From the Future Backwards
From the Future Backwards Knowing Next Now Lee Wetherington, AAP Director of Strategic Insight, ProfitStars®
@leewetherington 1
|
© 2014 Jack Henry & Associates, Inc.®
Presenter
Lee Wetherington Director of Strategic Insight
• Develops actionable insight and strategy for the financial services industry • Delivers keynotes nationwide • Technology Faculty Chair and guest lecturer for graduate banking schools • Authors articles for industry trades • Degrees in Economics and English from Duke University • Accredited ACH Professional (AAP) 2
|
© 2014 Jack Henry & Associates, Inc.®
@leewetherington
Agenda • Trends 2014 – Here and Now – About the Future – The Future in 1, 2, 3
• How Banks Win the Mobile Wars – Leveraging Data Banks Have That They Don’t – What That Looks Like (It’s Already Here) – Integrity, Integrity, Integrity
• Q&A
3
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© 2014 Jack Henry & Associates, Inc.®
Here & Now 4
|
© 2014 Jack Henry & Associates, Inc.®
Branch Transactions Per Month
SOURCE: 2013 FMSI Teller Line Study
5
|
© 2014 Jack Henry & Associates, Inc.®
Branch Personnel Costs
SOURCE: 2013 FMSI Teller Line Study
6 6
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© 2014 Jack Henry & Associates, Inc.®
Branches: Update & Outlook • 30% to 40% reduction in the number of bank and credit union branches over the next 10 years (Celent) • 1 of 4 community bank branches already “zombies” – # of branch transactions per month is plummeting – Cost of branch personnel continues to rise
• Compared to credit union competitors, community banks are more urgently challenged by the overhead of their legacy branch infrastructure…
7
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© 2014 Jack Henry & Associates, Inc.®
Community Banks vs. Credit Unions Credit Unions: 12.1% decrease Community Banks: 26.2% decrease
Credit Unions: 6.5% increase Community Banks: 18.4% increase
SOURCE: 2013 FMSI Teller Line Study
8
|
© 2014 Jack Henry & Associates, Inc.®
Debit card transaction volume growth no longer compensates for compression of interchange and challenges sustainability of “free checking” among small banks.
9
|
© 2014 Jack Henry & Associates, Inc.®
Revenue Per Debit Card Per Year
SOURCE: 2013 PULSE Debit Issuer Study
10
|
© 2014 Jack Henry & Associates, Inc.®
Judge Leon Scenarios: Reg II 1. Nothing changes. 2. Something changes. –
Regulated interchange caps lowered •
–
From 24 cents to 7 cents? 2 cents?
Routing provisions expanded •
From 1X1 to 2X2 per card
3. “The Full Leon” –
Regulated interchange caps lowered •
–
Routing provisions expanded •
11
|
From 24 cents to 7 cents? 2 cents?
From 1X1 to 2X2 per card
© 2014 Jack Henry & Associates, Inc.®
Debit Forecast: Cloudy, Chance of WTF • Growth in debit card transaction volume expected to slow considerably in 2014. – For exempt issuers, your debit card transaction volume will no longer make up for compression of interchange.
• Smaller FIs – Per transaction costs 40% higher than large issuers • Last year, exempt issuers network fees increased 9% for signature and 25% for PIN.
– BUT, signature debit interchange 100% higher – 64% signature to 36% PIN mix still produces strong margins for exempt issuers • But expect another 3% shift to PIN in 2014 12
|
© 2014 Jack Henry & Associates, Inc.®
Mobile RDC is the on-ramp to “photo banking” and key to banks’ migration of 55M online customers who have yet to use mobile banking. (Javelin Strategy & Research)
13
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© 2014 Jack Henry & Associates, Inc.®
Photo Banking • Mobile RDC • Mobile RDC loads of prepaid cards • Mobile billpay (photo billpay and “add payees”) • Mobile document/application submission • Mobile financial product research • Photograph credit cards to make online payments • Eye and facial recognition for authentication • Mobile shopping and price comparison 14
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Switching MB’ers to mRDC = Big Savings Rates of Deposit Through Physical Branch
15 | © 2014 Jack Henry & Associates, Inc.®
Save $50/Customer/Year with mRDC
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Average bank can save $49.80 per year per mobile banking customer by converting one monthly deposit to mobile.
