick mover into older remote access modes such as phone banking.

USAA offers a mix of insurance, financial management, mortgage, auto loan and banking services, almost entirely through nonbranch channels such as the Web and mobile devices. It also has a small but expanding network of financial centers located mostly near military bases, and most of those centers rely on remote-access technology and new video capabilities as a means to expand the company's physical footprint at minimal cost.

The firm's pioneering forays into new delivery methods make USAA a good representation of what financial retail delivery will look like in a couple of years, since its services often get adopted by civilian-oriented banks with larger branch networks later. Right now USAA is working on projects involving one-to-one video, Web bandwidth agility, data analytics, contextual Web marketing and voice-automated response.

By taking on unproven technology like voice recognition, the company is attempting to forge a new role for the Web as smartphones and tablets start to become banking channels in their own right.

"The way we look at it is the online banking site is looking more like an app and the apps are creating more content for the website. It's an ecosystem where mobile feeds the and vice versa," Hudson says.

That cross-device relationship is driving a redesign of the private portion of the member site that will make the Web site look and feel more like a mobile app to promote design and user experience consistency among devices.

For example, electronic bill payment for the iPad is being "reverse engineered" to make the Web browser experience mimic the iPad app.

"Bill pay on the iPad offers the top experience," says Rhonda Crawford, vice president of digital media and innovation at USAA. The personal financial management tools embedded in the online banking site, such as goal-based budgeting and debt reduction, are being incorporated to the iPad. Hudson says PFM is a good fit for the longer use sessions of tablets.

The iPad app includes an extensive amount of research materials and graphics, since USAA has found that users spend more time on tablets than on other mobile devices such as smartphones. Hudson says people often use tablets during leisure time, a trend also noticed by other early movers into financial services on tablets such as Bank of America and Citigroup.

While USAA's mission of serving the military lends to early tech adoption, having a large base of military users also brings unique website design challenges, as the firm works to deliver and sustain online banking to remote locations that most banks don't have to worry about.

"I was on the USS Nimitz over Father's Day weekend, and saw men and women using the low-bandwidth website," says Rhonda Crawford, vice president of digital media and innovation at USAA.

USAA offers Web banking in remote locales through lower bandwidth when a higher bandwidth isn't available. It uses device detection to track where the member is accessing the website. A low-speed connection results in the user being routed to a streamlined site.

"That has the basic transactions, money movement, stock trades, etc.," Hudson says. This version of the site is used in typically network inaccessible areas such as aircraft carriers. "They are surfing the Internet through a straw on those carriers, so we have to deliver the Web to them in a way that's as compact as possible so people can manage their finances from afar," Hudson says.



The low-bandwidth service demonstrates the importance of context in USAA's Web and digital marketing and development as it attempts to use data to tailor marketing and service using the Web and other channels. Much of the company's digital strategy is steered by the type of device the member is using, where, at what time and for what purpose - with the belief that these factors indicate what the consumer wants to accomplish later in a financial services session.

"Not all contacts are created equal. People are constantly looking at balances, but they are looking at balances for different purposes," Hudson says. USAA is attempting to create a context around member interactions by importing information on the contact, such as the location and time, and loading that into data stores that are integrated to other systems at USAA. Analytics are used to understand why a member would want to know what his or her balance is at a given moment, for example, or access the mobile site from a certain location, and respond with an offer of a relevant service or product.

Hudson says financial services sessions often migrate from one device to another. People may use a PC or a tablet at home to conduct research or view their financial picture, and return to that session later on a smartphone.

By using "big data" (generally a mix of internal static transaction information and more fluid, or "unstructured" information from social media and prior consumer communication), USAA hopes to determine if a balance query made on the Web is a prelude to a purchase, or another financial transaction - such as a transfer to a wealth management account or an insurance product - and respond with marketing or information that can be used later on a mobile device.

"We want to make it so that we don't lose anything from one device to another," Hudson says. The work to ensure consistency between channels is continuing - "we're not ready to declare victory today."

