Meaningful CyberSafety Reform? Not Today.

VISAcard_MFPresident Obama today announced measures to ensure more secure transactions, which the White House has dubbed the BuySecure Initiative. The President endorsed chip and pin technology in a speech at the Consumer Financial Protection Bureau, saying that the UK saw a 70 percent reduction in credit card fraud after its adoption, and plans to apply the technology at the federal level to government credit cards and debit cards, and upgrade payment terminals at U.S. facilities to accept the new cards.

But the technology isn’t really new. Some form of chip technology has been used abroad for decades, while the U.S. continued to rely on magnetic stripe cards, which are easier to counterfeit. Chip cards store payment data within a microprocessor chip, and each transaction creates unique data which cannot be used for future transactions. They’re difficult to counterfeit, and definitely safer and more secure than what most Americans have been using–though as mobile payment options grow, you have to wonder how much longer chip and pin will be relevant.

So it looks like the Federal government is getting on board with more secure transactions. The White House also mentions that companies are joining this “national effort to improve transaction security” — stores like Target and Home Depot (both victims of data security breaches within the past year), as well as Wal-Mart and Walgreens. These retailers will roll out secure chip and pin card terminals in stores by January.

But these stores already committed to chip and pin, along with many major banks. After October 2015, the company that has the outdated magnetic stripe technology — the retailer or the bank — will be the one holding the bag if there’s a data breach. (I wrote about this in our 2nd quarter 2014 issue of Bank Director magazine, available here. Registration may be required.) Target stepped up its efforts after its infamous data breach late last year, and already planned a roughly $100 million investment in chip card readers at all its U.S. stores by the first quarter of 2015.

The White House also announced that “Citi, in partnership with FICO, will begin making credit scores available for free to its consumer card customers updated monthly online — joining the over 70 million Americans who already have access to this feature at other nationwide banks and card issuers.” (Emphasis my own). Again, no real news here: Credit scores are often included as checking account add-ons.

President Obama’s goal to protect Americans from identity and data theft is laudable. But I just don’t feel that much was accomplished today.

Emily McCormick:

How will disruptive competitors like Google, PayPal and Simple impact the banking industry? Bank Director Editor Jack Milligan explores this question.

Originally posted on The Bank Spot:

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I am writing a story for the fourth quarter issue of Bank Director magazine on the emergence of nonbank disruptors as potentially serious competitors for traditional banks in the personal financial services and payments space. I don’t want to tip my hand before the piece is published in late October, but I would like to share some of my preliminary thoughts. I love writing feature stories like this because they allow you to really dig into a subject. There are fewer magazines out there that still practice long form journalism, but Bank Director is one of them.

There has certainly been a lot of activity in the PFS and payments space of late. The disruptors have been very busy. (You should definitely read a string of insightful blogs on the nonbank competitive threat written by my colleague, Bank Director President Al Dominick, at AboutThatRato.) Here are some of the…

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Financial Research: Grappling with Technology

Bank leaders want to know more about how to leverage technology to make their institutions more profitable, but don’t know where to start, reveals the 2014 Growth Strategy Survey. Bank Director and CDW surveyed 145 independent directors and executives in June and July to uncover technology’s role in growth strategy.

Growth-Survey-Group-1Bank leaders know that technology can make their banks more efficient, and know that customer demands are only growing. But less than one-third talk about technology at every board meeting, and one-quarter of banks lack the IT staff to grow the bank.

Growth-Survey-Group-4When asked about the top technology concerns for their banks, keeping up with the evolution of mobile banking is a concern for more than half. Data analytics is also top of mind, and the survey finds that big banks are better users of data. Forty percent of respondents overall use business intelligence tools and analytics within their organization, but more than three-quarters of banks over $5 billion in assets currently use data to support growth goals.

Growth-Survey-Group-2One-third are concerned that the bank’s core processor impedes the bank’s ability to innovate. Community banks in particular depend on vendors for their technological expertise, yet half say that their core processor is slow to respond to innovations.

Growth-Survey-Group-3It’s important to note that many of these concerns about innovation and the use of data tie into growing concerns about competition from outside the industry. Eighty-four percent of respondents say that today’s highly competitive environment is their greatest challenge when it comes to growing the bank, and 83 percent worry about nonbank competitors. Banks above $5 billion in assets reveal a heightened concern about PayPal and Amazon.

Full survey results are available online at BankDirector.com.