16
|
© 2014 Jack Henry & Associates, Inc.®
The future is always already here…if you know where to look. 17
|
© 2014 Jack Henry & Associates, Inc.®
The future is about better enabling natural behavior… 18
|
© 2014 Jack Henry & Associates, Inc.®
…and nudging against behavior that is financially harmful. 19
|
© 2014 Jack Henry & Associates, Inc.®
The key to your role in this future is data… 20
|
© 2014 Jack Henry & Associates, Inc.®
Big Data? 21
|
© 2014 Jack Henry & Associates, Inc.®
Big Data? No, Bank Data! • Banks must begin to understand their own data. – That’s where the value is.
• Transaction data can tell a bank... – …what other financials institutions customers use. – …what financial products/services they use. – …how much they pay to use other financial services. – …where they shop, how often, and how much they spend.
• Behavioral analysis is already necessary to bolster security, why not tap the same analysis to better understand and serve customers? 22
|
© 2014 Jack Henry & Associates, Inc.®
Data analytics are maturing beyond risk management and compliance to predictive behavioral applications that both empower customers to make better money decisions and create unique value that banks can ultimately monetize.
23
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© 2014 Jack Henry & Associates, Inc.®
Consumer Comfort With Bank and Affiliate Transaction Tracking and Analysis in Exchange for Services and Offers
24
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “Ten Trends for Financial Services in 2014: Big Data, Big Clouds, Big Mobile, Big Brother”; January 2014
70% Consumers OK FI Transx Analysis
How Banks Monetize Payments Data • Provide merchants with their share of wallet, i.e., how much of a customer’s spend in a given product category the merchant receives. • Proving incremental spend at given merchants after coordinated partnerships or collaborative campaigns within shared market. • Providing “anonymized” payments data to 3rd Party data analysis companies from whom FIs already purchase intelligence data. – e.g., Epsilon and Claritas 25
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: McKinsey Payments Practice
Payments Data = New Revenue
26
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© 2014 Jack Henry & Associates, Inc.®
“Average smartphone owner in the U.S. is not comfortable using a mobile wallet that would share personal information with merchants.” First Data Advanced Payments Report (2013)
27
|
© 2014 Jack Henry & Associates, Inc.®
28
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© 2014 Jack Henry & Associates, Inc.®
Rise of the “Debanked” Emergence of “NeoChecking”
29
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© 2014 Jack Henry & Associates, Inc.®
The “Debanked”
Mainstream consumers who willingly opt out of the traditional banking system
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
30
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© 2014 Jack Henry & Associates, Inc.®
Check Use Declines Percent of payments paid by check 61%
56 %
51 %
47 % 38 %
2002
2003
2004
2005
2006
34 %
2007
31 %
2008
Source: Fiserv 2011 Consumer Trends Survey
31
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© 2014 Jack Henry & Associates, Inc.®
30 %
2009
26%
2010
23 %
2011
2009: Worth Switching to Prepaid?
