Maine Banker March/April 2013 : Page 6
Prediction 2 — Small Banks Get Serious About Small Business In 2013, bankers will seek to expand their small business relationships by “banking the family,” which will include business owners, their families and their employees — the work family. By offering a full-service banking package, complete with mobile banking via smartphone and tablet, inter-faces to QuickBooks and other leading small business accounting systems, as well as PFM (personal financial man-agement) solutions, bankers will cement these profitable, long-lasting relationships. One obstacle that remains to executing this strategy is many banks’ inability to define the customer relationship and offer a summary view. Legacy systems still customer information file (CIF)-based will require a database re-boot to meet the sophisticated demands of tech-savvy business owners who expect their bankers to know them by more than just their account numbers. Community banks will benefit from missteps made by their big bank brethren whose fee structures con-tinue to contain more sticks than carrots. mitigate risk of account takeovers and resulting ACH and wire fraud. Prediction 4 — The Checking Account Gets Modern Despite the technology available, some banks’ checking accounts operate no differently than they did 50 years ago. Driven by consumer demand for conve-nience, the checking account will undergo an extreme makeover with better access and increased use of technology chan-nels. Prepaid cards such as Bluebird, a joint venture by American Express and Walmart, will force bankers to break out of their comfort zone and make the checking account the feature-rich centerpiece of the customer relationship. Email and text alerts, subaccounts for family members, remote deposit capture via smartphone, mobile photo bill pay, person-to-person (P2P) payments, customized debit cards and free ATM access will all become expectations by today’s advanced consumer. Long a difficult sell for most banks, bill pay will see revived interest as cus-tomer fatigue over frequently reissued credit cards (due to third-party security breaches) causes cancellations of the bill pay via credit card pull and stimulates conversions to a lower maintenance bill pay push from checking. Innovations in small business credit, such as Google’s AdWords Business Credit Card, will force bankers to offer qualified small business owners easier access to credit through a variety of specialized channels. Bank surrogates such as SmartyPig, Mint and Simple will push bankers to birth some of their own new, high-tech apps for visual banking via mobile devices. Less focus on systems and compli-ance and more focus on utility and customer experience will blast the rust off the checking account and help banks compete with the increasingly innovative products and services of non-banks. Also, expect banks to begin dispensing prepaid cards at ATMs to answer Bluebird’s call to the banked and the unbanked. According to a 2012 NerdWallet study, the average prepaid card charges nearly $300 in basic fees each year. Bankers will reel these lost customers back in with their own ver-sions of prepaid cards (in the slow-dying plastic form and in new smartphone apps) as an extension of the checkbook. Prediction 5 — Strategic Technology Planning Becomes Critical to Bank Survival After years of playing the waiting game with many tech projects put on hold or grossly underfunded, bank CEOs will call on their IT people to become more strategic to help banks grow. IT should be a means to an end, not an impediment to progress. Those who craft strong strategic technology plans will map a course for success. Smart bankers will realize that operations and technology benchmarking is a futile exercise designed to make their banks followers. Instead, they will look inward to the individual bank’s produc-tivity, efficiency and decision-making ability to craft strategies and monitor performance unique to the bank, its customers and its markets. The proper inward focus on what makes the bank successful will trump an overly outward focus on the competition. As Ralph Waldo Emerson said, “Do not go where the path may lead, go instead where there is no path and leave a trail.” Prediction 3 — Security Strategy Becomes as Important as Security Tactics As recent security breaches have shown, security is no longer a minor issue relegated to matters of password composition and acceptable use policies. Security has become a strategic issue that can make or break a bank or a technology provider. Expect more banks to develop security strategic plans as data loss prevention (DLP) programs complement banks’ information security programs and other risk management efforts. Bankers will realize that security at out-sourced providers is just as important as security within their banks. It doesn’t matter where the hardware or the data resides physically, the responsibility for security cannot be outsourced. Technology providers will be pushed to answer tough questions and prove adequate controls beyond the basic SSAE 16 (formerly SAS 70) requirements and reporting. Cybercrime will increase as crimi-nals get more sophisticated, networks become more open and data becomes more mobile. Small business customer relationships will require collaborative security awareness education to help  s -!).% "!.+%2 Prediction 6 — Effective Vendor Management Exposes the Pretenders and Rewards the Performers Faking sincerity won’t cut it anymore. Bankers will require their providers to demonstrate and deliver value, not just talk a good game, as they inventory their contracts and determine what they bought and what they got sold. As we tell our clients who engage us for system selection help: (1) Have a compelling reason to convert, otherwise don’t; and (2) the incumbent is the leader until unseated. In 2013, expect more compelling reasons and more incumbent fumbles. Recently, during a system selection engagement, a relatively new core processor refused to answer the bank’s request for proposal (RFP), which was very brief but required the vendor to answer certain questions in writing. The vendor’s refusal smacked of the quote, “Ask me no questions and I’ll tell you no lies.” Some attribute that quote to the Anglo-Irish novelist, playwright and poet Oliver Goldsmith, but the more cultured among us prefer to credit Ernest T. Bass from the Andy Griffith Show . Clearly, this vendor did not want to be subjected to the scrutiny that the RFP required. That -!2#( s!02),  
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