Small businesses need you – three ways to attract and retain your community’s businesses

Small businesses need your business as much as you need theirs. Since the advent of the modern banking system, small business owners have relied on regional and community financial institutions (RCFIs) to help them start their businesses, grow their businesses and maintain their businesses. In fact, as recently as 2013 RCFIs accounted for approximately 75% of all small business loans in the United States.

Since then, however, the ranks of RCFIs have continued to decline, mega banks have proliferated, and alternative lending sources such as Lending Tree, Quicken Loans and the Lending Club have provided entrepreneurs yet another source of funding to compete with RCFIs’ share of the small business market. And that’s to say nothing of the myriad non-traditional financial services providers offering innovative payments and digital banking solutions to small business owners.

Fortunately, in spite of the multiple forces working against RCFIs today, this fact remains: small business owners prefer to bank locally. They understand that the relationships and local insight of RCFIs is invaluable to them and their businesses, and something the mega banks and others competing for their business simply cannot provide. But in an ultra-competitive environment, with a seemingly infinite number of options available to small business owners, what can institutions like yours do to continue earning their business? Below are three best practices sure to increase your odds of winning the battle for small business market share in your community.

Invest in Technology

A no-brainer if ever there was one, right? You’d think so, but the reality is that consumers view the mega banks as technologically savvier than their RCFI counterparts because their websites, in many cases, are better; i.e., they look better, are easier to navigate and display equally well on mobile devices. So the first order of business for RCFIs looking to compete for small business clients, or any account holders for that matter, is to update their website. A fresh, modern looking website, that renders equally well on a mobile device, will significantly increase your odds of converting a website visitor into a new client.

Speaking of mobile devices, a survey conducted by ath Power Consulting found that nearly 70% of small business owners would switch banks in order to partake of better mobile banking services – 70%! Your typical small business owner isn’t generally sitting behind a desk all day; they’re hustling to generate new business, take care of existing clients and manage the day-to-day affairs of their company. Providing them a tool that enables them to deposit checks, transfer funds, authorize wire transfers and manage their cash flow while on the go is an invaluable service, one they’re more than willing to pay you for; as much as $100 a month, according to the Aite Group.

Become a Resource

Sir Francis Bacon is credited with coining the phrase, “Knowledge is power.” If ever there was a group this sentiment applied to it’s small business owners. As a RCFI you’re better positioned to provide the knowledge your local business owners need to be successful than arguably any other source they could tap. You’re privy to local housing data, commercial loan data, local zoning data, employment data and much more, all of which are extremely valuable to area entrepreneurs and small business owners. Positioning your institution as the subject matter expert on all things small business related is one of the smartest moves you can make.

As local business owners, and prospective business owners, begin utilizing the information you provide, something magical happens: trust forms. Whether the partakers of the information you provide realize it or not, you have become a trusted resource to them. A phenomena that is particularly powerful with business owners whose accounts you don’t yet hold; i.e., new business. It may take longer for some than others, but eventually they’ll think, “Wow, if this FI is willing to provide all this valuable information to me when I’m not even a client, what would they do for me if I were a client?” Become an invaluable resource to your local business community, and they’ll reward you with their business—guaranteed.

Market Your Wares

“I would’ve used my local bank for everything, if I would’ve known they offered it.” Those are the words of Chris, a small business owner who operates a mobile coffee service in Austin, TX, when asked why he doesn’t use the mobile business product his local bank provides. A sentiment all too common among small business owners. The same ath Power study cited above produced one particularly tragic finding: in 839 in-branch visits by prospective small-business customers, nearly 40% of bankers failed to mention the mobile banking services they offered. The savviest consumer in the world can’t buy something they don’t know about. To gain more business clients, you gotta tell ‘em about all the great business products and services you have to offer them, and what those products and services will do for them.

Which really isn’t difficult, and dovetails nicely into point number two about positioning yourself as the small business subject matter expert in your community. Billboards, radio, print ads and statement stuffers will likely always have a place in your marketing budget, but there are other, more effective means of getting the word out, which also happen to be less expensive and serve to position you as the invaluable resource you’re aiming to be. Examples, in no particular order, include: creating a business resource center on your website, chock full of valuable small business related info; producing a small business blog, where your in-house commercial loan officers and others can provide valuable tips and information; host workshops or seminars in-branch where small business owners, and aspiring small business owners, can learn about things like managing cash flow, accessing lines of credit and how the commercial loan process works; spread the word via Twitter, Facebook and other social media outlets; and last but not least, educate your front line folks on all the valuable products and services you have to offer small business owners.


It’s no secret in banking circles that business banking clients are a good thing. They maintain higher balances, are more willing to pay for products and services than retail account holders and the relationships you build with them result in greater lending opportunities. What doesn’t appear to be as widely known, however, is just how badly business owners need you. They need your technology, your expertise and your support. By investing in the tools they need, becoming the resource they need and making them aware of both, you will absolutely grow your business, their business and strengthen the communities you both serve in the process.

User experience: What is it and why all the hype?

“Experience schmicksperience.” There is no doubt in my mind that this phrase has been uttered, or at least thought, by many a banking executive in response to a member of their staff expressing the need for an improved online account holder experience. Yours truly has witnessed a few such reactions first-hand. As one who believes strongly in the value of a quality user experience for online banking users, I’m hopeful that a fairly recent event will convince the skeptics who disregard user experience. But first, what exactly is user experience?


