SAN FRANCISCO (1/7/12)--Trust, omnichannels, distributed denial of service attacks and challenges to payment networks' pricing practices are among the major trends forging ahead for financial services in 2013, says a new report. All of these can affect credit unions' strategies.
San Francisco-based Javelin Strategy & Research said these trends highlight steps that financial institutions (FIs) must take to bring order to the rapidly changing arena for banking, payments, mobile and security.
Many financial institutions will lose their positions of trust.News Now's review of articles last year noted that credit unions consistently beat their competitors on the issue of financial trust and member/customer satisfaction, but don't get cocky. Trust in FIs is "under assault by a seemingly endless list of players, including Apple, Google, mobile carriers and scores of innovative personal financial management players," said Javelin.
The winners "will be defined by who does the best job of developing an intimate financial snapshot of the customers, without crossing the line of being too 'creepy,'" said Javelin. Existing and new players are fighting for market share by offering competitive consumer-friendly services, like personal financial management (PFM) and alerts.
"It is difficult to rebuild trust once it erodes," said Mark Schwanhausser, Javenlin's director of multichannel financial services. "FIs that put themselves in position as proactive, straight-shooting advisers will reap trust and loyalty."
Omnichannel is the next evolution in banking trends. Members, like other consumers,already trust their financial information to multiple channels, but their data often aren't interconnected and unified into a single integrated, brand experience. Omnichannels will allow consumers to select any device or channel and have a secure, convenient and familiar way to transact financially. "This does not mean solutions will be identical across all channels, but that banking consumers' experiences will be harmonious, connected and consistent," said Javelin.
FIs must change their perception of omnichannel banking "as necessary rather than novel," said Mary Monahan, executive vice president and research director, mobile at Javelin. She suggested investing "in developing an integrated architecture wherein data and platforms can seamlessly converge while enhancing the quality of the brand experience."
Distributed denial of service attacks will go mobile. Two out of three mobile devices aren't protected from malware, Javelin said. These will be an attractive new attack vector for hackers to cripple information technology infrastructure. Al Pascual, Javelin industry analyst of security, risk and fraud, advised forming a partnership with security vendors to increase adoption of mobile security software. "Deputizing consumers through education on mobile security threats and encouraging use of anti-malware, firewall protection and other security solutions will have far-reaching benefits," Pascual said.
Retailers will increasingly challenge payment networks' pricing practices and take greater control of the payments business. While traditional card networks will still control transaction volume, the Dodd-Frank Act's interchange provision "has been a game changer," said Javelin. It suggested forming partnerships and leveraging merchant developments in pioneering ways.