There's plenty of data to work with. Growing as a mail order bank that quickly took to phone banking, call center services, and then Web banking, USAA tallied its 1 billionth customer contact shortly before its recent 90th birthday. It expects to hit the two billion contact mark within the next year. And its volume of mobile phone contacts alone should reach a billion by 2018.

The fast adoption of the Web as a channel of choice is quickly advancing at other institutions as well. Across the entire banking industry, Forrester says four of the top five banking activities - paying a bill, viewing balances/transactions, viewing statements, and transferring money, take place on the Web about 60% of the time. (Only check deposits happen more often at a branch - about 70% of the time. That's why banks love mobile remote deposit capture.) At the same time, Forrester says 37% of U.S. consumers who opened a financial product in 2011 did so on the Web, versus 36% in a branch. As more transactions happen digitally, banks accrue more data, and are expected to serve consumers faster and consistently between channels.

"Our growing contact volume shows the scale of and an engagement with these new channels," Hudson says. The Web is the "backbone" of USAA's cross channel marketing, service and delivery strategy, he says. "Channels tend to grow up individually, not in isolation but as a stovepipe ... now what you have is this explosion of connected devices. We're wrestling with turning all of these contacts and channels into an exceptional experience."

USAA has partnered with UNICA, a division of IBM that offers enterprise marketing management. EMM refers to a mix of Web analytics, lead generation and predictive modeling to produce marketing campaigns. USAA is leveraging the technology to offer products and services suited to their most recent activity, or the last application that the consumer started to use.

"It may be a query about a product that you never finished or a process that you started," Crawford says. "The marketing is based on consumer needs and what's happening in their lives."

Hudson says Web marketing has to be precise and personalized, or else it gets lost in a sea of other content that people see online.

"You can't be shouting at people online. Online marketing has to change. It's become a huge crowded place where everybody's shouting at each other and the marketing becomes a zero-sum game," Hudson says. "The promise of one-to-one marketing is that you are offering something that's of value. You can deliver on a promise to that person."



The need for context reflects the company's extensive use of voice recognition, an advancement that's part "virtual call center," part verbal website and part smartphone. One of USAA's latest projects is to deploy a voice recognition application for iPhone, iPad and Android users. Called Nina, it's similar to Apple's Siri in that a user makes a vocal request through the app, which is processed by Nuance, which USAA has hired to host the technology. Nuance's natural-language software processes the request, then sends a response to the mobile application. Consumers can then confirm the accuracy of the request or transaction verbally or manually.

USAA is integrating the software with its mobile applications, and expects the service to be ready by early next year. The use case for voice recognition fits USAA's remote access model well. It's easy to imagine a soldier executing a speedy transaction, such as paying a utility bill with a verbal command while on deployment. In theory, voice recognition lets members perform tasks they would normally have difficulty performing on a smartphone because of the complex navigation involved.

"Voice recognition allows you do more advanced tasks, rather than interact with a 3.5-inch screen," Hudson says.

Voice recognition technology has been contentious, however, since it hasn't worked as well in practice as it does in the Apple Siri commercials that feature celebrities like Samuel L. Jackson and Martin Scorsese, who joke or even flirt their way through dinner preparations or meeting schedules. The technology often produces different results than desired - often comically different enough that there are websites that detail the "funniest" Siri blunders. (For instance,

Hudson, who has frequently discussed the challenges of early-stage natural-language development, says the performance of natural language is improving. "We have high hopes for the new natural-language interfaces," he says.




Strains of the kinds of efforts USAA is making, such as its website redesign and use of customer analytics for marketing programs, can be seen at other financial companies, which are making the Web the hub of a cross-selling strategy. The strategy requires banks to continually rethink the role of the Web.

"Banks have to change their thinking online, from being a place where people go to do transactions to a place that acts as an advisor or a coach that provides information," says Mark Schwanhausser, director of multichannel financial services at Javelin Strategy & Research, who says the Web should be the anchor among several contact points.