According to the Nielsen Norman Group—pioneers in the field of evidence-based user experience research, training, and consulting—user experience (UX), “…encompasses all aspects of the end-user’s interaction with the company, its services, and its products.” Carrie Cousins of Design Shack—an online locale that covers all things web-design related, defines user experience as “…how a person feels when interacting with a digital product.” Cousins adds that UX encompasses many other factors, including but not limited to: “…usability, accessibility, performance, design/aesthetics, utility, ergonomics, overall human interaction and marketing.”


While some folks find it necessary to distinguish between usability—how things work— and user experience—how things feel, most lump the two terms together when discussing the totality of an end user’s digital experience. Plainly put: user experience concerns how things look, feel, and operate. This concept tends to be abstract and difficult to quantify, which is why it doesn’t fit neatly into the CFO’s spreadsheet. It’s hard as heck to quantify it; hard as heck to truly appreciate; and hard as heck to sell to bankers who are already paying a bunch for their digital channel efforts every month. So how did it become such a big deal, and why all the hype? Believe it or not, there’s science behind it.


One of the earliest and most interesting studies around UX was conducted by the UK Design School between Dec. 1993 and Dec. 1994. Researchers tracked the share prices of publicly traded companies who had won awards for their focus on design and UX, and then compared them to various indices such as the FTSE 100 and the FTSE All Share index. They found that the design-focused companies out performed all others by more than 200 percent. And that was over the course of a five-year bear market, a three-year bull market, and the beginning of the recovery in 2003; the superior performance of the design-led companies persisted throughout.


Intrigued by the findings of the UK study, in 2006 researchers in Canada created a UX fund of their own, comprised exclusively of companies well-known for their UX prowess, such as Google, Apple, and Netflix, and promptly invested $50,000. Their original plan was to sell after one year, but when they realized a nearly 40 percent return in year one, they simply couldn’t sell; four and a half years later, the fund had matured 101.8 percent! These two studies kicked off a wave of UX studies around the globe, as more and more business leaders began to grow curious. U.S.-based Watermark Consulting conducted a study from 2007-2012 that found that the top ten leaders in customer experience—based on Forrester Research’s Annual Customer Experience Index— outperformed the S&P with close to triple the returns, at a cumulative total of +43 percent. In spite of a growing mountain of evidence in support of UX investment, skeptics remain.


Which brings us back to that “fairly recent” event I referenced earlier. On Oct. 2, 2014, Capital One– yes, that Capital One– acquired San Francisco-based Adaptive Path. Why was this so significant, you ask? Because, Adaptive Path and the folks they employ are considered by many as the gurus of UX. The huge-font verbiage that adorns the Adaptive Path corporate home page makes it very clear what they do and what they believe: Great businesses are built on great experiences. We make those experiences happen. If you explore their website further, you’ll encounter such statements as, “When Adaptive Path was founded (2001), UX (user experience) firms didn’t exist…” Not only are they the gurus of UX, you could also say they invented the space. And Capital One just acquired them – lock, stock, and barrel. If you’re someone who provides financial services to consumers and you haven’t been taking all this UX stuff seriously, it’s officially time to begin doing so–others are taking it very seriously. It can mean the difference between winning and losing.

Words Have Meaning…Names, Power

The Patagonian Toothfish proved to be so popular that several years ago there was concern the species was on the verge of ecological collapse. How is it possible you’ve likely never heard of this fish, yet enough of it is sold and eaten each year to threaten its viability? The ugly creature was remarkably unpopular until it was marketed under the more attractive and exotic name, Chilean Sea Bass, by an enterprising fish wholesaler.


Everything from fish names to product and feature titles is responsible for creating powerful first impressions for consumers. Based on consumer impressions, products and features either experience widespread adoption or massive failure. Specific to financial services, here is a more concrete example: Mobile Remote Deposit Capture. If you’re a banker or commercial client, this is a great name for taking a picture of a check and depositing it remotely, versus driving to the local branch. However, if you’re a consumer, this is jargon. Taking high-value business-centric features like the remote capture of a check for deposit to consumers is a great way to create a high-value, self-service workflow. However, the packaging and naming must create logical connections and context associated with the features. Essentially, you have to create a brand around the feature for consumers to connect with and embrace.


The more complex the function, the more important it is to create an intuitive message about the what and why of a new feature. Without establishing a relatable name, value proposition and brand, consumer adoption and satisfaction of valuable workflows and features are likely to lag. Naming, branding, and complexity are key elements to consider when delivering business services to consumers in ways that delight, rather than frustrate them.


Products and services are named with the same goal in mind: to say something about the product that a lengthy explanation cannot. Easy Deposit is a tremendously popular name for Retail Mobile Remote Deposit Capture because it communicates the benefits of the feature. The emphasis is on the function (deposit) and the benefit (ease). The value proposition is built into a simple name that provides the context for use and a promise of why consumers should care.


The second key component of bringing a business-oriented service to the consumer space is to think about the complexity of the task required to achieve the result. Transfers from a locally held account to an account at another financial institution via online or mobile banking are typically fulfilled via the ACH network, but not presented this way to retail customers. Given the lack of familiarity with ACH processing, a feature called ACH payment would be confusing. Therefore, further exploration for a name that creates context for consumers is vital for success.


