MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

This week MyPrivateBanking Research releases the first comprehensive report on banking apps of the largest retail banks worldwide that run on the Apple Watch.

The report shows that the market for wearables will substantially benefit from the launch of the Apple Watch as it continues to grow to over $ 12 billion by 2018. The implication for banks is obvious: as the market penetration of smartwatches is increasing, the demand for banking apps that run on these devices will increase at the same rate. Actually, many banks are adopting this technology already today: The MyPrivateBanking report evaluates 23 Apple Watch apps of 22 banks and compares their overall performance. The evaluation comes to the conclusion that today’s Apple Watch banking apps are mainly providing only very basic features lacking the capability to excite clients. Outstanding examples from other industries and comprehensive strategic recommendations complete the study.

Watch out for our concise guidelines helping banks to take the right steps towards a winning Apple Watch app.

Wearable device market value from 2010-2018

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Mark Zuckerberg, founder of Facebook, has just revealed that video views on Facebook have doubled since April with more than 500 million users watching eight billion video views daily. Responding to the exploding importance of video, Facebook added new features to its platform like live broadcast for public figures and 360° videos for creators. This way, companies get more opportunities to communicate their message to their customers.

How can banks and wealth managers take advantage of this significant trend? Here are a few suggestions:

Keeping clients up-to-date. Most people prefer to watch news and headline content via video instead of reading long, complex articles. Market developments and investment topics are a great area for video coverage. An interactive video stream covering investment topics and economic research is certainly a great idea to support clients in their investment decisions.

Education. Banks are expected to support their clients in every important life situation and educate them about important financial decisions. For instance, the purchase of a new house requires a lot of assistance. A dedicated video blog that gives tips and guidance how to calculate the costs of a house purchase and setting up a financing plan would add a lot of value to many customers.

Promotion. Many clients customarily ignore their bank’s promotional material – 90% of a bank’s promotional letters go in to the bin immediately. Adding promotional videos to social media presences in a smart way can increase the eyeballs significantly. Yet this works only when the video is only shown to users that indicate an interest in the topic area – using the particular search terms, looking at related content on social networks or showing other behavioral patterns that will spark an interest in the banks promotional videos.

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From passwords to two-factor authentication, bio-authentication, and tokenization, both consumers and cybercriminals have forced the online and mobile banking industry to come up with innovative and convenient security technologies. The latest functionality announced to be available to US e-commerce consumers in the middle of 2016 is MasterCard’s new facial recognition-based identification method. Online retailers will be able to authorize a transaction by taking a snapshot of their face and blinking once (to prevent fraudsters from holding up a picture of the retailer and fooling the system).

Particularly popular with Millennials or the ‘selfie-generation’, using selfies to authorize transactions is a clear advantage to passwords/ PINs as it saves consumers from remembering complicated combinations of numbers or letters.

Just like other biometric authentication functionalities, ‘pay by selfie’ is surely on-trend but it remains uncertain how secure the new technology is. Biometrics that rely on static information like face recognition or fingerprints can be easily faked; the case of the German defense minister Ursula von der Leyen’s fingerprint cloned just from photos is a solid proof in this sense.

The retail banking industry is rushing its way in offering consumers innovative mobile technology functionalities but the next generation of mobile banking apps needs to include stronger security features to make cyberattacks impossible.

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In our Mobile Apps for Banking 2015 benchmark, Credit Suisse appears to be the most successful bank when it comes to continuous improvements during the last three years.

While DBS and BNP Paribas are on top of our rankings regularly, Credit Suisse managed to jump from the 13th rank in 2013 to the 9th rank in 2014 and arrive at the third rank in this year’s evaluation of the banking apps offered by the 35 largest retail banks worldwide.

Credit Suisse is rolling out its new digital strategy since beginning of this year and the continuously improving performance of its mobile flagship Private Banking Schweiz shows its great success. These are the four improvements that had most impact on its progression:

Core functions: The new version now offers a complete set of core functions, including trading.

Add-ons for clients: Clients can view their finances graphically, making it easy and convenient to check the financial situation at a glance.

Content for customer retention and marketing: Clients can now apply for new products and services directly from the app and they have access to a comprehensive section discussing mortgage, including video material, calculators and tips.

Attraction of a whole client segment: The Viva app contains valuable rewards and music streaming offerings, which is particularly attractive to the young client segment.

