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“Every new idea looks crazy at first”
(Attention e-banking/payments product or security managers: ready or not, customer-controlled accounts are coming)
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The quote “Every really new idea looks crazy at first” is attributed to both Alfred North Whitehead
and Abraham Maslow, but regardless of who said it this truism applies to financial services, payments
and security managers right now because limits and controls on account usage is shifting from bank to
account holder.
Banks are still playing the “man behind the curtain” role with accounts, not giving
the customer the ability or permission to simply determine, in advance, how “their” deposit, payment,
investment and other accounts can be used. At stake is adoption, selection (to use card industry parlance),
cross-sell, and loyalty, and the first provider that makes it easy for customers to feel the most control
is set to gain big at the expense of competitors. (Yet to digress, even if I were able to predetermine
how my bank or card account could be used in advance, all that peace of mind and transaction-shift will
remain simply as a drawing board concept because of usability issues.
As you board a large commercial
aircraft, have you ever momentarily stared to the left, into the cockpit, to witness the jaw-dropping
complexity that keeps us mere mortals from flying even a Southwest 727? Even if customers could go online
to prohibit unwanted foreign transfers to their card or make sure the card doesn’t get turned off on
their next trip to Brazil, our rudimentary usability practices would make the consumer’s control panel
look like that set of cockpit controls, thus barring adoption.)
Back on point, there’s a market waiting
to explode in what we’ve coined as UDLAPs (User Defined Limits and Prohibitions) and IFMs (Interactive
Financial Messages, or two-way alerts that update consumers on selected conditions within their accounts).
We’ve been calling for changes in these two areas for years, and I invite clients and readers to hold
me accountable on the following data-derived belief: by the end of this decade, bank customer activity
and industry vendor success will begin to measurably be determined by how much is invested in UDLAPs
and IFMs. These two areas are the next spending wave, like what we saw in bill payment (or have yet
to see in aggregation). Banks can’t afford to build UDLAPs and IFMs on their own, vendor platforms are
a natural, and customer profitability will be determined by how well and how fast they are deployed.
Watch for our Banking Safety Scorecard, available Wednesday the 7th to non-subscribers, or 9:00 am PST
November 2 to Javelin subscribers. A credit Card issuer’s version of the Safety Scorecard report (both
of which compare top institutions based on their availability of UDLAPs, IFMs, and many other vital
features) was published a few months ago. Additionally, our report on what IFMs look like has been released
and subscribers may access that now.
Get on board with UDLAPs and IFMs, because they will change everything about the profitability of customer
relationships, giving account holders the feeling of control they so desperately crave.
Written by James Van Dyke, President and Founder, Javelin Strategy and Research, November 2, 2007 Javelin
Strategy & Research is the leading independent provider of quantitative research focused exclusively
on financial services topics. Based on the most rigorous statistical methodologies, Javelin conducts
in-depth primary research studies to pinpoint dynamic risks and opportunities. Javelin helps its clients
achieve their business initiatives through three service offerings, including syndicated research subscriptions,
custom research projects and strategic consulting. Javelin’s coverage topics include security, risk,
fraud, compliance, payments, mobile and multi-channel financial services. The company’s client list
includes some of the largest banks, credit unions and card issuers, as well as significant technology
enterprises in the financial services industry.
For more information please visit: http://www.javelinstrategy.com
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