Beyond the naming, this feature’s adoption benefits by reducing the choices of how the transfer is made, as well as the complexity required to set it up. Rather than a model in which end users create a recipient and bind an account triplet (ABA, account number, type) for the external account, the workflow for identifying the target account is simplified and broken into multiple steps, each step with an explanation of the required data and how to obtain it. Addressing the how in this case will prove as valuable to consumer adoption as addressing the what,demonstrating the power of fusing naming conventions and technology.


Finally, in this particular example, careful consideration of the entry point for this feature, which is often the transfer menu item, should be considered. The typical distinction between an internal funds transfer and an external ACH-fulfilled transfer is likely hidden or invisible to consumer banking customers. After a self-service linking process (often involving micro deposits), the external accounts should be presented alongside the account holder’s internal accounts as options for transferring funds.


Packaging, including naming and reviewing workflows, will greatly influence how consumer banking customers will perceive the value of business features or services.  Creativity and workflow review will make the difference between success and failure.  Ensure the features and benefits are easy to discover, use, recall and share. Ultimately, a well-packaged feature may require significant effort to repackage and market, but without this effort, business features are likely to live in obscurity – like the nearly forgotten Patagonian Toothfish – rather than embraced and adopted by millions.


This article was originally printed in the September/October 2014 issue of Western Banker magazine.

Choose Your Partners Wisely

The tendency for humans to try and do everything themselves is as old as time. Whether it stems from a desire to reap all the glory, a lack of trust in others, or simply a failure to consider asking for help, it’s been the downfall of many. In the words of Inspector Harry Callahan, “A man’s got to know his limitations.”

At Q2, we create great software – that’s our forte – in the form of a virtual banking platform that strengthens communities by strengthening the financial institutions that serve them. We do not build ATMs, design firewalls, provide core processing, erect data centers, or do a slew of other things around which entire companies are built. For these reasons, choosing the right partners is critical to our success – and yours. As Lou Senko, Q2’s Vice President of Information Technology says, “We like to think of our trusted partners as part of the magic that happens behind the scenes. Their technology is a key foundation to some of Q2’s future capabilities underneath our product offerings.”

EMC is one such trusted partners for us. Who do you consider your key partners? Tweet them some appreciation and include #Q2partners.

Are We There Yet?

Well, the Marketing Kings of the Universe have done it again – pushed much of the world into a tizzy. Picture it… CEOs texting their charges at dark-thirty in the morning asking, “what are your plans”; relationship managers and customer service reps checking their email every five seconds to see if their talking points have arrived; product development folks wiggin’ out in a frantic we-must-get-our-hands-on-the-SDK-or-die fervor; and citizens of the world buying up every last one of the Cliff Bars and Vitamin Waters in preparation for their strip-mall-sidewalk camp outs!!

You probably guessed what I’m talking about. Apple’s BIG iOS 8 and iPhone 6 release. As with Michael Jordan in the waning seconds of a game, the weather in Seattle, or the dysfunction in Washington, the question remains: Really, this, again? And not only again, but touted as being ‘bigger than ever’?! Truly, you know it’s a big deal when an eleven-year-old girl who has spoken of her “first phone” since about age five says, “Dad, I know you and mom would get me the iPhone 5 for my birthday, but I’d rather wait a month and get the iPhone 6.” Let’s not even address how the armor-hewn shroud of secrecy surrounding the Announcement Event has fed the hysteria.

Hyperbole aside – it is a big deal, especially the iOS 8 release. Here’s why. The ripple effect of Apple’s forthcoming operating system will affect a wide swath of humanity. Developers really do need to know what impact these advancements will have on their apps; companies whose customers rely on these apps really do need to know how their end users might be impacted; and customer service reps who support the users of said apps really do need to know how to answer questions around them. Preparation is indeed in order.

At Q2, we’ve been diligently preparing and anxiously waiting along with the rest of the world, trying as best we can to put ourselves in the shoes of our customers, and our customers’ customers. I’d venture to say these preparatory efforts have touched every corner of our company – from the CEO down. I’d also venture to say – at great risk I realize – that we’re as prepared as we can be. We’ve studied the impact from every conceivable angle, considered all potential participants, and reflected ad nauseam on the lessons learned from the iOS 7 release.

We also know that we can’t possibly account for every conceivable variable under the sun—and  we are in good company. In August 2010, Microsoft released 14 security patches in one day, to address 34 vulnerabilities. And in 2005, Oracle released 88 patches for security vulnerabilities over a four month period – that’s 22 a month! The point being, it ain’t easy. You can have 128,000 employees and more resources than Solomon and still not get things right.

But, we have a great advantage. Armed with a virtual banking platform intentionally constructed to accommodate change, and the knowledge that, even in a worst case scenario, no lives will be lost, we have confidently awaited the big day. That being said, we apologize in advance to the Inupiaq fisherman with no thumbs for the slow load times in the Beaufort Sea and maybe the placement of the navigation buttons on the ATM locator page. Glitches aside, we are ready and see this as another opportunity—one that may transcend any product release—to prove our commitment to partnership.

The Whole of UX Design: Greater than the Sum of Its Parts

Not so long ago, one of the biggest challenges for web application designers was creating intuitive, consistent experiences across multiple browsers. Once smartphones became ubiquitous, the focus shifted to touch-friendly controls and responsive layouts in order to provide similar experiences on PCs and smartphones. Today, however, with the mobile device market exploding to include tablets, phablets, glasses, and smartwatches, the competition to produce software offering innovative, multi-device experiences has reached a fever pitch, and the challenge has become far more vexing.