$1,900 $1,400 $900 Median savings (US$)
$400
82% would be worse off
$(100)
18% would save
$(600) $(1,100) $(1,600) $(2,100) Source: Aite Group
32
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
Potential savings to checking account holders from switching to prepaid debit cards
Overdraft Volumes Remain High Overdraft Revenue (US$ billions) SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
$40
$30
$20
$10
$0 2007
2008
2009
2010
Source: Moebs Services, FDIC, NCUA, OCC, Federal Reserve
33
|
© 2014 Jack Henry & Associates, Inc.®
2011
Monthly Account Fees Up… Average Monthly Service Fees on Checking Accounts
$6.00
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
$5.00 $4.00 $3.00 $2.00 $1.00 $1998
2000
2002
2004
2006
Source: Bankrate.com 34
|
© 2014 Jack Henry & Associates, Inc.®
2008
2010
2012
ATM Fees Up… Average ATM Fees on Non-Members
$3.00
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
$2.50 $2.00 $1.50 $1.00 $0.50 $1998
2000
2002
2004
2006
Source: Bankrate.com 35
|
© 2014 Jack Henry & Associates, Inc.®
2008
2010
2012
…and interest rates are down 1.00%
0.80%
0.79%
0.60%
0.40%
0.20%
0.08%
0.00% 2001
2003
2005
2007
Source: Bankrate.com 36
|
© 2014 Jack Henry & Associates, Inc.®
2009
2011
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
Average Checking Account Yield
“NeoChecking” Accounts
37
|
© 2014 Jack Henry & Associates, Inc.®
Characteristics of “NeoChecking” • PFM the focus, not the add-on • Blending prepaid, debit, and credit – Functions/transitions from one to the other do not require closing/opening of accounts
• Mobile-first design
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
38
|
© 2014 Jack Henry & Associates, Inc.®
Neo-checking providers use mRDC to migrate funds from you to them. 39
|
© 2014 Jack Henry & Associates, Inc.®
mRDC is offered to load prepaid cards. From there, your bank becomes a bystander. 40
|
© 2014 Jack Henry & Associates, Inc.®
• Adoption grew 50% between 2008 and 2013 • Nearly 1 in 4 consumers have one • Prepaid cardholders are now mainstream consumers (not just low-income) – Cardholders skew younger… • Gens X & Y use prepaid to manage finances
– …but are represented equally among income levels
• 90% of prepaid cardholders have DDA accounts • Load volumes will grow 20% annually thru 2016 • 5 issuers account for 75% of prepaid load volume 41
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Aite Group’s “Prepaid Debit Card Realities”; November 2013
GPR Prepaid Debit Cards
• Banks:
$79.81
• Internet:
$71.85
• Retail:
$40.06
• Blended: $51.89 • For every $100 loaded on a prepaid card, the issuer can expect to generate $1 of revenue
42
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Aite Group’s “Prepaid Debit Card Realities”; November 2013
Annual Revenue/ Active Cardholder
MB’ers Own Prepaid 2X All Consumers
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Prepaid and Checking Account Ownership by Mobile Bankers & All Consumers
43
|
© 2014 Jack Henry & Associates, Inc.®
Prepaid is unhinging money storage from traditional checking. 44
|
© 2014 Jack Henry & Associates, Inc.®
45
|
© 2014 Jack Henry & Associates, Inc.®
46
|
© 2014 Jack Henry & Associates, Inc.®
Gen Y.1
Gen Y.2
18-24
25-34
47
|
© 2014 Jack Henry & Associates, Inc.®
PFM Demand by Age 48
|
© 2014 Jack Henry & Associates, Inc.®
49 | © 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “21st-Century PFM for a Mass Audience: How to Build Everyday Online and Mobile PFM’; February 2013
PFM Demand by Income 50
|
© 2014 Jack Henry & Associates, Inc.®
51 | © 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “21st-Century PFM for a Mass Audience: How to Build Everyday Online and Mobile PFM’; February 2013
PFM or FPM? 52
|
© 2014 Jack Henry & Associates, Inc.®
53
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© 2014 Jack Henry & Associates, Inc.®
SOURCE: Ron Shevlin’s Snarketing 2.0 Blog; “PFM is Dead, Long Live FPM”; http://snarketing2dot0.com/2012/09/24/pfm-is-dead-long-live-fpm/
Spend, Shop, Buy, Plan
SOURCE: Javelin Strategy & Research; “21st-Century PFM for a Mass Audience: How to Build Everyday Online and Mobile PFM’; February 2013 54
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© 2014 Jack Henry & Associates, Inc.®
“Account aggregation and budget creation/tracking is great, but unless it changes behavior…then the potential impact of PFM is unfulfilled. Too many consumer advocates focus on financial literacy. Knowledge without action, or change in behavior, is useless.” SOURCE: Ron Shevlin; Snarketing 2.0; “Finance Dot Data Dot Gov”; http://snarketing2dot0.com/2012/09/28/finance-dot-data-dot-gov/
55
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© 2014 Jack Henry & Associates, Inc.®
MB’ers Want PFM (Can Get It Elsewhere)
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Preferred Source for PFM for Online Bankers (Past 90 Days) vs. Mobile Bankers (Past 90 Days) vs. All Consumers
56
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© 2014 Jack Henry & Associates, Inc.®
57
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© 2014 Jack Henry & Associates, Inc.®
Mobile PFM is the segue from mobile banking to mobile shopping. 58
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© 2014 Jack Henry & Associates, Inc.®
Mobile PFM is the segue from mobile banking to mobile finance and loans. 59
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© 2014 Jack Henry & Associates, Inc.®
Mobile/digital wallets affect
where you shop, what you buy, and how much you pay.
