The Daily Dividend: Industry News

News, notes and insights from around the industry

SEPTEMBER 25, 2017
Age is Only a Number
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

age is only a numberHow do people access their bank accounts? Does it make a difference if they’re a young professional that never writes checks or a retiree with who mistrusts websites and apps? Yes—but not as much as you might think.

40% use internet to check their bank account.
26% use mobile.
18% go to bank branches.
ATMs, telephone, and mail are the least popular choices, with single digit percentages.

New research from ABA shows that while customers 55 and over definitely prefer branches more than customers 54 and younger, the brick-and-mortar option is no one’s first choice. In every age group, mobile or internet banking took top honors as most used method of banking.

For customers ages 18-44, mobile is their favorite way to access their accounts, with internet in second place. For 45 and up, internet takes top honors. In the small group of 45-54, mobile was second choice, but for 55 and up, the second choice was branches.

It seems that even older generations have embraced technology and prefer the convenience of checking their bank account on the computer.
 
SEPTEMBER 22, 2017
Friday Hot Links: Millennial Edition
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

friday hot links millennial editionResearch says that Millennials in the U.S.:

Currently account for more than $1 trillion of consumer spending
Will soon make up one-third of the adult population
Will make up around 75% of the workforce by 2025

No wonder so many businesses are obsessed with understanding Millennials and finding out what makes them tick. Here’s some weekend reading to shed some light on this mysterious generation.

Millennials want instant access
New research shows that Millennials want constant access to banking services and expect immediate gratification – not surprising for a consumer segment that prefers to transfer money online and says in large measure (60%) that it can go up to a full year without writing a check. To win over Millennials, your mobile app should be fast and easy to use.

Millennials are scared to invest
New research finds that 20% of Millennials say they will never invest in the markets, and 53% will never be comfortable investing in the markets. Perhaps their local community institution could help them find the link between healthy financial habits and greater investing confidence?

Millennials love apps
Providing financial education Millennials can access online, whether through a mobile app or on a website, might be the key to winning their business. Millennials are more interested in building a financial future than some studies might suggest, but they like to do it on their own time (see above: instant gratification). Providing them with the right resources could go a long way to making them not only loyal customers, but better customers.
 

SEPTEMBER 21, 2017
The State of Chat
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

the state of chatIf AI is the wave of the future, then chatbots are at the vanguard as they become more and more prevalent in online customer service. With Siri finding phone numbers and Alexa transferring money for consumers already, how are chatbots infiltrating financial institutions

In a consumer survey from earlier this year, only 11% of respondents said they would trust a chatbot to give them mortgage advice. When making major decisions, customers still want to talk to a human.

AI still has a hard time parsing the slang and context-dependent social cues of human communication. No matter how much information it has, a chatbot can still misinterpret common turns of phrase or simply not have the answer that a customer needs. 

As a cautionary example, USAA developed a chatbot with a set of 10,000 answers that still struggled. After more study, the company found that a smaller set of more developed answers (around 3,000) was more effective, but it’s still having trouble finding the sweet spot of what customers are actually searching for.

Chatbots currently have the most potential to fill the space between a financial institution’s website and its frontline employees. If it’s hard to find an answer on a website but the problem doesn’t warrant a trip to the branch, chatbots could be the answer to simple tasks like replacing a missing card.

 

SEPTEMBER 20, 2017
Spanning the Breach
By Hilary Collins, Assistant, Research and Publications, Financial Managers Society

spanning the breachOne of the most important benefits community institutions can deliver to their customers and members is a sense of security – not only for their finances, but for their personal information as well. Privacy in the age of technology is more important than ever, and there are some important lessons to be learned from the recent Equifax breach.

Make it harder for hackers.
As the benefits of using data to help build customer relationships, make big decisions and more become ever more apparent, it is likewise becoming obvious that as we save, stockpile and sort data for our own purposes, we’re building treasure troves for hackers. As data becomes more accessible and attractive within our own organizations, it’s important to ensure we aren’t making it more accessible and attractive to hackers. 

Use more than one layer of defense.
Prevention is important, of course, but having plans in place to mitigate the damage and immediately begin recovery in the event of a breach are essential parts of a good cybersecurity program as well. One mitigation technique is separating sensitive data into smaller chunks and protecting those chunks behind different walls, so one hack is unlikely to access a large amount of information.