Today’s UI/UX designers must look at multi-device design holistically—considering not only screen sizes, touch zones, and consistency between devices, but also the who/what/where/when/why/how of device usage. As designers, developers, and product owners we must commit to broadening our focus on user experience. Ignoring the full picture of how users interact with their devices is analogous to deciding at the beginning of a test that you won’t answer the last five questions – producing an A+ isn’t even a possibility.

As Google’s Senior User Experience Designer, Michal Levin, points out in her bookDesigning Multi-Device Experiences, 86% of consumers use their smartphones while using other devices. Because smartphone use is often rushed and subject to interruption, users are likely to perform shorter tasks or stop in the middle of their tasks and try to resume them later. A good phone-oriented design will give priority to tasks that users are most likely to perform on phones, and offer ways to save those tasks for completion in the future, on that device or another.

I was fortunate to attend Nielsen Norman Group’s Usability Week in San Francisco this past June, and during the “Scaling User Interfaces” session, presenter Raluca Budiu mentioned that users often admit during usability testing that they would never perform certain tasks on certain devices. I thought it was a powerful statement. Given the number of factors that differentiate devices—from screen size to portability to privacy (we know that tablets and desktops are often shared among family members while phones are used privately)—it behooves us to survey our users and analyze data around which tasks are likely to be performed on various devices.

Doing so enables designers and developers to apply energies otherwise spent forcing round pegs into square holes, towards optimizing the experience on each particular device, providing users not only what they desired, but delivering it in a way that is better than they could have imagined. Not only does simple responsiveness fall short in facilitating the device specific goals of the user, it also fails to address other areas of the cross-platform experience. Serving up all your desktop content to phones negatively impacts load time, even though users are unable to see all the loaded content within the given screen real estate.

Additionally, as Aurora Bedford discussed in Nielsen Norman Group’s “Visual Design for Mobile and Tablet” session, the ideal placement of frequently used controls varies between devices and even between operating systems. For example, since our thumbs are typically near the bottom of iPhones when we’re holding them, it is recommended that commonly used controls be placed at the bottom of iOS mobile applications. However, to avoid accidental taps of the device buttons on Android, it is recommended that frequently used buttons be placed at the top of the screen.

To further complicate matters, the main theme in Levin’s Designing Multi-Device

Experiences is device interoperability; i.e., we must consider how users’ devices interact with one another. She points out that our mental models as designers are often stuck in the “consistent across devices” mode. While consistency across devices is integral to improving usability, increasing usage, supporting brand identity, and boosting the perception of a professional application, it is only a fraction of the whole picture. It’s equally imperative that device designs are also continuous—that users can abandon halfway completed workflows on their phones and pick them up again later on their desktops or tablets.

The game changer, she asserts, is the creation of designs that are complementarythat enable devices to interact and work together to heighten the user experience. She used the example of the Scrabble app, where players sit around a tablet which serves as the game board, while the individual users’ phones contain their letter tiles. So how do application designers tackle the daunting challenge of creating consistent, fast, user-friendly, innovative, continuous, complementary experiences across all devices?

There is no silver bullet. We can, however, make huge advances by analyzing the device specific

data we have today, which leads to informed decisions on which features to highlight on various devices. We can survey our users on their device-oriented habits and behaviors. We can use progressive disclosure to reduce load time and cognitive overload on small devices, while still offering the content available on larger devices. We can perform usability tests at the wireframing and prototyping stages.

Perhaps most importantly, we can open our minds to the big picture of device usage and realize it’s so much more than it was ten, five or even two years ago. If we’re able use research and education to anticipate the needs of our users a few years into the future, we have a fighting chance in the race to develop innovative technology…that’s also delightful to use.

There’s Gold In Them Thar Hills…

There’s still gold in them thar hills, and the best part is, today, there’s no shovel required to mine it. What gold, you ask? The opportunity mobile business banking represents for community financial institutions. With net interest margins harder to see than Wonder Woman’s plane – it’s invisible – and regulatory and compliance expenses growing like kudzu – it can grow 7 ft. in a week – mobile business banking is an opportunity that community FIs should jump all over – ASAP! Why? Because the opportunity is huge; it will bring in new business; it will reduce attrition; and it will generate fee income. If all of that’s not a gold mine, then I don’t know what is.


Did you know that Barlow Research estimates the potential revenue from fees and deposits in the SOHO (small office/home office) segment alone at $36.2 billion? These are companies who typically have ten or fewer employees – many of whom are likely already doing their retail banking with community FIs just like you. According to a 2013 study by Power Consulting, during which 839 in-person audits were performed by small business owners at 38 FIs across the country, nearly 40% of FIs audited never even mentioned their FI’s business mobile offerings. Have you told your potential SOHO accounts about your mobile banking solution? With Power Consulting estimating 12% of SOHO accounts could convert to business clients if their FIs mentioned mobile business solutions, now is the time to promote mobile business banking.


