MyPrivateBanking Blog
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Archive for April, 2014

War of mobile operating systems undecided – banks should broaden offer

Friday, April 25th, 2014

Android rocks the market and hits 81 per cent of smartphone share in the last quarter of 2013 worldwide. Google´s operating system grew by an impressive 51.3% compared to last year. The winner besides Android was Windows Phone with a massive growth rate of 156% but accounting for less than 5% of the overall market. Apple´s operating system has lost 1.5% of market share but still managed to grow shipped devices by 25% compared to the last year. Blackberry, is the loser of the last year´s race of operating systems with a loss of 40%.

Which operating systems should bank´s consider for the development of mobile banking solutions?

Our underlying assumption is the more operating systems are available the broader a reach will a bank have with regard to client base and spent time on apps. Therefore an app for a single operating system is not an option. Clearly, there is no way around Android´s operating system. Surprisingly, there are still banks which do not provide a single app for this dominant OS.

As our upcoming report on Mobile Apps for Banking 2014 shows, banks have been and are developing mainly for iOs devices, treating Android in many cases as a second choice. Numerous apps (especially supporting apps) were only available for iOs whereas only two apps were exclusively for Android.

The demographic profile of iOs users is at this point somewhat more attractive to banks: the users of iOS are more likely to be 35 or older and are more likely to have a household income of USD 2000k or above per anno (source: Hunch Inc.). But that should not lead banks to believe that only iOS users are an attractive segment. Even though Android users at this point might be somewhat younger and poorer, this will quickly change over the coming years as these users are growing up and moving to professional life. We are not expecting that many of them will change their operating system preference to iOS on that journey.

But banks should also consider developing for Windows Phone right now since the operating system is growing immensely and the market is not yet overcrowded. Research for the upcoming Mobile App for Banking report shows that Windows strong app development support results in better performing and full-experience apps - essentials to impact on customer retention and attract potential new clients.

As for Blackberry clearly the user profile, with an average older and wealthier user, has been a strong motivation for banks to develop apps. However, it remains to be seen whether the operating system will survive the current crisis.

For the future we see apps more frequently in different context and on more and more diverse devices. The upcoming report reveals that more banks are investing into the release of Windows 8 apps which are both suitable for tablet and desktop, also several eReader apps crossed our way. Banking apps will grow into all kinds of devices such as television and wearables like Google Glass and smart watches. This trend will continue and extend to devices today unimaginable and only inspired by science fiction (but becoming reality soon…).

 

Finance industry dipping a toe into cloud computing

Friday, April 11th, 2014

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.

 

Social Media in Finance – Is It Time for Your Compliance Health Check?

Friday, April 4th, 2014

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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