Secure Widgets for Business
An Industry Spotlight on Retail Financial Services
© 2009 WorkLight Inc. All Rights Reserved
www.myworklight.com
Executive Summary
This document is a companion to the “Web 2.0 for Business: Trends, Statistics and Recommendations for Businesses” paper, which presents industry data and statistics related to key Internet and Web 2.0 trends that impact business in general. That paper highlights the importance of adopting next generation tools and services in order to take advantage of new business opportunities. This document focuses on how Web 2.0 widgets are specifically impacting customer engagement in the online and mobile retail financial services markets. It provides key industry statistics and analyst insights, such as the following: The consumer online experience is blossoming as new technologies such as widgets, personalized homepages, and social networks take off. On the other hand, customer online financial services experience has largely remained unchanged over the last several years. This gap in online experience is driving consumer expectations from their financial service providers. The number of consumers using online retail financial services is not growing. Despite the hype, the adoption rate of mobile banking is very low (7.2% of mobile phone subscribers). The proliferation of smart phones that can run widgets will drive adoption of the mobile web and mobile banking. Only the largest financial institutions are effectively trying to cross-sell/up-sell online customers. The remaining institutions need to start in order to remain competitive.
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The document then presents some real-world examples of secure widgets applications used to engage with customers, cut marketing and customer service costs, and increase business performance through enhanced offerings. Some key “take-aways” include the following: Secure widgets offer a way to meet customers where they spend their time; on their desktop, on the web, or on mobile devices, and thus advances the vision of “anytime, anywhere” financial services. Widgets allow financial institutions to provide a uniform customer experience across all digital channels – desktop, web, and mobile. A uniform user experience across all digital channels drives customer adoption and increases the level of engagement with customers. Secure widgets offer a basically free channel for online advertising. When incorporated in secure widgets that present customers with balance and transaction information, the conversion rates of ads soar because ads can be targeted and they are viewed in an opt-in, receptive channel. An effective widget strategy should incorporate a secure “write-once, run-anywhere” approach, in order to be ubiquitous, scalable, and future-proof.
1 According to Wikipedia, “Widgets are interactive virtual tools that provide single-purpose services such as showing the user the latest news, the current weather, the time, a calendar, a dictionary, a map program, a calculator…among other things.” Different vendors refer to widgets as gadgets. This document uses the two terms interchangeably.
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Online Retail Financial Services
Adoption Statistics and Customer Usage Patterns
What You Should Know: Many people use retail financial services online. This market, however, is not growing. It appears that almost everyone who would use these services is already doing so. At the same time, far more people exploit Web 2.0 consumer tools, like widgets, on a daily basis. They use widgets to stay current with news, weather, flight delays, stock prices, and many other types of rapidly changing information. They receive these updates through consumer tools and services such as Vista Sidebar, Apple Dashboard, Yahoo! Widgets, Google Gadgets, iGoogle, My Yahoo, Facebook, and iPhone and other smart phone apps. Their positive experiences with these consumer tools are now increasing their expectations for banking convenience and availability. Financial institutions must address this expanding online customer experience chasm. Here are some statistics that highlight this trend: • • • 39% of the US population uses Internet banking 3 53% of Americans who are online use Internet banking 4 5 Online banking adoption growth is flat and even dropping – specifically: o Growth in 2007 was 1.4% less than 2006 o Growth was negative in Q3 07 – the first quarterly decrease in 5 years o Subsequent quarterly growth was less than 1%; far less than past years 6 The biggest banks have done the best job of driving online adoption. This has created a gap that smaller institutions need to bridge in order to remain competitive. 7 Numbers of US consumers shopping for bank services online (per month) Service Credit Cards Checking Accounts Savings Accounts • # of Shoppers 12 million 4.2 million 4 million # of Applicants 2.3 million 200,000 252,000 % of Services Approved / Purchased 20% 5% 6%
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Customer expectations of their banking experience are increasing, to match the experience they are getting elsewhere on the web o “If the Web has made anything obvious to the industry, it is that when customers judge the ease of use of any banking solution, their yardstick is the Internet and its ease of use. That’s a high bar 8 being set by the likes of Yahoo, or My Space, or eBay or many other players.” o “Customers will continue to migrate from the branch, ATM, and call center channels to other, newer options, specifically online and mobile. To support this migration, banks must evaluate investments in channel strategy and technology, in some cases divesting in one channel (i.e., 9 branches) and reinvesting the capital in another (i.e., mobile).”