The mobile channel – smartphones and tablets – has officially become the channel of choice for consumers, and account holders of your FI are probably no exception. In fact, in 2014 access to the Internet via mobile devices eclipsed that of the desktop. The aforementioned Power study found that of the small businesses already utilizing mobile business solutions today, 32% of them access it two-three times per week. That’s two-three times per week you’re able to engage, cross-sell, upsell, consult and nurture your most lucrative clientele via the virtual channel. The same Power study found that 66% of small business owners would be likely to switch FIs for a superior mobile offering – 66%! When you consider the average small business relationship generates 50% more revenue than an “affluent” retail customer, mobile business banking will become a major focus for strategically minded community FIs.

In a case study by the CEB Tower Group, mobile banking customers were 53% less likely to attrite than non-mobile banking customers. When combined with mobile bill payment, they were 82% less likely to attrite. If mobile means sticky and mobile business means an opportunity to acquire new, highly-profitable accounts, then the case for mobile business banking as a serious – and profitable – attrition reducer is obvious. If further support is required, then consider the PPC Group found small business owners 40% more likely to consolidate their personal and business accounts at the FI currently serving their retail needs. A mobile business solution is the heavy-duty toggle bolt of attrition reducers – the proverbial golden handcuffs.


With the Feds continuing to chip away at interchange income and overdraft protection fees – and consumers more aware of FI fees than ever before – mobile business solutions are a beacon of light on the fee income horizon. Charging fees for business banking solutions has been an acceptable practice since the first online cash management solutions arrived, and mobile business solutions are no exception. A 2013 Aite Group study found nearly 30% of businesses currently using mobile business solutions pay their FIs more than $100.00 a month; it drops to 20% for those businesses not currently utilizing mobile offerings. And across all small businesses surveyed currently utilizing mobile business solutions, almost 50% currently pay their FIs more than $50.00 a month. Time equals money, especially for busy small business owners – Who wouldn’t pay for more time?


Mobile business banking could just be the most lucrative opportunity at hand for community FIs. Besides bringing in new business, retaining current business and generating fee income, executing on a mobile business solution will dramatically alter the way your FI is perceived in the markets you serve – it will position you as a leader and strengthen your brand. The best news of all: the market is virtually untapped. As of Q4, 2013, only about 30% of FIs with less than $10 billion in assets offered a mobile business solution. With your FI focused on growth through differentiation and your account holders focused on the freedom to bank anytime, anywhere, and on any device, the time is now to develop, deploy and advertise your mobile business solutions. After all, there’s gold in them thar hills.


Enjoy the blog? Visit our site again soon to read more from our industry experts—and to continue learning about trends in small business banking, read the ath Power Consulting report, “Small Business Mobile Banking.”

So How Do You Thrill a Customer? Solve Their Vexing Problem!

Today, I conducted a webinar, part two of a three part series on branch transformation. Today’s webinar was focused on how financial institutions need to change the focus of what actually occurs in the physical branch. I am advocating for a dramatic move away from the traditional transaction/new account opening focus to an engagement center. Activities that will actually draw in existing and potential customers in three distinct categories: consultative selling, education, and problem solving. Based on the feedback from the webinar, this message resonated with the FIs that signed up for the series.

Not an hour after the webinar ended, I was clearing out some emails and found this article from Bank Innovation. The story was about a new study released by Ernst and Young that revealed the results of why people make the choices they do regarding primary banking decisions. Interestingly, the three areas that EY highlighted from the study are simplicity, advice, and problem solving. I found the fact that their three key areas were so similar to what I had advocated in the webinar both validating and challenging. Validating in the sense that what I was providing in education for the attendees was in alignment with a new study right on topic. Challenging in that I still don’t see much movement in community bank and credit union C-level executives’ attitude regarding how rapidly the virtual branch is advancing and the associated impact on the branch.

I firmly believe that we live in an age where people of all ages and companies of all sizes know how powerful and liberating mobility has become. People are shopping, receiving entertainment, transacting, and interacting via mobile devices. Smartphones and tablets have enabled anyone to be able to access their financial institution at any time and place they choose with whatever device they have in their hand. How powerful! The resulting decline in branch traffic and any measurable statistic on transactions has been precipitous. Yet many bankers cling to the traditional structure and say that it is in the branch where true customer service is manufactured. And to them I say: customer service is what any one customer says it is and nothing more. Once someone has deposited a check from their mobile phone at 11:00pm on Sunday evening, can you really say that requiring them to make a trip to a branch Monday morning is better customer service?

One of the most telling statistics from the EY study had to do with satisfaction with their institution across four categories: products, channels, benefits, and problem solving. Not surprising (at least to me) was that satisfaction with problem solving ranked the highest, with 56% saying that when their FI solves vexing problems, that brings the highest level of satisfaction to account holders. See chart below:


In light of this fact, it is interesting to that so few FIs make any actual real effort to be in the problem-solving business. The model I advocate for banks to consider and possibly emulate is the Apple Store and the world-renowned Genius Bar. How hard would it be for a bank to have one? You already have a really good bar structure– you call it the teller line–just cut all that wood off the top and you’re left with a great looking long piece of marble or Corian. Put some geniuses behind there and you are in business. Once your customers and members knew that such a resource existed from your institution, they would be calling making appointments the next day. And perhaps, just as an Apple store in the mall is slammed at 11:00 on Wednesday, so your branch would experience the type of activity that befits an engagement center, drawing in virtual branch customers and prospects alike.

