Why Is It Still Called a Checking Account?
Mobile Commerce: A New Way to Bank and Pay
Our Financial Services Practice Is Expanding
Welcoming Andrew Gorrin
2007 Fed Payments Study Release Pending
Dove in the News: Heavy Debit Card Use Raises Fraud Alerts
We’ve Moved!
Current Issue
Issue #22
Issue #21
Special Issue #2
Issue #20
Issue #19
Issue #18
Issue #17
Issue #16
Issue #15
Issue #14
Issue #13
Issue #12
Issue #11
Issue #10
Issue #9
Issue #8
Special Issue #1
Issue #7
Issue #6
Issue #5
Issue #4
Issue #3
Issue #2
Issue #1
Hitachi Consulting
2 Atlantic Ave
Boston, MA
02110 USA
617-482-2100 P
617-482-1470 F
Website
E-mail
Issue #21
Although industry nomenclature continues to emphasize the paper-based legacy of banking services (checking accounts, ‘free checking’, ‘basic checking’, etc.), we are living in an increasingly electronic world. And we are now entering the next phase in the migration to electronic account access: mobile banking. In the future, electronic account access will no longer be tied to a PC or self-service terminal, but will be available in the palm of a customer’s hand, wherever they (or their phone) happen to be.
In this issue of On Payments, we share our perspective on two topics: 1) the opportunity FIs have to rebrand their DDA offerings to align with consumer preferences and to differentiate their customer value proposition; and 2) the trends and developments shaping the evolution of mobile banking and payments—and why everyone in the financial services value chain needs to pay attention.
To sign up for an online subscription to On Payments, please click here.
Why Is It Still Called a Checking Account?
Consider the following facts:
 |
Checks now account for less than 20% of the transaction mix of most retail banks, and check volume is declining by 4+% annually. |
|
Debit is by far and away the big growth driver, adding anywhere from 15 to 25% per annum for retail banks. |
|
The majority of DDA accounts in the U.S. continue to carry ‘checking’ as a lead brand, often modified by words like regular, free, or premier. In fact, 47 of the 48 free checking products offered by the 50 largest banks in the U.S. brand these products ’Free Checking’ or some near variation. |
Despite the fact that consumers have changed their behavior and have replaced many of their checks with either debit or bill pay, we as a banking industry have continued to brand DDA accounts with the word ‘checking’. It’s traditional and it’s certainly not going to raise any eyebrows, but is it as safe as we might think? We would say not. We think that retail banks are inviting innovative competitors to enter the DDA business with brands that strike a more emotional chord with retail customers. In essence, we believe that the ‘checking’ brand could go the way of the ‘MP3 player’ brand, and be replaced by the equivalent of the ‘iPod’ brand. The implication of this is significant – the likely innovator of both a new and edgy brand along with a new and edgy ‘checking’ account product will most likely not come from within the industry.
To read the full article, click here.
Mobile Commerce: A New Way to Bank and Pay
Most of the freshmen who started college this year were born in 1989. As far as they’re concerned, Wal-Mart has always been a larger retailer than Sears and has always employed more workers than GM. They get much more information from Jon Stewart and Stephen Colbert than from the newspaper. High definition television has always been available, and they grew up with bottled water. They have never “rolled down” a car window, and avatars have nothing to do with Hindu deities.
These are just some of the ‘fun facts’ about the Class of 2011 highlighted in Beloit College’s annual Mindset List, which attempts to illuminate the worldview of today’s 18-year olds. Not surprisingly, many of the attributes on the list relate to technology: these students have always had access to the Internet (and high speed access at that). Online networks like Myspace and Facebook rule their social world. Cell phones and integrated wireless devices are basic life necessities. They are totally connected at all times.
In the banking world, a new wave of technology is rapidly approaching that will capitalize on the technographic shift taking place, and it has the potential to revolutionize how consumers conduct their banking activity and pay for goods and services. Mobile commerce is quickly becoming a reality for both banking and payment activities, and every player across the financial services value chain must take notice.
If you turn on your on your TV, you can’t help but see the commercials demonstrating the numerous features and functions of the new Apple iPhone. Although the technology behind many of these capabilities has been in place for some time, the release of new products such as the iPhone is enhancing awareness of mobile capabilities and changing how the general public thinks about what they can do with their mobile phones. This is good news for financial institutions (FIs) and others within the financial services industry looking to push mobile commerce—which includes both mobile banking and mobile payments—into the mainstream.
Although mobile commerce is still in its infancy, it has a solid base from which to grow. Awareness of new capabilities is increasing and customers are embracing new functionalities available on their mobile phones. With these pieces in place, it is only a matter of time before mobile commerce moves into the mainstream and financial institutions need to begin planning now for this new technology or risk lagging behind their competitors.
To read the full article, click here.
Our Financial Services Practice Is Expanding
We are excited to announce that we are restructuring our Financial Services practice to create a national Financial Services practice within the broader Hitachi Consulting organization, which we believe will enable us to meet your needs in ways not possible before. We will continue to provide strategic and research services, but we will also be able to offer systems development, implementation, and integration services as well as outstanding business intelligence solutions as we leverage resources within the much larger Hitachi Consulting organization.
For more details, click here.
Welcoming Andrew Gorrin
We are pleased to announce the latest addition to Dove Consulting’s Financial Services practice, Andrew Gorrin.
Andrew joins Dove as a Senior Manager. For the last 5 years, Andrew has been with American Express, most recently as a Director in charge of High Value Customer Acquisition in OPEN from American Express, the company’s small business card issuance group. In this role, he developed strategies to penetrate key high-margin industries within the prospect universe and led a team that managed the acquisition channels that resulted from the strategy. Prior to American Express, Andrew attended Georgetown University, where he received his MBA from the McDonough School of Business.
Andrew can be reached at agorrin@doveconsulting.com or
617-357-7918.
2007 Fed Payments Study Release Pending
In early December, the Federal Reserve Bank of Atlanta expects to release the high-level results from the 2007 Payments Study.
This landmark study is the third in a series of studies measuring non-cash payment trends in the United States. Conducted in 2001, 2004, and now 2007, the Payments Study estimates the volume and value of electronic and paper check payments originated during the calendar year 2006. The research gathered data on credit cards, debit cards, automated clearing house (ACH), electronic benefits transfer (EBT) payments, and paper checks.
More detailed reports from the study are expected be released in the December 2007- February 2008 timeframe.
Dove in the News: Heavy Debit Card Use Raises Fraud Alerts
The Boston Globe recently ran a feature article on rising debit card use—and corresponding increases in debit card fraud—citing results from our 2007 Debit Issuer Study. The article focuses specifically on the conflict between signature debit and PIN debit, and the potential trade-off FIs make between interchange and security when promoting signature debit over PIN.
To read the full article, click here.
We’ve Moved!
Our new address is:
Dove Consulting
2 Atlantic Ave
Boston, MA 02110
Please update your files accordingly.