MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Social media’s disruption of communication is overwhelming financial institutions and creating confusion about which social networks they should focus on. Instagram, a mobile app based photo and video sharing platform, has skyrocketed to 300 million active users thus surpassing Twitter and making Instagram an important global media platform. But the pace of change and the mind boggling competitive dynamic in the social media industry is confusing to more conservative institutions like banks and wealth managers.

As our recent report Social Media for Banks and Wealth Managers: 2014 shows, it’s especially difficult to get banks to understand the significance of social media and the relevance of different social media platforms. 95% of the banks under evaluation have launched Facebook and Twitter presences but only 45% of them have an Instagram official photo stream.

Visual social media has become crucial in developing a good social media strategy. Unlike their more text-based siblings Facebook and Twitter, these channels give access to individual images and images are known to appeal to emotions and tell a story that is easier for consumers to connect with than informational texts. It is this emotional connection that distinguishes a brand, a service, a product, or a company from its competitors. Citi or Crédit Agricole are good examples of banking players that have well-structured Instagram presences with strong corporate images and entertaining posts.

As for those who have not yet joined the bandwagon: photo-stream us! Make us stare, meditate, laugh, frown, and get interested in your brand!

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(by Francis Groves, Senior Analyst)

Social Media Charter, formed in August to help the UK’s financial services industry to use social media compliantly and effectively, is holding a Summit event at the House of Lords on the subject of using social media responsibly.

Interviewed on the BBC this morning, Kitty Parry, the Social Media Charter Chief Executive, highlighted the upside of social media for the banking industry, including the interesting statistic that customer service interactions provided via Twitter and Facebook costs banks (presumably UK ones) an average of 75 pence a time, compared with a cost of £4.75 for an equivalent interaction conducted over the phone. She went on to mention the empowering nature of social media for bank customers as a way of comparing customer service and products between banks.

In our recently published report on ‘Social Media for Banks and Wealth Managers: 2014′, MyPrivateBanking finds that the leading banks globally are indeed focusing heavily on customer service functions in their approach to social media. In our report we provide detailed coverage of the most effective customer service strategies that our analysts encountered and the lessons to be learned from them, as well as information on how much customer query/complaint traffic is now going to banks’ social media presences. However, we also found that very few banks are using social media effectively to showcase their products and services, even new offerings. Although fear of infringing regulations in relation to marketing and social media may be one inhibiting factor, we see a more general lack of social media vision and a pervasive defensiveness in relation to their reputations as the main drag on effective involvement with social media.

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Digital channels are gaining ground when it comes to communication between affluent/high-net-worth individuals and their financial advisors. A substantial minority of around 20% - 30% already communicates with their financial advisor via instant messaging providers, video chat, social media, and screen sharing. These data are from our latest 2014 Wealth Survey, covering China, the US, UK, Germany and France. Yet, the most striking insight is that the wealthiest group – high-net-worth-individuals with more than 1 million USD of investable assets – are the most tech-savvy when it comes to digital communication. Around 40% of this client segment state that they are using messengers and video chat predominantly when communicating with their financial advisor.

Implications for wealth management firms are disruptive: Advisors need to be ready to use new digital channels, and security and compliance issues need to be addressed. However, in the long-term there are even more profound consequences. If communication moves from analogue to digital, it becomes possible to use software for automating communication and answering inquiries. Robo-advisors are already automating portfolio allocation. It’s not unthinkable that they will also automate client communication in a not too distant future.

For more learnings and insights, get our 2014 Wealth Survey including 289 data slides.

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(by Francis Groves, Senior Analyst)

In our most recent report on Social Media in Banking & Wealth Management, MyPrivateBanking highlighted the arrival of payment processes that use social media channels, specifically the introduction by BPCE and its S-Money subsidiary of a payment service for Twitter users. This service was launched in October and is initially focused on facilitating payments in a social context such as crowd-funding, friends clubbing together to buy a gift or charity fundraising. Go to the @SmoneyFR Twitter stream at the moment and you will find them promoting the AFM Telethon campaign to raise money for families affected by rare neuromuscular diseases (especially in children) - “@SmoneyFR #envoyer X€ @Telethon_France.”