Despite the statistics from Forrester that suggest consumers use websites as the primary tool for most banking activities, most marketing on that channel, and other digital channels such as tablets, is still rudimentary. "It seldom goes beyond banners selling online banking," says Brad Strothkamp, a vice president and principal analyst at Forrester Research. "Or some may have a message pop up."

Chris Feathers, senior vice president and direct marketing manager at Wells Fargo, says the bank is using data management to avoid making common Web marketing mistakes. "We use information about our customers and their interests to determine what messages and offers should be presented for consideration," he says. "For example, if we know that a customer has multiple checking accounts, they may not need to open another one and are probably more interested in finding out how to use our [Web] banking services to manage their accounts. This type of 'intelligent marketing' allows us to make the most efficient use of ad space, avoid banner blindness, and avoid overmarketing."

Feathers says that as consumers become more digital-friendly, they are increasingly turning to online channels to conduct their own independent research. Wells Fargo hopes to provide a similar level of education and guidance to what would be received from a personal banker in a branch or over the phone. For instance, it has redesigned its Home Lending site to provide researchers the ability to navigate solutions according to their needs with an extensive amount of educational content well integrated into the experience. "If a customer is looking to buy their first home, for example, they can now easily access information about the basics of the mortgage application process, tools and resources to evaluate loan options, loan product details, how to apply, and how to manage their loan after closing from within the Learning & Planning Center," Feathers says. Other banks are using live interaction to engage consumers online. Keynote Systems recently lauded Webster Bank, along with Bank of America and Citigroup, as banks that offer live Web chat - a service that helped these banks score high on Keynote's recurring ranking of bank Web performance.

While primarily a customer service venue, users can also use live Web chat to ask questions about products and get a fast answer. "When you get into a complex financial product, people are going to have a lot of questions," says Greg Jacobi, senior vice president of e-banking at the $85 billion-asset Webster Bank, of Waterbury, Conn. Jacobi says the live chat centers are staffed using models similar to those of a call center. He says the bank can use historic volumes to anticipate timing for spikes in chat activity. Jacobi says the timing of an ad or pitch presented to the consumer can make a difference. He says the bank chooses to place its Web ads - which are targeted using transaction history and demographic profile - after the user has left the online banking site. "It may seem counterintuitive, but that's when the user is more receptive to getting other information," he says.

Web marketing can also drive a larger expansion strategy. At the U.S. division of Rabobank of the Netherlands, Paul Chartrand, senior vice president of electronic channels, arrived from Wells Fargo about a year ago to build a team to increase the company's Web profile as it develops its largely agricultural banking service in the U.S. While the bank's U.S. Web suite was limited in comparison to other banks, it is rapidly expanding both Web and mobile functionality. It is marketing its services heavily online, and will soon add mobile remote deposit capture to a range of mobile products that includes browser-based mobile, SMS banking and smartphone apps.

The bank has a good head start in connecting with consumers: JD Power has given Rabobank its highest user-satisfaction rating for two years in a row. But there is a lag in brand awareness that the bank is hoping to overcome with the help of its digital strategy. Rabobank has been around for more than 100 years, but is not well known in the U.S. It began expanding into the U.S. about 10 years ago. The social media and online effort will focus heavily on brand building and customer acquisition by collecting data on how people are visiting the site and what they are researching and viewing in online sessions.

The Dutch company has begun to track how customers use the website: visits, navigation and time spent. It has also established itself on Facebook and is running Web display ads. "We have a lot to do; we have gone from zero to full speed in less than a year," says Chartrand, who is based in San Francisco. The marketing pitch is more tied to the products that the bank offers, and its ability to build relationships with clients - as opposed to touting user-directed functionality of Web and mobile.

"Ag lending is less self-service than other financial services," Chartrand says. "You can't apply online for an ag loan when you're securing that loan with five tractors and 100 acres. You can't underwrite that on an automated system."