MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

One of the most exciting digital developments in the financial services sector is the use of cloud computing. Exciting, because it’s one of the hottest trends around in financial technology at present. The financial sector, not known for its fast adaptation of digital trends, due to natural concerns where everything is about client data and money, is taking its first steps into this brave new world.

The potential benefits are obvious. Besides offering secure deployment options, cloud computing substantially speeds up time-to-market for new products. The keyword is efficiency: relying on excelling, up-to-date and trustworthy IT structures, enterprises reduce costs as well as risk. They don’t need to make big decisions too soon - hoping for a happy ending – but can rather go for testing the alternatives and, thus, aiming for the proven best solution.

Additionally, as the demand for business intelligence analysis tools is increasing to better serve customers’ individual needs, so does the demand for IT that can cope with such huge amounts of data. Moreover, cloud systems offer the flexibility that in today’s fast moving digital markets give a real competitive advantage – without imposing the costs for restructuring the complex in-house IT systems.

For example, a bank could decide to combine a private cloud with extensive security provision for a CRM database while using a public cloud at lower costs for less sensitive tools like marketing and social media. Apps can be developed cost-effectively through platforms as a service. And all this without any capacity going to waste, since with a cloud, you pay for what you’ve used and no more.

However, concerns regarding security and client data issues still prevail and these are hampering financial firms from jumping into the enticing warm water, as ballyhooed by the numerous providers. Indeed, well-designed cloud systems often provide more sophisticated security systems than finance companies themselves do nowadays. However the mindset will change; this is one emerging field that it will be well worth keeping an eye on in the coming months.

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By Francis Groves, Senior Analyst

How far have compliance requirements for social media in finance come and exactly which are the most likely problems and the prime concerns of the regulators?

2013 saw significant strides being made towards making social media compliant in the banking and finance industry. This trend was particularly marked in the United States with the SEC signalling last spring that social media was an acceptable medium for disseminating the kind of information that could move stock prices just so long as the company’s investors were made aware that Facebook, Twitter & co. were going to be used as channels for this purpose by that company. In June the US’s Financial Industry Regulatory Authority (FINRA) announced that it would be carrying out spot checks on institutions regarding compliance in the social media arena. In a separate development, in September FINRA fined a broker for Facebook remarks about a company in which he and a few dozen of his clients held investments but which he failed to disclose in the Facebook entry. Finally, in December the Federal Financial Institutions Examination Council (FFIEC), which performs a policing role in relation to corporate practices of US banks and other financial institutions, produced its own final guidance on social media practice.

Just this week, the SEC issued guidance on the use of social media by financial advisors that makes clear that they are prohibited from using social media channels to advertise or promote themselves by means of client testimonials. Although customer testimonials may seem a fairly harmless form of self-promotion, under US law, as far as financial firms are concerned, testimonials are considered too selective and unrepresentative.

So, as far as the US is concerned the regulatory framework is fairly clear and, not surprisingly, expertise and resources to help the finance industry with social media compliance have become widely available. Social media compliance practitioners in the US include i-Social Smart, Actiance, Nexgate, GremLN, Gladiator Social Media Compliance Services, Smarsh and SocialComply from Temenos, the Swiss banking systems provider. Meanwhile, in Europe the regulatory picture is less clear with legislators and regulators still looking into the issues and considering their issues. Fewer social media compliance services seem to be available although some, such as Actiance and SocialComply, which are active in North America, also operate in Europe.

So what are the key demands that regulators have or may have in relation to social media channels in finance and what effect is this likely to have?

The following seem to be the main areas of concern in relation to social media in banking and finance:
- The risk of fraud / the danger to financial brands
- The danger of failing to take responsibility for social media content because the channel is deemed to be an   external third party
- Failure to train staff properly on handling social media as company representatives
- The danger of social media using customers privacy being breached (by themselves or staff)
- The problem of institutions responding to social media communications too slowly
- The danger of security breaches

Clearly these dangers are not negligible but neither should they create enormous problems for banking and finance staff who themselves are rapidly becoming more familiar with social media in ordinary life.

At MyPrivateBanking, we have consistently identified low cost advantages as being one of the attractions of social media. Effective use of social media gives financial institutions opportunities to both identify their own customers’ needs and preferences and to keep track of competitor activity in key areas. More generally and longer term, we see the banking and finance industry’s engagement with social media as empowering for customers and as an important factor in the achievement of better financial services than ever before. It would be a pity if regulation inhibits the growth of social media in finance and, to be fair, we believe that this is unlikely to happen. Many institutions will need outside help with achieving compliance in this field but the real danger may be that financial regulation of social media becomes unduly restrictive or, even worse, an excuse to stop necessary changes to the industry.