The Growth of the…Branch?

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The American Bankers Association just released survey results that say that the number of Americans that prefer to bank within a branch actually grew within the last year. Americans opting for internet banking fell by 8 percentage points, while the number who prefer to meet their banking needs through ATM or mobile each grew slightly.  The ABA theorizes that recent technological advancements made within bank branches have made the channel more efficient and therefore, more attractive to customers.

Reflecting the view across the pond, Accenture released a study last month, focusing on the UK financial services industry, with similar findings–online banking remains steady, while the use of branch and mobile channels grow.

There are certainly branch success stories for community banks in the U.S., and most of these involve a transition to self-service, whether through the use of image-enabled ATMs or video tellers. Kennebec Savings Bank uses image-enabled ATMs to handle one-third of the bank’s deposits, and the machines allow the bank to expand in its market through self-service branches more cheaply  than through a traditional branch. And Conestoga Bank opens two-to-three times more accounts each quarter through video tellers. (For more on how these banks are using technology in the branch, please read my contribution to Bank Director magazine’s innovation section, “Will Video Kill the Teller Line?“.)

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Emily McCormick:

Love this behind-the-scenes look at the latest issue of Bank Director magazine.

Originally posted on The Bank Spot:

In the world of magazine journalism, there are few things more important than the cover story. I believe this is still true in magazine publishing today, although the importance of the cover story might eventually join the typewriter and 35mm camera as relics of the past as digital magazines become more prevalent.  Most webzines, whose designs are often indistinguishable from any other website, would never devote all that precious space on their home pages to one story.

When I was a newspaper reporter, my goal was to get on the front page as often as I could. Above the fold was good. The upper right hand corner, as the lead story, was better. A story that ran across the entire top of the front page under a banner headline was like hitting the lottery.

I have spent most of my journalism career in magazines, either with a monthly or now…

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Emily McCormick:

Al Dominick ends his excellent five-part series on non-bank competition.

Originally posted on About That Ratio:

This is the fifth and final piece in my series on emerging threats to banks from non-financial companies — one that shines a light on the pooling of money from many different people to make an idea happen. Click on any of these titles to read my previous posts: For Banks, the Sky IS FallingPayPal is Eating Your Bank’s LunchThe Bank of Facebook and Is WalMart the Next Big Bank.

Next week kicks off Shark Week on the Discovery channel… maybe you’ve been inspired by the endless commercials hyping this programming during Deadliest Catch?  Perhaps so inspired that you’ve come up with a brilliant new idea that just needs some money to get it off the ground!  As a creative type (you watch Shark Week after all), you can’t be bothered with your community bank’s draconian business loan process.  No, you want to start right away and are…

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Are You Part of the Conversation?

origamibirds_MFYour financial institution may be the heart of its community, but once the conversation goes online, does your bank follow?

The Financial Brand published a piece earlier this week on the 5 LinkedIn Myths Bankers Need to Shake, detailing research from consulting firm St. Meyer & Hubbard and marketing technology firm kadince.com that found that more than half of banks forbid their bankers to craft relationships through LinkedIn.

This is just the latest study that highlights the problematic relationship between banks and social media. A year ago, Bank Director, in its 2013 Bank Board & Executive Survey, found that less than half of banks engage with customers through Facebook or Twitter.

Yes, there are risks in social media engagement, so your bank does need a plan. Your bank might not be on social media, but your customers are. Social media monitoring service mention says that the average company is mentioned 39 times a day and almost 300 times a week. Of these, few talk directly to the company — meaning that they won’t be talking to your bank, but they will be talking ABOUT your bank.

And in a today’s competitive environment, you might want to pay attention to the social media conversations that consumers are having about other banks in your market. According to Forbes, Verizon and AT&T are monitoring complaints about competitors like T-Mobile so they can reach out to these unhappy customers and offer their own services. Media Bistro examines this further, saying:

If you’re not using Twitter to listen to customers, you’re missing out on one of its most significant benefits. Since Twitter is an open network, you have the opportunity to use tools and search to discover what anyone is saying about any topic, in real time.

Verizon is focusing its efforts on those users that are seen as “influencers” – Twitter users that have a lot of followers. Who are the influencers in your community, and where are they? If they’re not on Twitter, they’re likely on LinkedIn, a social network built entirely around business leaders. Don’t you want to be where your customers are? Because it’s likely that your competitors will be.