Make sure your response helps instead of hurting.
A ham-handed response to a major breach can do more harm than good. A strong plan should restore and improve defenses, help the customer and set the correct tone moving forward. On the other hand, a bad plan can alienate customers, hurt an institution’s public image and permanently weaken both reputation and profitability.

You’ll find more tips on cybersecurity in the cover story of the latest issue of FMS forward, our member magazine.
 

SEPTEMBER 15, 2017
Friday Hot Links
By Mark Loehrke, Editor, Financial Managers Society

hot linksAutumn may be right around the corner, but there’s still time to fire up the grill and enjoy a few hot links from around the industry.

Building an IA Analytics Program
We’ve got a terrific data analytics story on tap for the next issue of FMS forward, but in the meantime take a look at this worthwhile primer on how to build an analytics program for internal audit.

Modernizing Compliance
So it turns out the heavy regulatory scrutiny in the financial services sector has resulted in at least one perhaps unexpected development – the banking industry is now apparently seen as a prime example of how to keep up with shifting compliance requirements. After you’re done patting yourself on the back, though, remember that you’re only as good as your next examination – a great reason to keep in mind the six questions you should be asking about your compliance program.

Rethinking Loan Origination
Millennials may be more open to personal loans than many surveys have previously suggested, but they’re still not terribly excited about walking into a branch to get the process the started. So it may be time to rethink your institution’s lending process – and what it looks like to the next generation of borrowers.        

 

SEPTEMBER 14, 2017
The Tech Lowdown
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

the tech lowdownEver wonder where your institution stacks up in terms of technology? New research from Bank Director offers a chance to do some peer comparisons against respondents from banks with over $250 million in assets in the areas of technology budgets, data analytics programs and overall digital savvy.

The majority of respondents consider themselves followers rather than leaders in tech, with 62% noting they consider themselves “fast followers” instead of early adopters, and 27% admitting their institution was simply slow to implement new technology. Not surprisingly, banks with $1-$5 billion in assets were more likely to consider themselves industry leaders than those with smaller asset levels.

Out of the banks that were slow to implement new tech, over a third said they struggled to attract tech talent (39%), while another third said they can’t support innovation on the back end (36%) and 19% said that technology simply wasn’t a priority for their Board or management team – a reminder of how difficult it can be to move ahead without support from the top. That lack of support could stream from a lack of understanding, as more than half of respondents (56%) do not believe their Board members have sufficient technological expertise.

Another section of the survey posed the question of who’s in charge of tech at banks, with 67% of respondents noting that all of the business lines at their institution understand and chip in on the technology budget – with the IT department as a partner in the process – while 30% said IT leads the process mostly on its own. As far as outside partnerships with fintech startups, 46% of respondents hadn’t seriously considered it, but an additional 45% were open to it. 

Banks have taken notice of the importance of data analytics, and many are making personnel changes to address this growing trend – including the 20% of respondents who said their institution has hired new employees to focus on data, and another 20% that have shifted some current employees to analytics-related projects. Yet while many institutions seem to be adding data analytics staff, they don’t seem to be putting their financial weight behind these endeavors – while a total of 84% of survey respondents have either hired new staff or had existing employees devote some of their time to data, 82% don’t think data analytics is getting enough of the technology budget. 

In the big picture, it might be time for banks to decide if they’re happy being a follower or if they want to get ahead of the curve – and for those institutions who barely participating in the tech race to take a hard look at what that might mean for their future going forward.
 

SEPTEMBER 8, 2017
Friday Hot Links
By Hilary Collins, Assistant, Publications and Research, Financial Managers Society

hot linksTGIF! Enjoy some great industry reads this weekend.

Successful succession planning
When it’s time to say goodbye to talent at the top, having a healthy succession plan can help ensure a smooth farewell – start by identifying the three critical areas of succession planning.

Connecting with customers
Unified communications can be a new way to look at how you interact with your customers – and how you can ensure every channel of your institution offers the same experience. 

Accounting for accounts receivable
Accounts receivable is often overlooked, but there’s a convincing argument that changing how you handle AR – namely, through automation and new technology – can have a big impact on cash flow and efficiency. 

 



Contributors


Mark Loehrke
Writer/Editor
Email: markl@fmsinc.org 



Danielle Holland
President/CEO
Email: dholland@fmsinc.org 



Autumn Wolfer
Director, Membership and Marketing
Email: awolfer@FMSinc.org


Hilary Collins
Assistant, Publications and Research
Email: hcollins@FMSinc.org