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Although there has been little acknowledgment from the wealth management industry, the rise in crowdfunding in recent years has been remarkable. Goldman Sachs sizes the addressable market for crowdfunding at about $1.2 trillion. This is the total market value for crowdfunding that could be realized in the long-term. For 2014, Goldman Sachs estimates the U.S. crowdfunding market size at $10 billion, up from just $1 billion in 2011. The Worldbank forecast that global crowdfunding could increase to between $500 billion and $1 trillion by the mid-Twenty Twenties. These numbers include marketplace lending (e.g. Lending Club), equity-based crowdfunding (e.g. Circle Up and OurCrowd) and donation-based crowdfundfing (e.g. Kickstarter).

But isn’t crowdfunding something invented by hipsters to collect a few thousand dollars for some crazy art project or an even crazier new invention that will not go anywhere? That was probably true in the very beginning of the crowdfunding trend, 10 or even 5 years ago. But nowadays crowdfunding has flourished into a multi-billion-dollar industry, quickly spreading across the globe. Even institutional money is now flowing into (specifically p2p/p2b) lending-based crowdfunding chasing for better returns than one can get on a typical fixed income security.

So crowdfunding is opening up not only to small retail investors but also to institutional and private wealth. Therefore, crowdfunding brings some threats to the wealth management industry. In a way it is another tool that disintermediates investing as robo-advice does in another context. Affluent individuals, HNWIs or potentially wealthy individuals are using more or less automated platforms to engage with investment targets in a much more direct fashion compared to investing through a typical wealth manager. The functional and emotional benefits of this type of investing may - over the long run - shift assets under management away from the traditional wealth management industry.

But where there are threats there are also opportunities…. We’ll explore the whole field of crowdfunding from the perspective of wealth managers and private banks in a shortly to be published new report. Stay tuned.

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Here’s the fourth hint for our little quiz about which bank showed an outstanding effort in continuously improving its core banking app in our yearly ‘Mobile Apps for Banking’ benchmarking:

4.) THE BANK WE ARE SEARCHING IS KEEPING PACE WITH THE LATEST TRENDS, OFFERING A SMARTWATCH APP THAT ADDS A LOT OF VALUE TO INVESTORS

Watch out for our new report coming soon!

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Here’s the third hint for our little quiz about which bank showed an outstanding effort in continuously improving its core banking app in our yearly ‘Mobile Apps for Banking’ benchmarking:

3.) THE BANK’S CORE APP EXCELS THROUGH ENGAGING CONTENT WHILE PROVIDING EXCELLENT USABILITY

Watch out for our new report coming soon!

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Here’s the second hint for our little quiz about which bank showed an outstanding effort in continuously improving its core banking app in our yearly ‘Mobile Apps for Banking’ benchmarking:

2.) THE CORE APP OF THE BANK WE ARE SEARCHING CONTAINS INNOVATIVE PAYMENT OPTIONS FOR CONVENIENT TRANSACTIONS

Watch out for our new report coming soon!

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Google’s payment platform using NFC technology, Android Pay, announced earlier this year, has started to roll out in the U.S. today. Google seems to be back in the game of mobile payments with a promising start: over one million points of acceptance and gradually more announced to be joining. Like Apple Pay, the mobile payment solution loads automatically without having to launch an app, by simply unlocking the device. In-app functionalities are to be implemented later this year.

Google Wallet, the digital wallet forerunner in the U.S., will be automatically converted by app-update to Android Pay. However, the app has not been closed down but given an overhaul to serve as a P2P app (send and receive money).

Google’s Android has an impressive 79% worldwide market share, in the global market for mobile operating systems. Therefore, Google’s alternative to Apple Pay and Samsung Pay, has good chances to see early mainstream adoption among others due to retailers’ fondness of rewards schemes announced to become part of Android Pay’s functionalities soon.

It is surprising that it took Google so long to respond to Apple’s challenge. But there is no doubt that on a global scale Google has the power to become the leading mobile payment provider at the POS.

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Among the banks evaluated for this year’s report on Mobile Apps for Banking, there is one remarkable example that managed to successfully climb up the ranking ladder over the last years. Participate in our little quiz and guess the bank!
We will release a hint each week until the report will be published by beginning of October 2015.

Here is the first hint:

1.) THE BANK WE ARE SEARCHING IS UNDERGOING PROFOUND CHANGES IN ITS DIGITAL STRATEGY

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