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Videos are a widely used tool in viral marketing as they convey a message ten times more powerfully than a text could do and they are easily consumed on mobile devices when on the go. Consumers don’t like spending time watching lengthy videos just as little as they like being spammed with advertisements. Personalized short videos produced with apps like vine could be an answer to that. These six second self-made videos posted on social media channels like Facebook or Twitter address the user in a quick and catchy way. Unfortunately, apart from a few banks, the financial world has not yet realized the potential of the self-made videos.

NatWest is one of the few banks using this new opportunity. The bank produced an array of short videos in order to reduce answers for user requests on their Twitter support channel to a single tweet:

https://blog.twitter.com/2013/natwest-gets-creative-with-customer-service-on-vine

And this is only one example of the potential of short videos: vine videos can be implemented and integrated virtually anywhere, be it a website or a PowerPoint presentation - revealing their true potential as an eye-catcher that grabs your visitor’s attention in a few seconds.

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The mobile payment industry grew substantially in 2011. There were already 212 million m-payment users at that time and the numbers have been growing significantly ever since. In past years, the largest banks worldwide were slow in adopting innovative payment functions, but now they are starting to catch up with industry trends. We will introduce some of the best payment options that we encountered while evaluating mobile banking solutions for the current Mobile Apps for Banking Report.


Contactless payments allow users to pay for in-store purchases by mobile phone without needing to provide a banking or credit card. CIBC Mobile Banking is an example of this, as it allows the bank’s clients to pay for their groceries, grab a coffee or buy a movie ticket with just a tap of their smartphones. Also, Itaú QR Card enables customers to make day-to-day payments by scanning QR codes of participating partners’ products, with the receipts being automatically forwarded to the client´s postal address.


People-to-people payments are ideal if users want to pay friends, family or acquaintances without needing their bank account details. Various alternatives are available on the market to satisfy different client needs. Commonwealth Bank of Australia’s app collection provides a solution for paying contacts by e-mail, mobile phone or even Facebook accounts. With the addition of another useful feature, clients of National Bank of Australia can also generate QR codes to request payments from their contacts.


Wallets commonly function like a virtual prepaid card that users can create by utilizing the app. BBVA provides such a virtual wallet and cross-sells small credit lines through an included financing calculator. The app allows users to directly calculate financing options and to apply for a loan in only two steps for purchases made with the credit card.


If clients of NatWest forget their banking or credit card at home they will still be able to get cash. The “Get Cash” option provides a code which clients can use to withdraw cash directly from any of the bank´s cash machines or at major supermarket chains.


Barclays Pingit has always been a front runner in mobile payments, allowing clients and non-clients alike to use the service. The bank has been popular for sending and receiving money using just a mobile phone, and in its latest update the bank has added QR code payment options for offline purchases.


Mobile payments are an increasing trend and there are numerous pathways which banks can choose to add more convenience to their customers’ lives and gain potential client interest. Banks need to pay attention to future trends and determine which payment methods will be dying off in the process in order to keep their mobile apps up-to-date and to win clients’ loyalty.

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(by Francis Groves, Senior Analyst)

In MyPrivateBanking’s latest report, ‘Mobile Apps for Financial Advisors‘, 9 of the 14 vendors covered told us that they provided private banks/wealth manager with some form of electronic vault functionality for use in conjunction with their advisor apps. We believe that this is an encouraging level of provision in this area but there is undoubtedly a lot more that could be done in this area to help advisors/relationship managers and their clients. Moreover, the document handling/electronic vault/secure mailbox sector is full of ambiguity and confusing terminology.

Our focus is chiefly on wealth management clients and their requirements but banks themselves can also be purchasers of electronic vault facilities, as remote back-up services, increasingly cloud-based. Of course, there is likely to be some overlap with the vault facilities that the banks themselves provide for their private clients but it adds to the confusion. On top of that, some service providers and industry specialists use alternative terms such as a ‘digital vault’ or an ‘Internet data safe’, not to mention brand names such as SmartVault, a US provider specialising in vault solutions mainly for accounting purposes.

More serious than the confusion over terms, is the lack of clarity over the details of these client vault services. For example, is it good practice to use the client’s digital vault for posting mail (and documents) as well as for longer term storage? If a relationship manager can put things into their client’s digital vault, can they also retrieve them if, say, they made a mistake and put another client’s documents there by mistake? Presumably, the client’s digital vault requires backing-up, so how quickly would the client have access to that in a disaster recovery situation?

It looks as if private banks and wealth managers are only just beginning to understand the importance of client vault facilities to their overall offering to their clients. Banks face decisions about whether to offer vault services as a way of differentiating their private banking services from their retail ones or whether to use the offer of a digital vault for clients as an incentive for paperless banking. Another area of uncertainty is the extent to which banks should allow clients to store other non-bank related documents, such as electronic copies of wills or deeds of ownership to mention just two, in their digital vault. Providing clients with a secure vault could well become a key way for private banks to ensure they remain (or become) a wealth client’s most important provider of professional services rather than the client’s lawyer or accountant, who may be able to offer their own digital vault service.