60
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© 2014 Jack Henry & Associates, Inc.®
How much is at stake? 61
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© 2014 Jack Henry & Associates, Inc.®
62 | © 2014 Jack Henry & Associates, Inc.®
SOURCE: “The Great Mobile Alliance” by Steve Mott; Digital Transactions; July & September, 2012
$1 Trillion
The
BIG
Question 63
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© 2014 Jack Henry & Associates, Inc.®
Who will control and monetize mobile marketing of payments data? 64
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© 2014 Jack Henry & Associates, Inc.®
The future is more about data than payments… 65
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© 2014 Jack Henry & Associates, Inc.®
Evolution of Digital Payments
Invisible Digital Mobile
66
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© 2014 Jack Henry & Associates, Inc.®
What does that future look like? 67
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© 2014 Jack Henry & Associates, Inc.®
Beware
what happens to your
data.
68
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© 2014 Jack Henry & Associates, Inc.®
Google Wallet: Merchant of Record SOURCE: Citi GPS: Global Perspectives & Solutions; “UPWARDLY MOBILE II A Long and Winding Roadfor Mobile Payments – Eight Crucial Questions, Answered”; November 2012
69
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© 2014 Jack Henry & Associates, Inc.®
PayPal: Merchant of Record
SOURCE: Citi GPS: Global Perspectives & Solutions; “UPWARDLY MOBILE II A Long and Winding Roadfor Mobile Payments – Eight Crucial Questions, Answered”; November 2012
70
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© 2014 Jack Henry & Associates, Inc.®
Your data
uniquely enables you to provide value with
integrity…
71
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© 2014 Jack Henry & Associates, Inc.®
…integrity
wins the race…
72
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© 2014 Jack Henry & Associates, Inc.®
Who Wins the Mobile/Data Wars? • Google? – “Here’s a business who sells what you’re looking for.”
• Amazon? – “Buy whatever you’re looking for from us.”
• Merchants? – “Buy, Buy, Buy!!!”
• FIs? – “We’ll help you decide whether, when, and where it makes sense to buy the stuff you want…in real time.” 73
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© 2014 Jack Henry & Associates, Inc.®
Lee Wetherington, AAP [email protected] http://discover.profitstars.com/leewetherington
@leewetherington
http://www.linkedin.com/in/leewetherington 74
|
© 2014 Jack Henry & Associates, Inc.®
@leewetherington 1
|
© 2014 Jack Henry & Associates, Inc.®
Presenter
Lee Wetherington Director of Strategic Insight
• Develops actionable insight and strategy for the financial services industry • Delivers keynotes nationwide • Technology Faculty Chair and guest lecturer for graduate banking schools • Authors articles for industry trades • Degrees in Economics and English from Duke University • Accredited ACH Professional (AAP) 2
|
© 2014 Jack Henry & Associates, Inc.®
@leewetherington
Agenda • Trends 2014 – Here and Now – About the Future – The Future in 1, 2, 3
• How Banks Win the Mobile Wars – Leveraging Data Banks Have That They Don’t – What That Looks Like (It’s Already Here) – Integrity, Integrity, Integrity
• Q&A
3
|
© 2014 Jack Henry & Associates, Inc.®
Here & Now 4
|
© 2014 Jack Henry & Associates, Inc.®
Branch Transactions Per Month
SOURCE: 2013 FMSI Teller Line Study
5
|
© 2014 Jack Henry & Associates, Inc.®
Branch Personnel Costs
SOURCE: 2013 FMSI Teller Line Study
6 6
|
© 2014 Jack Henry & Associates, Inc.®
Branches: Update & Outlook • 30% to 40% reduction in the number of bank and credit union branches over the next 10 years (Celent) • 1 of 4 community bank branches already “zombies” – # of branch transactions per month is plummeting – Cost of branch personnel continues to rise
• Compared to credit union competitors, community banks are more urgently challenged by the overhead of their legacy branch infrastructure…
7
|
© 2014 Jack Henry & Associates, Inc.®
Community Banks vs. Credit Unions Credit Unions: 12.1% decrease Community Banks: 26.2% decrease
Credit Unions: 6.5% increase Community Banks: 18.4% increase
SOURCE: 2013 FMSI Teller Line Study
8
|
© 2014 Jack Henry & Associates, Inc.®
Debit card transaction volume growth no longer compensates for compression of interchange and challenges sustainability of “free checking” among small banks.