The popularity and pervasiveness of widgets and gadgets can be seen by examining the following numbers: • Desktop gadget frameworks o Gadgets/widgets have become indispensable Internet tools – 615 million people, representing 10 65% of the worldwide Internet users, viewed or engaged with a widget .
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Pew Internet and American Life Project, 2008 ibid. Growth = number of customers who logged into a liquid deposit account during the quarter 5 comScore Online Banking Report, April 2008 6 Leading industry analyst, 2008 7 www.netbanker/compete 8 Terrence Roche, Principal, Cornerstone Advisors 9 Hunt, R. etal, Tower Group, “2009 Top 10 Business Drivers, Strategic Responses, and IT Initiatives in Retail Banking,” Oct 2008 10 comScore, June 2008
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o 1/3 of online youth are using desktop and web-based gadgets . o Number of Google Gadgets (in Google Gadget Gallery) = 52,364 o Vista Gadgets are available on all computers running Vista – currently over 200M installations o Apple Dashboard gadgets are available on all Mac computers Web-based personalized homepages (web-based gadget frameworks) o Number of iGoogle users: Over 24.3M (Jun 08) o My Yahoo users: Over 41.6M – (Jun 08) Mobile platforms, such as the Apple iPhone, that offer desktop-style gadgets are also growing at a tremendous rate. o Today, there are over 12 million iPhone users (Q4 08) and the numbers are growing quickly
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What You Should Do: Use secure widgets to engage customers. For example, provide simple account balance or transaction widgets, to connect with customers, lower customer service costs, and enhance your brand value. In order to meet consumers wherever they are spending their time, create widgets that truly “run anywhere” – namely within all popular widget frameworks. Some examples include desktop widget frameworks such as Vista Sidebar, Apple Dashboard, Yahoo! Widgets, Google Desktop, and Adobe Air, web-based personalized homepages such as iGoogle, Netvibes, and Windows Live, social networking services such as Facebook, and mobile platforms such as the iPhone. To reduce development cost, complexity and time to market, explore how “Secure Web 2.0 for business” platforms can help.
What You Should Know: Financial services organization spend a lot of time and money presenting crosssell/up-sell offers to customers. These offers are typically distributed via email, banner ads, print advertising, billboards, and TV commercials. Widgets offer unique marketing potential for financial institutions since offers can be personalized, and are delivered via a highly-receptive, opt-in channel. This is particularly true when ads are part of secure account balance or transaction widgets that provide immense value to customers. Furthermore, placement costs of widget-based offers are basically zero, since they are distributed via publicly-available widget framework infrastructure like Yahoo! Widgets, Vista Sidebar, Apple Dashboard, iPhone Apps, and many others. On the other hand, placement costs of traditional advertising are quite high. The ROI is straightforward. Here are some statistics and analyst insights that highlight this trend: •
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Online Marketing Patterns in Financial Services – Widget Marketing is Basically Free
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Pervasiveness of online marketing tools in retail financial services o 42% of the largest 25 banks use targeted marketing technology to cross-sell/up-sell during online account access o Of the next 50 banks, only 18% of banks use targeted marketing technology to cross-sell/up-sell during online account access Online conversion rates for deposit products are heading down over a spectrum of banks, because financial institutions are failing to close sales online due to ineffective online marketing capabilities. Many institutions are digging a hole for themselves by under-investing in online marketing. This may jeopardize their overall marketing effectiveness. To retain customers without competing on price, banks must be able to package products and crosssell effectively when the opportunities present themselves.
