2010 financial services wrap

1. Mobile for the masses. Australian banks may have been a little slow to the mobile banking party, but those that have embraced the channel have reaped quick rewards. ANZ’s goMoney application for iPhone was the first application by a major Australian bank to allow users to pay a third party via their mobile, without knowing the recipient’s bank account number. GoMoney’s clean interface and attraction to customers and non-customers has proved a winner, with more than 31,000 downloads in the first four days, and growing to more than a million since then.

2. NZ wins PFM race. US banking giant Wells Fargo put personal financial management at the top of its online banking priorities almost two years ago. The thinking was that a bank should be able to better capture and deliver data to actually help customers improve their financial position. In our region, Kiwibank was the first to adopt similar thinking, launching heaps! in March, and finding it was attracting 70 per cent repeat usage in the following months. Here, Suncorp and Bank of Queensland have deployed budgeting tools, as the major banks scramble to develop their own offerings.

3. Online ID gets an overhaul. When it was revealed in 2010 that the online verification service being used by both UBank and ING Direct was susceptible to stolen identity details, it caused the industry to rethink how customers should be verified online. The Commonwealth Bank learnt from those who came before it and stepped up the number of documents it checks online. Not only is this more secure, but it also allows the bank to verify customers for multiple products, giving the bank an edge in online origination.

4. Everyone’s a merchant. In April, ANZ made accepting credit card payments via mobile easier for small business people using iPhones. The ePOS Mobile application was piloted with a number of retailers but, despite promises, is yet to emerge in the Apple App Store. In the meantime, US players including Square and Bling Nation are working hard to provide interim hardwarebased solutions to enable card payments. Square recently dropped the fixed processing fee it was charging merchants, taking on competitors Intuit and Verifone in the US. As the US market heats up, local institutions are awaiting the iPhone 5, which, it’s speculated, will come with an in-built chip that will work with contactless card readers. There were hopes the iPhone 4 would do the same, however, so it’s likely we’ll still see more interim alternatives popping up. PayPal is also one to watch, with its Bump application changing the way institutions think about person-to-person payments.

5. Lending meets online retail. When a former counterfeit goods assessor put his mind to financial services last year, the result was Kabbage, a US-based online lending company that uses data from online marketplaces such as eBay to help establish creditworthiness. Kabbage has since generated more funding to help grow its business and expand the number of online marketplaces it works with. Kabbage is looking to expand its reach into Asia Pacific, so we’re watching for a local solution, since Australian retailers are heavy users of eBay. More broadly, the use of data generated in social communities is set to become a trend embraced by financial institutions looking to decrease their reliance on basic credit scores and seek new lending opportunities.

6. An appetite for apps. Banks continue to grapple with the question of which mobile devices to build for, with many choosing Apple based on the number of devices in hands. But beyond the device debate, there’s a growing drive towards useful applications that do more than just offer mobile banking transactions.  The Commonwealth Bank’s Property Guide demonstrates the bank’s willingness to tailor applications to devices and location-driven scenarios. The use of augmented reality and valuable property information from RP Data provides a mobile experience that gets customers talking, and helps the bank capitalise on Australia’s seemingly endless property boom. Combine that with links to mobile lenders and it become clear how the bank can drive loyalty with its app.

What lies ahead

• mobile is set to dominate in 2011, with more native applications, payment services and a move towards services and applications designed for tablets.

• the debate on account switching will continue, and while true account portability may not eventuate, banks will be forced to make switching easier.

• person-to-person and merchant payments will gain greater attention from banks as they seek to find new revenue streams to replace lost fee income.

• personal financial management tools will grow in number and sophistication, moving beyond banking towards community-based services.

• banks will explore data visualisation and infographics as a means of helping customers better manage their finances.