9
|
© 2014 Jack Henry & Associates, Inc.®
Revenue Per Debit Card Per Year
SOURCE: 2013 PULSE Debit Issuer Study
10
|
© 2014 Jack Henry & Associates, Inc.®
Judge Leon Scenarios: Reg II 1. Nothing changes. 2. Something changes. –
Regulated interchange caps lowered •
–
From 24 cents to 7 cents? 2 cents?
Routing provisions expanded •
From 1X1 to 2X2 per card
3. “The Full Leon” –
Regulated interchange caps lowered •
–
Routing provisions expanded •
11
|
From 24 cents to 7 cents? 2 cents?
From 1X1 to 2X2 per card
© 2014 Jack Henry & Associates, Inc.®
Debit Forecast: Cloudy, Chance of WTF • Growth in debit card transaction volume expected to slow considerably in 2014. – For exempt issuers, your debit card transaction volume will no longer make up for compression of interchange.
• Smaller FIs – Per transaction costs 40% higher than large issuers • Last year, exempt issuers network fees increased 9% for signature and 25% for PIN.
– BUT, signature debit interchange 100% higher – 64% signature to 36% PIN mix still produces strong margins for exempt issuers • But expect another 3% shift to PIN in 2014 12
|
© 2014 Jack Henry & Associates, Inc.®
Mobile RDC is the on-ramp to “photo banking” and key to banks’ migration of 55M online customers who have yet to use mobile banking. (Javelin Strategy & Research)
13
|
© 2014 Jack Henry & Associates, Inc.®
Photo Banking • Mobile RDC • Mobile RDC loads of prepaid cards • Mobile billpay (photo billpay and “add payees”) • Mobile document/application submission • Mobile financial product research • Photograph credit cards to make online payments • Eye and facial recognition for authentication • Mobile shopping and price comparison 14
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Switching MB’ers to mRDC = Big Savings Rates of Deposit Through Physical Branch
15 | © 2014 Jack Henry & Associates, Inc.®
Save $50/Customer/Year with mRDC
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Average bank can save $49.80 per year per mobile banking customer by converting one monthly deposit to mobile.
16
|
© 2014 Jack Henry & Associates, Inc.®
The future is always already here…if you know where to look. 17
|
© 2014 Jack Henry & Associates, Inc.®
The future is about better enabling natural behavior… 18
|
© 2014 Jack Henry & Associates, Inc.®
…and nudging against behavior that is financially harmful. 19
|
© 2014 Jack Henry & Associates, Inc.®
The key to your role in this future is data… 20
|
© 2014 Jack Henry & Associates, Inc.®
Big Data? 21
|
© 2014 Jack Henry & Associates, Inc.®
Big Data? No, Bank Data! • Banks must begin to understand their own data. – That’s where the value is.
• Transaction data can tell a bank... – …what other financials institutions customers use. – …what financial products/services they use. – …how much they pay to use other financial services. – …where they shop, how often, and how much they spend.
• Behavioral analysis is already necessary to bolster security, why not tap the same analysis to better understand and serve customers? 22
|
© 2014 Jack Henry & Associates, Inc.®
Data analytics are maturing beyond risk management and compliance to predictive behavioral applications that both empower customers to make better money decisions and create unique value that banks can ultimately monetize.