To get the full story, sign up for the webinars. (If you missed them, you can always ask for a replay.) But even if you don’t, I strongly urge you to revisit your strategy on branch transformation. These physical locations can become powerful engagement centers. But it won’t happen organically; you are going to have to push a new paradigm, a different attitude towards what constitutes customer service.

For more information on Q2’s Webinar Series, contact q2webinars@

Combatting Fraudsters

What is the right approach as the attack landscape changes?

I often get asked about my thoughts on banking from mobile devices. There’s no doubt about it: increasing demand for banking on mobile devices has become a critical component of most financial institutions’ (FIs’) offering. But my concern is that I don’t think FIs or account holders fully appreciate the potential risks of banking on mobile devices. Risks that as a CSO, I see or hear about every day.

I know a lot of industry folk claim that security professionals often hyperbolize about mobile banking threats. But here is the reality: surprisingly many mobile banking applications are often designed without proper security controls built in. Even worse, perhaps the underlying mobile operating system has flaws in its design. Look no further than the recent Apple iOS security vulnerability as an example (oh by the way, make sure to get the latest iOS update for you iPhone users). And even when the apps have proper built-in security, it may not be enough. Why? Well, as we deploy more sophisticated controls, fraudsters also adapt their techniques. Couple insufficient security with the proliferation of malware attacking mobile devices, and you have a threat that is very real and will continue to grow, evolving from running up bogus charges from cellular carriers—which is minor in comparison—to the potential of credential-stealing and theft of financial data.

Theft of financial data from mobile devices, you ask? You bet. One of the methods we are beginning to see it is through the use of malicious quick reader (QR) codes. For example, fraudsters create fake ones to convince account holders to download “new security software” from their FI. What really happens is the account holder downloads malware onto their mobile device, which then waits to intercept an out-of-band (OOB) SMS one-time-password (OTP). Once obtained, fraudsters can login as the account holder or potentially use to approve a financial transaction. Yep, from the same out-of-band SMS OTPs that we all believe to be a secure method for countering attacks. And this is just one example.

But with the right approach, I know we can defeat fraudsters. This is why I’m so passionate with FIs about establishing a multi-layered security strategy, which focuses on the entire banking session, from login and authentication thru transaction submission. In the face of a myriad of threats, layered controls should be deployed to ensure a secure banking experience. Examples include the use of OOB OTPs and tokens, behavioral modeling to detect and prevent anomalies, multi-factor authentication, and the use of dual controls.

Why layered controls? This approach ensures the weakness of one control is compensated by the strength of another. And of course, these controls cannot be set and forgotten. They must be revisted as the attack landscape changes. My question to you: Is your FI investigating or using a multi-layered security approach? Implementing such a strategy will go a long way towards mitigating threats.

Check out the most recent issue of Credit Union Magazine where my fellow security colleagues and I further discuss combatting mobile threats.

A Shift in Banking

Financial services is often considered a mature, slow-moving industry, so it’s not surprising that in 2007, very few in the financial services industry embraced a mobile banking solution. Fast forward to the past few years where small glowing squares with the words “Netflix,” “Facebook” (F for short), and Flipboard stamped on them sitting on a smartphone screen drive the mobile expectations of banking customers. I think this is great.


Initial Industry-wide skepticism about mobile banking functionality has quickly been replaced with institutional scrambling to find a solution for the growing customer demand for mobile banking. The mobile solution has quickly ceded to a mobile revolution, one that has completely changed the interaction between customers and where they put their money. It’s no longer simply about checking your account balance online; it’s about using an app on your tablet or smartphone to open your account in the first place without, if you choose, ever setting foot into your FI. Wearable computing will undoubtedly be the next big thing to impact customer expectations, and the financial services industry must grow beyond any lingering skepticism about mobile banking. Instead of the traditional ebanking structure that is siloed between voice, online, and smartphone – which is extremely difficult to both administer and maintain – it would be wise to team with a technology partner that can grow with your FI as new technologies emerge, one with an architecture that is flexible and secure.

Commentary to an article posted on Bank Innovation.

A Factor of Two

The password is dead. At least, so they say – the headlines anyway. And if you haven’t seen them, you may not be paying attention. From the 2011 Forbes article declaring “The Password is Dead”, to the December 2012 Wired Magazine cover story titled “Kill the Password”, to the recent 2013 American Banker report reiterating “The User Name and Password Are Dead. Now What?”. Houston, we clearly have a problem – one that requires solving.

Authentication processes that only rely on static values presented at each logon event are well known to be vulnerable to compromise. It only takes a single misstep to fall victim to malicious threats lurking in the inter-webs, keystroke-logging their way into your online life.

Is it surprising to see the rapid adoption of two-factor authentication by social and consumer sites such as Gmail, Yahoo!, Twitter, Evernote, Dropbox, PayPal, and so many others? Please explain: why wouldn’t you want to protect your online banking account with at least the same level of security protecting your Facebook account!? Struggling to understand why these online services are surpassing the adoption rates of technologies by banks, credit unions, and other financial institutions? Me too. Maybe what’s even tougher to accept is the number of financial institutions not even offering such enhanced authentication features to their customers? One barrier often cited is the fear institutions tend to have around customer attrition due to overburdening security hoops. I may have given you that one a few years ago, but two-factor authentication is becoming more of a standard offered in many online services, such as the popular ones listed above. Google recently introduced their two-factor authentication for Gmail users. With nothing more than a simple instructional video, Google rolled out this feature in “3 easy steps.” Quite possibly, banks and credit unions alike haven’t considered that such enhanced authentication features might be welcomed and seen as a benefit or differentiating advantage in the eyes of their customers and members.