The new service is reported to rely on standard security within the payment/credit card industry. Payments to another individual are limited to €250 and are not (yet) confidential. In the future payments by direct messaging may be available. Although some reports indicate that the service is a collaboration with Twitter, we understand that it is in fact an initiative of BPCE/S-Money on their own, using publicly available Twitter documentation.

But Twitter payments are only one part of the range of recent initiatives by S-Money. At the beginning of the year they signed up with the Visa subsidiary V.me, which will allow customers to store their card details - securely - in a single place.

Then in February, ‘Dilizi’ a new system that turns merchants’ smartphones or tablets into card payment systems, was announced. This new system is particularly attractive to traders who work away from their own premises a lot, such as plumbers. It could also be used in raising money for good causes.

One particular segment of French society that has come into S-Money’s orbit this year is the country’s student population. In July, Crous, the state-owned provider of university services (such as canteen meals) chose S-Money as its e-payment manager. So, potentially, 1.6 million young people are likely to become familiar with S-Money.

At a time when there has been talk of payment processing slipping out of the hands of traditional banks, it is interesting to see that BPCE seems to have the expertise, the financial resources and corporate courage to put the understanding that it has of its home market to work to buck that trend.

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The question is not if there will be wearable banking but rather when it will arrive in the mass market. While wearable activity trackers already observe every step of an increasing number of people, the use of wearable mobile devices (other than smart phones or tablets) for financial matters is still in its early stages. But there are a few financial services apps already out there for Google Glass and smart watches. Just check here, here and here. These are the early movers but there is no doubt that others will follow soon.

It’s not clear yet which apps and which devices will ultimately be successful: It could be devices like Google Glass, smart watches, or even bracelets for taking the role of contactless payment tools. Even more far-fetched ideas might ultimately come to the market. Why not a partnership between a big fashion house and a stock broker. Earrings, which discretely start to vibrate when stocks fall below a certain level certainly could find their buyers. Therefore, continuous research among its client base, rapid prototyping and closely watching its competition should be on every bank’s critical path to their next breakthrough mobile app.

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Don’t miss our new report on the digital behaviour of 1000 survey participants from China, UK, France, Germany, and the US. This survey paints a comprehensive picture of the attitudes and the behavior of the wealthy with regard to mobile technology.
Some key findings:

Chinese affluent and wealthy clearly win the race for most technology friendly respondents…

… BUT the rest of the world is about to catch up: particularly the UK survey participants surprise with their technology affinity

The trends apply to all wealth segments – for several criteria, the high-net-worth segment even is in clear lead

All age groups under 55 are heavy users of mobile technology for financial matters

Get ready for these and many more surprising results published in our new Wealth Survey!

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News about the release of Snapcash surely came as no surprise to us at Myprivatebanking Research. The integration of social media and payment systems is successfully growing and clearly challenging traditional payment players like banks, credit card providers, and older online providers like PayPal. Whereas rumors have made rounds for the last months about Facebook’s plans for a mobile payments system using its Facebook Messenger iPhone app, another popular social messenger provider has stolen the thunder: Snapcash, the product of the recent collaboration between Snapchat and Square Cash (a mobile payments company headed by Twitter co-founder Jack Dorsey), is the latest mobile payment option that allows users to send money to friends via the app by simply typing dollar amounts into new “Snapcash” messages. For now, Snapcash is available to Snapchatters in the United States who have a debit card and are 18 or older.

Trying to keep up the pace with consumers’ increasing demand for highly innovative and convenient products, successful offers like Snapcash or Applepay challenge the banking industry to come up with similar or better solutions. It is true that banks must deal with stricter regulatory guidelines but they should also be aware that consumers have more choices than ever and won’t wait for banks to catch up. But banks – across the globe – seem not to have a strategic response. Will they get frozen out of the online payments markets like music labels have failed to conquer the online music business and traditional book stores never were able to challenge Amazon in online book selling?

Very few banks have already invested in convenient mobile payment solutions aimed at improving the customer experience. Barclays’ Pingit app is one exception. Users can send and receive money via the app without sharing bank account details and even send gifts to friends. But Barclays is the exception and not the rule in the banking industry. Will they finally give up this market to the tech players?