23
|
© 2014 Jack Henry & Associates, Inc.®
Consumer Comfort With Bank and Affiliate Transaction Tracking and Analysis in Exchange for Services and Offers
24
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “Ten Trends for Financial Services in 2014: Big Data, Big Clouds, Big Mobile, Big Brother”; January 2014
70% Consumers OK FI Transx Analysis
How Banks Monetize Payments Data • Provide merchants with their share of wallet, i.e., how much of a customer’s spend in a given product category the merchant receives. • Proving incremental spend at given merchants after coordinated partnerships or collaborative campaigns within shared market. • Providing “anonymized” payments data to 3rd Party data analysis companies from whom FIs already purchase intelligence data. – e.g., Epsilon and Claritas 25
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: McKinsey Payments Practice
Payments Data = New Revenue
26
|
© 2014 Jack Henry & Associates, Inc.®
“Average smartphone owner in the U.S. is not comfortable using a mobile wallet that would share personal information with merchants.” First Data Advanced Payments Report (2013)
27
|
© 2014 Jack Henry & Associates, Inc.®
28
|
© 2014 Jack Henry & Associates, Inc.®
Rise of the “Debanked” Emergence of “NeoChecking”
29
|
© 2014 Jack Henry & Associates, Inc.®
The “Debanked”
Mainstream consumers who willingly opt out of the traditional banking system
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
30
|
© 2014 Jack Henry & Associates, Inc.®
Check Use Declines Percent of payments paid by check 61%
56 %
51 %
47 % 38 %
2002
2003
2004
2005
2006
34 %
2007
31 %
2008
Source: Fiserv 2011 Consumer Trends Survey
31
|
© 2014 Jack Henry & Associates, Inc.®
30 %
2009
26%
2010
23 %
2011
2009: Worth Switching to Prepaid?
$1,900 $1,400 $900 Median savings (US$)
$400
82% would be worse off
$(100)
18% would save
$(600) $(1,100) $(1,600) $(2,100) Source: Aite Group
32
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
Potential savings to checking account holders from switching to prepaid debit cards
Overdraft Volumes Remain High Overdraft Revenue (US$ billions) SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
$40
$30
$20
$10
$0 2007
2008
2009
2010
Source: Moebs Services, FDIC, NCUA, OCC, Federal Reserve
33
|
© 2014 Jack Henry & Associates, Inc.®
2011
Monthly Account Fees Up… Average Monthly Service Fees on Checking Accounts
$6.00
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
$5.00 $4.00 $3.00 $2.00 $1.00 $1998
2000
2002
2004
2006
Source: Bankrate.com 34
|
© 2014 Jack Henry & Associates, Inc.®
2008
2010
2012
ATM Fees Up… Average ATM Fees on Non-Members
$3.00
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
$2.50 $2.00 $1.50 $1.00 $0.50 $1998
2000
2002
2004
2006
Source: Bankrate.com 35
|
© 2014 Jack Henry & Associates, Inc.®
2008
2010
2012
…and interest rates are down 1.00%
0.80%
0.79%
0.60%
0.40%
0.20%
0.08%
0.00% 2001
2003
2005
2007
Source: Bankrate.com 36
|
© 2014 Jack Henry & Associates, Inc.®
2009
2011
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
Average Checking Account Yield
“NeoChecking” Accounts
37
|
© 2014 Jack Henry & Associates, Inc.®
Characteristics of “NeoChecking” • PFM the focus, not the add-on • Blending prepaid, debit, and credit – Functions/transitions from one to the other do not require closing/opening of accounts
• Mobile-first design
SOURCE: Aite; “Trends in Retail Banking”; Ron Shevlin; March 2013
38
|
© 2014 Jack Henry & Associates, Inc.®
Neo-checking providers use mRDC to migrate funds from you to them. 39
|
© 2014 Jack Henry & Associates, Inc.®
mRDC is offered to load prepaid cards. From there, your bank becomes a bystander. 40
|
© 2014 Jack Henry & Associates, Inc.®
• Adoption grew 50% between 2008 and 2013 • Nearly 1 in 4 consumers have one • Prepaid cardholders are now mainstream consumers (not just low-income) – Cardholders skew younger… • Gens X & Y use prepaid to manage finances
– …but are represented equally among income levels
• 90% of prepaid cardholders have DDA accounts • Load volumes will grow 20% annually thru 2016 • 5 issuers account for 75% of prepaid load volume 41
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Aite Group’s “Prepaid Debit Card Realities”; November 2013
GPR Prepaid Debit Cards
• Banks:
$79.81
• Internet:
$71.85
• Retail:
$40.06
• Blended: $51.89 • For every $100 loaded on a prepaid card, the issuer can expect to generate $1 of revenue
42
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Aite Group’s “Prepaid Debit Card Realities”; November 2013
Annual Revenue/ Active Cardholder