What You Should Do: Embed highly-personalized offers within opt-in secure customer widgets. Monitor conversion rates to gauge the success of the campaign. Compare the costs and returns of widget-based offers vs. traditional marketing channels.
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Leading industry analyst, 2008 Shevlin, R. Tower Group, “Retail Banking: Why Online Marketing Matters,” June 2008
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Mobile Retail Financial Services
Adoption Statistics and Customer Usage Patterns
What You Should Know: Despite the hype, adoption of mobile financial services is dismally low; the main reasons are security, difficult browser navigation and poor display for most handsets, and slow data rates. This will change rapidly as smart phones that can run widgets, achieve respectable market share. Here are some findings that support this trend: • • Mobile banking adoption is very low 13 o Only 7.2% of mobile phone users (18 or older and employed) use mobile banking 14 What kinds of mobile devices are consumers using for mobile banking? o 20.5% of smart phone users o 2.7% of basic mobile users Why is adoption low? 15 o Traditional (WAP) mobile banking is perceived as not secure 16 o Traditional (WAP) user interface is not easy to use 17 o 73% of consumers fear hackers can access their phones o 68% of consumers are concerned that sensitive mobile banking data can be stolen using a wireless 18 signal despite encryption 19 Smart phones with widgets will change this because they: o “Exude ‘relevance’ by their sheer nature” – single purpose apps o Are fast and convenient, since they: Take users straight to a predefined destination, without delays Enable faster delivery of the key information Simple to install and use, even for inexperienced mobile users o Are secure 20 Most popular mobile banking activities (in order of usage levels from highest to lowest) 1. Check bank account balance 2. Check credit card balance/available credit 3. Locate ATM/branch 4. Transfer money between accounts 5. Receive/pay bills 6. Contact customer care A recent analyst study found that none of the surveyed providers of mobile financial services received a passing grade. 1/3 of the institutions received a grade of “need improvement to be successful,” while 21 2/3 received a grade of “marginal.”
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What You Should Do: Plan your offering for the rapidly-approaching days of ubiquitous 3.5G networks and mobile devices Focus on providing mobile functionality that customers want today. Create a road map for how these functions will merge into existing online tools.
13 Compass Intelligence, “Analysis of Mobile Banking Applications: Demographics and Mobile Usage Behavior of Mobile Banking Users,” October 2008. Survey of 20,000 consumers and business decision-makers 14 ibid. 15 Leading industry analyst 16 Leading industry analyst 17 Javelin Strategy and Research 18 ibid. 19 Leading industry analyst, Dec 2008 20 Checkfree Survey 2008 21 Yankee Group, Howe, C.,“The Best of the Anywhere Web,” Nov. 2008
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Widget Adoption In Online and Mobile Retail Financial Services
What You Should Know: Widgets provide the glue to unifying your organization’s online and mobile offerings. Widgets provide a simple, easy-to-use way to perform common financial service requests and transactions. Widgets also provide a uniform customer experience across a broad range of online and mobile services. Customers see their balances and can transfer money in exactly the same way on their desktop as they do on their mobile phone. This vastly increases the likelihood that customers will adopt and use the online/mobile services offered by the institution. Here are some numbers and analyst perspectives that highlight this trend: • • • Almost ¼ of online bank customers are interested in having a widget display account balances Almost half of social network users surveyed said they would switch banks if they offered widget-based 23 banking. “[The] overall receptivity to chats and widgets in the online banking industry is consistent with general online industry trends. Consumers are increasingly relying on emerging media in many aspects of their online lives, so it’s natural that they would want their online banking experience to conform to these expectations…banks have not yet developed capabilities to adequately match consumer expectations, 24 which provides additional opportunities for banks to satisfy their customers.”
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What You Should Do: Support mobile widgets today, in order to position your organization as a leader in online and mobile banking. Provide a uniform online and mobile customer experience. View the mobile offering as an extension of the online offering, not a separate channel.