Introduce the smartphone. Yeah, you know, that device nearly every one of us owns. You remember now – the one you have connected at your hip. Consider online banking, from a security perspective, and realize the opportunity a mobile device introduces. Then consider engaging that mobile device in authentication-based events – representing the “something I have” in the two-factor realm. Why would your institution not leverage this second factor? To send a real-time SMS message to authenticate a user at login? To initiate an automated call containing a one-time code to authorize a transaction? Or to validate a higher-risk activity using a randomly generated value from a soft token app? This added level of security could often be just enough to halt fraudsters perpetrating account takeover attacks. Sure, it has its weaknesses, such as a smart phone infected with a malicious SMS-stealing Trojan. But show me a technology that doesn’t have weaknesses. There isn’t. That’s why the best protection strategy is one that employs “multi-layered” security controls, to compensate for whatever weaknesses may exist in one control with the strengths of other controls.

It’s something I know. My Password. But it’s clearly not enough. Add to the equation something I have. A second factor.

Virtual Branch Myth #2, Part 2

In my previous blog entry, I detailed the myth that integrating online and mobile banking will hold back mobile banking.

As we continue the series in this blog post, I would like to address the issue of mobile being a separate channel.

Mobile is a Channel Myth: Mobile is the next evolution in online banking.

Mobile is cool. Mobile is hot. Mobile devices sales are rising as PC sales are falling. These type of stats are used as “evidence” that mobile is the next evolution of the online experience. When it comes to banking, the fact is that mobile is just another access point for consumers who want to access their financial institutions anytime, anywhere and on any device.

Newsflash: each access device is not a channel; your customer, acting beyond the branch, is the channel.

Think about how many types of mobile devices and operating systems exist today. You have the commercially viable iOS (Apple) and Android OS, plus minor systems in Blackberry (RIM) and Windows 8 (MS). There are multiple Apple devices and literally dozens of Android devices. Now suppose each of these required a separate interface to your core system. Each one would need to have its own user interface. The navigation for similar tasks would not be the same. All of this would generate confusion for your customer. Does that sound like evolution or taking your virtual branch back to the stone ages?

Customers want their financial institution to offer the same unified multi-device access they receive from the non-banking brands they trust with their shopping and browsing. Put another way, if decoupling mobile from online was a great idea, wouldn’t most all of the large online players be doing this?

On the contrary, Amazon and Apple go out of their way to integrate their mobile and online experiences across access devices. Facebook spends millions on ensuring that the user experience from online to handset to tablet is unified, integrated and consistent. Do you think that Facebook thinks that they should shun online and go mobile only? Of course not and neither should you!

Embracing a mobile strategy based on concerns over whether the days of online banking is over is a compromise that leads to dissatisfied customers and a weak Virtual Branch offering. To be successful, FIs need to focus on providing an integrated and unified customer experience that maximizes each access device for its unique qualities while ensuring that data, transactions, security protocol and user interface are consistent. This channel of one strategy is the central to retaining current and attracting new customers.

Stay tuned for more in my next blog post.

Virtual Branch Myth #2, Part 1

There are many in financial services who believe that mobile banking is a channel of its own, distinctly separate from other online banking applications. They theorize that only when mobile is decoupled from all other online capabilities can mobile grow, expand and capitalize on its unique capabilities.

Those who argue for a mobile-only strategy usually believe in the following myths:

1) Online banking will restrict mobile from growing as it normally would.

2) Mobile is the next evolution in online banking and that traditional online access is archaic and antiquated.

3) Mobile and online channels are different and therefore deserve their own distinct applications and systems.

To me these three myths are all part of one misconception: that the mobile channel can be successfully decoupled from other online services. To gain a better understanding of the issue at hand, these myths must be thoroughly explained and debunked. Due to the amount of information needed to discuss this topic, I will break this topic up into multiple blog entries.

Mobile Is a Channel Myth #2, Part 1: Internet banking will hold mobile banking back.

In order for you to believe that online holds back mobile, you would have to assume that mobile will only take on all of the features that online offers.  Since so many financial institutions have online systems that are so far removed from the expectations of their customers, offering only the most rudimentary functionality, it is easy to see why they would be attracted to the bright shiny object that mobile represents compared to their antiquated online system.

There is no question that PC sales are down while at the same time the sales of mobile handsets and tablets are off the charts. But without a synchronized mobile and Internet offering, consumers and FI support personnel alike must deal with a separate verification, authorization and issue resolution processes.

Rather than holding mobile back, Internet banking acts as an additional integrated resource for consumers.

Consider this example: suppose a consumer takes a photo of a check with a mobile device to make a deposit. Twenty minutes later, the same consumer is trying to verify if they have enough money to buy that flat screen TV they have found on sale – today only!. The mobile deposit will probably show up in the online system, but will the customer’s mobile available balance match up with the online balance? If the systems are separate, there is a good chance that they have separate interfaces to the core system that holds the balance information.  Separate interfaces often mean mismatched information.