Private banks need to give clear messages about what their client digital vault facility can be used for, how secure it is (and whether this security provision is different from that for other banking services), the client’s responsibilities for keeping it secure and who has access to it, both for depositing documents and withdrawing them.

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Having researched the performance of the main players in the market in our report, ‘Mobile Apps for Financial Advisors 2014’, published on Wednesday, MyPrivateBanking’s researchers came across several features that enhance client meetings in a way that is not only new but thrilling, reflecting the sheer scale of technical innovations in this field.

Here are our top-5 for this year:

  1. Co-browsing – A great opportunity to smooth follow-up meetings that saves time and enhances clients’ experience
  2. Client matching app – An increasing trend in the market that enables the end-client to interact with the advisor through an app of their own and to perform portfolio analysis or initiate trades
  3. Community/Chat function – A highly interactive tool that enhances client-advisor relationships through offering a new channel for correspondence and collaboration and generally making the client feel they are connected
  4. Interactive graphical tools – In this area we could see some of the greatest improvements-these tools range from interactive timelines that are linked with affirmative/negative signals to show if goals match (or not) to full multimedia document sharing tools
  5. Sophisticated document management functions – Particularly in combination with the emerging matching client apps, good document management is highly important as a means of keeping clients up-to-date and ‘in the loop’

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A quick peek preview into the upcoming MyPrivateBanking ‘Mobile Apps for Banking report’ (April 2014) reveals that above all, the lack of interesting marketing content provided for clients and non-clients is one of the banking apps’ major weaknesses.

The majority of banks show an unsatisfactory integration of additional content in their main banking apps. Only a few manage to offer good content promoting the bank and their products. For further information the user is generally referred to the website, opening in a separate browser, which then often has clumsy navigation or looks crammed in on a mobile device. And that is odd, given the fact that the app is the first and foremost contact point for clients with their bank. It’s also startling that so few banks consider the needs of non-clients and offer information prior to the log-in-screen, which could be a good way to inform and attract potential customers. Most of the content is only available behind the password protected walls of the app.

Every physical bank branch displays posters, brochures, client magazines, even multi-media terminals are available, to cross-market products to clients or distribute general information. But the significance of the regular branch office is rapidly shrinking compared to the increasing number of clients who carry their personal branch office in their pockets. It is a huge opportunity to use this mobile channel, which is much more frequently visited by clients than a bricks-and-mortar office, to sell products, advertise services and strengthen the bank’s brand.

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Thinking of user paths not only means considering which is the most user-friendly route, but also guiding the user to specific locations within a digital space. When it comes to apps, users have to be guided with care because their actions and responses may be different from those that have been observed for customers on a PC browser, accessing a bank website, for example.  Banks must think of how to guide users to the app in order to get a return on their investment. In the beginning banks were able to attract app users with very simple apps. Now, however, rapid development has raised standards and clever, thoughtfully constructed apps are flooding into the mobile app space. In order to be able to live up to current expectations of user experience, banks should think through user paths when developing an app and embedding it in its environment.

The following three aspects of user paths are useful to consider:

Finding the app: the interfaces the user will connect to before acquiring an app include the bank’s website and/or the app store from where the app can be downloaded for their device. The website should give an overview of the whole app catalog, provide brief descriptions, screen shots and links to the app stores where the app is available.  The app store where the user will be able to download the app should also have all significant features listed.

Utilizing the app: development of in-app navigation should be closely linked to the objective for which the app has been developed in the first place. If clients are to be persuaded to move from branch banking to mobile banking, banks should provide a mobile banking app that explains, demonstrates and facilitates the process of registering for mobile banking. If a bank wants to support clients by providing a branch finder, a map or list of branches is the primary step - but it shouldn’t end there. Anticipating the information needs of clients with regard to opening hours, services provided and the telephone number of each branch is also necessary. Another example is advertising products: instead of just making banner advertisements, banks can provide simulators which assist the client in the important (financial) questions of life. Within the framework of our current research, we find a lot of banks have developed simulator tools for clients and prospective clients but have missed a vital final step: providing a link so that the app user can apply for the appropriate product or service.

Moving on from the app: an app is relatively strictly confined regarding the depth and breadth of content and functions it can provide and therefore cannot fulfill all client needs. However, considering the devices on which apps operate there are almost infinite possibilities for how banks can continue to interact with the user beyond the boundaries of one app. Providing product and services information in an app, for instance, is a hard task as banking products are often very complex and regulated. A sensible solution would be to outline the distinctive features of a product and then link to the website for further information. Also, communication or help within the app is limited to covering basic questions, perhaps by providing FAQs, for example. However, open questions will remain and, therefore, communication features for various kinds of contact are necessary. For instance, an assistance hotline for technical difficulties will be very useful for less tech-savvy clients. Enabling users to comment on an app by offering a feedback form is a good idea.