MB’ers Own Prepaid 2X All Consumers
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Prepaid and Checking Account Ownership by Mobile Bankers & All Consumers
43
|
© 2014 Jack Henry & Associates, Inc.®
Prepaid is unhinging money storage from traditional checking. 44
|
© 2014 Jack Henry & Associates, Inc.®
45
|
© 2014 Jack Henry & Associates, Inc.®
46
|
© 2014 Jack Henry & Associates, Inc.®
Gen Y.1
Gen Y.2
18-24
25-34
47
|
© 2014 Jack Henry & Associates, Inc.®
PFM Demand by Age 48
|
© 2014 Jack Henry & Associates, Inc.®
49 | © 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “21st-Century PFM for a Mass Audience: How to Build Everyday Online and Mobile PFM’; February 2013
PFM Demand by Income 50
|
© 2014 Jack Henry & Associates, Inc.®
51 | © 2014 Jack Henry & Associates, Inc.®
SOURCE: Javelin Strategy & Research; “21st-Century PFM for a Mass Audience: How to Build Everyday Online and Mobile PFM’; February 2013
PFM or FPM? 52
|
© 2014 Jack Henry & Associates, Inc.®
53
|
© 2014 Jack Henry & Associates, Inc.®
SOURCE: Ron Shevlin’s Snarketing 2.0 Blog; “PFM is Dead, Long Live FPM”; http://snarketing2dot0.com/2012/09/24/pfm-is-dead-long-live-fpm/
Spend, Shop, Buy, Plan
SOURCE: Javelin Strategy & Research; “21st-Century PFM for a Mass Audience: How to Build Everyday Online and Mobile PFM’; February 2013 54
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© 2014 Jack Henry & Associates, Inc.®
“Account aggregation and budget creation/tracking is great, but unless it changes behavior…then the potential impact of PFM is unfulfilled. Too many consumer advocates focus on financial literacy. Knowledge without action, or change in behavior, is useless.” SOURCE: Ron Shevlin; Snarketing 2.0; “Finance Dot Data Dot Gov”; http://snarketing2dot0.com/2012/09/28/finance-dot-data-dot-gov/
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MB’ers Want PFM (Can Get It Elsewhere)
SOURCE: Javelin Strategy & Research; “Leveraging an Omnichannel Approach to Drive $1.5B in Mobile Banking Cost Savings”; July 2013
Preferred Source for PFM for Online Bankers (Past 90 Days) vs. Mobile Bankers (Past 90 Days) vs. All Consumers
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Mobile PFM is the segue from mobile banking to mobile shopping. 58
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Mobile PFM is the segue from mobile banking to mobile finance and loans. 59
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Mobile/digital wallets affect
where you shop, what you buy, and how much you pay.
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How much is at stake? 61
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SOURCE: “The Great Mobile Alliance” by Steve Mott; Digital Transactions; July & September, 2012
$1 Trillion
The
BIG
Question 63
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Who will control and monetize mobile marketing of payments data? 64
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The future is more about data than payments… 65
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Evolution of Digital Payments
Invisible Digital Mobile
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What does that future look like? 67
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Beware
what happens to your
data.
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Google Wallet: Merchant of Record SOURCE: Citi GPS: Global Perspectives & Solutions; “UPWARDLY MOBILE II A Long and Winding Roadfor Mobile Payments – Eight Crucial Questions, Answered”; November 2012
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PayPal: Merchant of Record
SOURCE: Citi GPS: Global Perspectives & Solutions; “UPWARDLY MOBILE II A Long and Winding Roadfor Mobile Payments – Eight Crucial Questions, Answered”; November 2012
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Your data
uniquely enables you to provide value with
integrity…
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…integrity
wins the race…
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Who Wins the Mobile/Data Wars? • Google? – “Here’s a business who sells what you’re looking for.”
• Amazon? – “Buy whatever you’re looking for from us.”
• Merchants? – “Buy, Buy, Buy!!!”
• FIs? – “We’ll help you decide whether, when, and where it makes sense to buy the stuff you want…in real time.” 73
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Lee Wetherington, AAP [email protected] http://discover.profitstars.com/leewetherington
@leewetherington
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