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comScore Online Banking Report, April 2008 WorkLight survey - http://www.readwriteweb.com/archives/survey_48_of_bank_customers_wa.php 24 Brian Jurutka, VP comScore
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Financial Services Applications
The immensity of the widget opportunity for financial institutions should now be clear. This section presents a brief financial services widget example, and then offers suggestions for additional financial services applications.
Sample Financial Service Application
The following figure shows an example of a customer bank widget; one that displays customer’s account balance.
Account Balance Widget
In order to provide a complete solution for financial services institutions, this widget should run anywhere a customer may be spending their time, including desktop widget frameworks such as Vista Sidebar, Apple Dashboard, Yahoo! Widgets, Google Desktop, Adobe Air, and others. It should also be available via personalized homepages, such as iGoogle, Windows Live, Netvibes and others. The widget should also be “embed-able” in social networking applications like Facebook. The following figures show some examples. Note, that in all cases, the customer experience is identical.
Account Balance Yahoo! Widget (Desktop)
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Account Balance iGoogle Gadget (Personalized Homepage)
Account Balance Facebook Application (social network)
As discussed earlier in this paper, the mobile Internet experience will soon match the home Internet experience. Online services and mobile services must unify to provide consumers with a consistent “anytime/anywhere” customer experience. The figure below shows the same account balance widget running as an iPhone app. Note that the customer experience is uniform, no matter where the customer accesses the widget.
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Account Balance iPhone Widget (mobile)
Additional Applications
Many financial services applications are ripe for implementation using widgets. Some allow customers to display secure information like account balances and transaction summaries; others allow customers to complete transactions, like funds transfers and bill pay. While an in-depth look at applications is beyond the scope of this paper, several common financial services examples include the following: • Customer acquisition – secure widgets can be employed on publicly-available web sites to replace banner ads. These widgets are essentially “in-situ” applications for services like account opening and credit card applications. Performing applications without be redirected increasing the likelihood of application completion and thus increases the institution’s conversion rates. Customer service – secure widgets can be employed to facilitate a wide variety of customer services, such as account and balance updates, transaction summaries, credit card activity monitoring, portfolio management, and many others. Since more customers complete self-service through these easy to use application, customer service costs go down. Furthermore, these widgets provide an opt-in platform for presenting highly-targeted offers, thus increasing offer conversion rates as well. Bill pay – to increase use of the financial institution’s bill pay and expedited bill pay facilities, secure widgets can be employed to allow customers to track and pay bills, right from their desktop, personalized homepage, or mobile device.
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Conclusions
The number of consumers using online retail financial services is not growing. For those consumers who access financial services online, the customer experience is largely commoditized. Financial institutions that have looked to the mobile market to extend their online performance have been disappointed by low adoption rates and poor performance. In today’s competitive environment, smart financial institutions need to exploit online Web 2.0 consumer services and technologies to attract new customers, engage with existing customers, lower costs, and increase customer value. Widgets represent one such technology; a technology that provides powerful capabilities to enhance the customer experience, while matching customers’ expectations for service and performance. In this case, financial institutions create the widgets and make them available to customers.
Getting Started
Before getting started, financial institutions need to explore the following topics: • • • Integration with back-end applications and transaction systems Widget development and rollout process that provides “run anywhere” coverage for widgets Security requirements needed to make widgets appropriate for use in the secure and highlyregulated financial services environment.
These topics incorporate many considerations and are beyond the scope of this paper. You can get more information about these topics by contacting sales@myworklight.com.
About WorkLight®
WorkLight develops and markets WorkLight for Financial Services, which is a server-based product that allows financial institutions, for the first time, to create an always-on channel with customers. For example, companies can securely deliver to customers personalized account information, transaction updates, as well as share highly personalized news and offers via familiar desktop and web widgets, iPhone apps, and other smart phone apps, as well as social networking sites. Using widgets to deliver highly relevant, personalized information directly to customers, WorkLight obviates the need for consumers to log in to and navigate through complex customer web sites, thereby significantly enhancing the customer experience. The outcome is an increased number of transactions, reduced customer service costs, and an improvement in customer acquisition and retention. For more information, go to: www.myworklight.com/retailbank
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