Summing up, banks need to consider what they want to achieve by providing an app. Should it be a marketing app or does the bank want to support the user? Which paths would the bank like him or her to go down and which paths are important to the user? In order to be really useful, an app should not only provide the first step along the road to the desired objective but should offer multiple paths of action for the user in order to stay connected with the bank and reach that ultimate goal: increasing the value of the client relationship.

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At MyPrivateBanking we’re looking forward to the launch of our 2014 report on Advisor Apps in Wealth Management in early March (2nd edition). Plenty has been happening in the field of mobile applications for wealth management advisors since we published our first report on the topic 12 months ago. Since the New Year, our researchers have had an interesting time seeing some features that seemed novel a year ago become widely adopted and discovering new innovative ‘first shoots’ in app functionality, plus coming across one or two surprises. Our 2014 report will reflect the fast development in the wealth management sector with:
In depth research of wider field of mobile application vendors; 15 in all, including eight that we are covering for the first time

A more detailed look at the real-life dynamics of client meetings and how apps can improve advisor/relationship manager effectiveness

New projections about the direction in which wealth management apps are heading, based on the evidence of our research

Careful attention to the latest thinking and practice in areas such as app security, matching apps for wealth clients, report publishing and document management

Fresh insights on how vendors see the future of mobile technology in wealth management , gained by our interviews with leading industry participants

Based on detailed interviews with banks/wealth managers about the current state of their industry, both trends and needs, in order to get the full picture of the market.

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When in December 2012 an estimated 36 million Euros were stolen from of over 30,000 mobile banking app users in Europe, the expected public outcry failed to appear. Although Trojans and other malware have been repeatedly used to hijack user accounts (migrating from PCs and laptops to new devices) those incidents still don’t spark too many concerns for mobile security. As the volume and value of payments flowing through the mobile channel are on the rise, it is likely that hackers will target mobile channels in rapid succession, exploiting users’ outright dependency on handheld devices.

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There’s no question that the innovation, product and services development, that is taking place, provides consumers with greater convenience and flexibility. We are used to connecting with friends on Facebook, entertaining ourselves with a quick game and carrying out our everyday banking tasks, using sensitive access data while on the go.

Ensuring that the consumer is appropriately protected in this changing environment is a challenging task for financial institutions and mobile operators. Accompanied by the rapid mobile development, new ways of fraud, breaching security, and other acts of piracy are opening up. The following list illustrates the most common risks today:

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Mobility and Convenience

One of the reasons that mobile banking is so popular, is that it can be done ‘on the go’. The immediate access to all our bank information and services meets our need for convenience. This need results in the saving of passwords and user names, which undermines their effectiveness, or even the omission of additional tokens for processing payments. Entering another token might slow the user down, but it adds another layer of security. Losing a device with so little security entails great dangers.

Phishing

Phishing scams aim to lure users to reveal their private information such as user names, passwords or credit card credentials. By imitating text messages or emails from the bank that contain links to spoofed websites or a request for account information, the user is betrayed into giving sensitive data directly to the thief.

Wi-Fi networks

Public connections are generally not very secure - most places that offer a public Wi-Fi hotspot warn users not to share sensitive information over the network. Many users might be tempted to check their balance while frequenting the coffee shop around the corner.

Several way authorization

While the classic online banking uses an interplay of various channels (e.g. computer and mobile phone, computer and paper-tokens - transaction authentication numbers, computer and token-generator), for mobile banking this is not the case. With a smartphone this protective duality disappears: both credentials (card number/user name and the token) are available on the phone. It is obvious that a stolen phone therefore offers more sensitive data, which can cause a financial loss.

Malware

The mobile channel offers a whole new wealth of possibilities for hackers. Trojans that record entire voice conversations, sending them back to command and control the phone, keylogger programs that record every single keystroke the user makes - those are just two examples of malware attacks that are on the rise.

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It is therefore the new imperative for financial service providers and banks to shed their widespread ‘wait and see’ attitude and start implementing a comprehensive strategy that includes cross-channel monitoring, development of clear policies and monitoring of the market places where their apps have achieved mass penetration. The solution lies in being responsive to the rapid changes taking place in the mobile landscape - allowing defenses to respond in real time by using big data algorithms. However, the most important and most neglected part of any security strategy must be the education of the client. 99% of all security breaches in online banking are (ultimately) causes by human error and carelessness. So, it was shocking for us when we found in our mobile app benchmarking analyses - over and over again - a lack of security information and anti-fraud education within mobile apps, app store descriptions or on mobile portals which function to make apps more popular. The change of this shortcoming is job number one.

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