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(by Francis Groves, Senior Analyst)

Visual Media seems to have grown exponentially in the last few years. Instagram and Pinterest only date back to 2010 and 2011 respectively but as far back as June 2013 Pinterest has had second place - after Facebook -  as a driver of traffic on the Internet.

The power of images is often that they tell a story and, as advertisers have known a long time, pictures undoubtedly have a power to pull people’s attention. And people can process images very rapidly. For social media this has meant that all social media presences are becoming increasingly visual. Just think how rapidly images have crossed into LinkedIn and, especially, Twitter. And Facebook is now one of the Internet’s largest stores of images. Not only have images become ubiquitous in social media, the presences that specialize in images are highly effective. Buying rates (the proportion of buyers to visitors) are significantly higher for Pinterest than Facebook, as is the willingness of Pinterest visitors to affirm they are positively engaged by brands through Pins.

So where does this leave the banking industry with its somewhat abstract products and services?  Visual social media guru, Donna Moritz, lists four especially effective uses that images can be put to in social media: handy tips, how to advice, catchy quotes and checklists and a fifth, infographics, which is also effective but not in Moritz’s top 4. So, the secret of successful images could, it seems, be summed up in a word, ‘Advice’. But of these 5 tactics, banks - and then only a few of them - really only seem to be good at infographics. In the finance industry, if you want advice, you go to a YouTube channel or the blog page on the website because we all know that financial advice is complicated; it takes time to explain it and

So it seems as if banks are not yet quite getting the point of visual social media. No, you can’t say very much at a time through a picture or a graphic but the little you do say could have immense pulling power and visual social media sites like Pinterest could be used to advertise a bank’s services and expertise more directly than is currently the case. In short, banks should use their visual social media as hooks to draw people in to what they have to offer. They seem to ‘get’ this on Facebook and Twitter but not on their visual social media presences.

Congratulations to those banks that are leading the way in visual social media. Maybe now is the time to make these presences more than just pleasant places to visit for a few minutes (Pinterest visits were averaging 16 minutes in 2013) and to make them speak more directly about your service, your expertise and your messages. The good news is that some banks have a lot of original graphical material both already on social media and in their archives and the capacity to create even more. Only 20% of Pinterest content is original (as opposed to shared) so there should be plenty of scope for an institution that can use its visual image ‘capital’ effectively.

(Stay posted for our new report on Social Media in Banking which will be published later this November)

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Amazon has released a new device called Echo – a device combining speaker and microphone with high-tech inner life. Working Siri-like, Echo is determined to read every wish from the user’s lips. Using voice-command, it is capable of playing music, putting products on a wish list, answering questions about any topic where information is available on the Internet and do a myriad of other things.

Reactions across social media and the blogosphere to this surprising release shortly before Christmas are mostly negative – in the aftermath of the NSA scandal it is only natural people are sceptic about data leeches.

Yet nobody should ignore that voice commanded devices is gaining in popularity. Just imagine a portfolio manager retrieving portfolio infos, drilling deep on some positions or even trading while driving her car to work or sitting at home just by talking into her smartphone, Echo speaker, digital windscreen or even an implanted chip. No matter how it will look like, you can be sure that voice-commanded processes will play an important role in the future and the market potential will be enormous.

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(by L. Elsler, Analyst)

We often see that mobile apps are prematurely released into the app stores. User experience (UX) tests, if at all, have only been done once the application is fully developed. This common practice leaves little opportunity to really develop a user-friendly application. But UX testing is not something you just bolt on once the development of an app is almost finalized. Especially banking and wealth management apps, with their heavy duty transactional processing (just think of payments, brokerage or portfolio checking) UX testing must become an integral part of app processing:

  • Produce your banking app like an expensive German car. These car brands dedicate a majority of the resources during the development process into user experience. The car is being tested, crashed and judged over and over again before releasing it for sale. Developers must be proud of their end product- only then it will also satisfy the user.
  • Integrate UX tests for all the use cases during the development process. From project start to the first release a dedicated UX team should give input to the mobile app development.
  • Think about what the purpose of the application is in the first place. Is it to “kill time” or to fulfill a task? A task based approach should be held as simple as possible to efficiently support the user.
  • And last but not least, make the user part of the UX team. The most progressive banks have their own UX lab and invite clients frequently to test-drive the latest release of all their apps.

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