Here’s another example, suppose a consumer creates a bill payment on their non-integrated mobile device. The bill payment goes through fine. When it’s time to pay that bill the next month, they find it on the mobile device and make the payment. The following month, when they need to pay the bill their mobile device is not available. So they use a friend’s computer to access their financial institution via online banking and look for the bill payment vendor. Only it’s not there because the FI has a mobile strategy that is not integrated into all of the access points that the customer can use. This same scenario plays out for issues such as support, security, authorization, dual control, and so forth.

Embracing a mobile strategy based on concerns over outdated online banking technology is a compromise that leads to future obsolescence and a poor consumer experience. Instead, to be successful, FIs need to focus on providing an integrated experience that maximizes each access device for its unique qualities while ensuring that data, transactions, security protocol and user interface are consistent. This channel of one strategy is central to retaining current and attracting new customers.

Check back soon for my next blog post – Mobile Is a Channel Myth #2, Part 2.

Virtual Branch Myth #1

As a follow up to my recent blog post, here’s the first in a series of Virtual Branch Myths to consider.

“Our FI employs a best of breed approach to technology; we buy individual products that meet specific customer/member needs”. Sounds good, right?

The problem with this siloed approach is that it leads to selecting individual products chasing a particular market segment or specific devices. Mobile is the obvious example; many FIs have selected a specific mobile vendor for a specific part of mobile functionality. This results in the FI having multiple apps for online banking, mobile remote deposit, mobile bill pay, mobile PtoP, and so on.

Moreover, each of these products have a different user interface, the flow of entering information, the navigation in the app, the information that is retrieved and displayed all will be different. It is possible, even likely, that they would see different available balance information displayed in different apps. This is because regardless of the app source, there still has to be an interface back to the core system. Multiple systems means managing multiple interfaces to the core and depending on how the company creates this interface and whether it is online/real-time or batch will affect the balance and other critical information that is retrieved and displayed on the mobile device.

With this in mind, the importance of a consistent user interface cannot be overlooked. When looking at “best of breed”, start by asking these questions:

1. Do I need to create another host interface?
2. Will this present a different user interface for my customers/members?
3 .Will the data, navigation and experience be simplified and intuitive if I offer this in addition to the other systems that I deploy?

If the answers are Yes, Yes, and No, then even though you may perceive that there is a particular feature/function that is desirable from a particular vendor, the long term negative aspect of non-integrated systems will greatly outweigh any short-term benefit. You should look for a solution that allows for one host interface to run myriad integrated applications that present a unified user experience. Make sure that your view of technology is a strategic one, not the shiny object du jour … stay tuned for more Virtual Branch myths!

Hooked On Mobile

As a person who regularly travels back and forth from Connecticut to Austin, I have to admit that I really rely on the ability to connect to work and home via mobile on a variety of devices such as my iPhone or iPad. During presentations, I often talk about how we have truly become a mobile society and talk about how, for many, the mobile device (be it a smartphone or tablet) has become an extension of who we are. I joke that we could be 10, 20 or 30 miles, etc. from home and realize that we forgot our cellphone and immediately turn around and go back and get it.

Our mobile devices have even become the last things we put down at night and the first thing we pick up in the morning. That became even more apparent to me recently, when I had left the office to head to the airport with an associate and realized when we were almost at the airport that I had forgotten my iPhone on my desk. Since I was flying back to Connecticut, I sat there thinking how I would be able function without my iPhone until I returned to Austin next week. I thought about how much I rely on this simple device to check email, communicate and importantly do my banking as I travel. To say I was panic stricken would be an understatement. Luckily my associate was able to reach someone in the office who was kind enough to drive the phone the airport, and I was reunited it with. Imagine if you were in a similar situation, and I am sure you could relate.

In the Thursday, March 07, 2013, edition of USA Today there was an article on the topic of “Always Working” that discussed how mobile has become an integral part of our daily lives, be it work or personal. The article mentioned a Pew Research Center Study that cited that nearly two thirds of full time workers own smart phones, up from 48% two years ago, and one third own tablets, up from 12%.  I imagine that when you factor everyone else who own smart phones or tablets, we’d all agree we are hooked on mobile and our devices.
With more mobility comes more convenience, especially when it comes to banking, and with that comes even greater opportunity for banks and credit unions to better serve their markets. People are looking to convenient ways to connect with their financial institutions as evidenced by the following:

1. The ability to connect any time anywhere is appealing as demonstrated by all the articles and the ongoing list of statistics about the growth of mobile.

2. Like other ebanking transactions such as online transactions, mobile is cost effective and less expensive than traditional transactions done at a branch or via a call center.

3. Consumers, both retail and commercial, are demanding access to financial institutions via mobile or tablet devices for their banking needs. Study after study is confirming this type of demand.

4. The ability of financial institutions to connect to their customer via a multitude of channels deepens relationships and provides the additional opportunity to connect with consumers.

5. Adoption rates of mobile and mobile banking will only continue to rise as more and more of us realize the convenience. And it is not just a younger generation trend. Just walk into an Apple store and at the table you see groups of all ages learning how to use the iPhone and iPad and you’ll see my point.

6. Mobile has become top of mind for businesses and consumers, and this includes banks and credit unions looking to raise their service levels.

With all this in mind, it goes without saying that opportunity exists for banks and credit unions to extend their footprints and better serve the people like me who are simply hooked on mobile.

For the financial institutions out there, have you developed your strategy around mobile/tablet banking? Is your mobile strategy integrated into your overall ebanking offing?  If not the time is now. Opportunity is knocking.