According to a survey made by Federal Reserves (Fed) consumers report using mobile banking up to 60 times per month; however, the median number of mobile banking transactions is four or five times in a typical month.

The most popular mobile banking transaction is checking account balance or checking recent transactions: 90 percent of mobile banking users having performed this function in the past 12 months (see figure 1.)

Figure 1: Activities done with mobile phones over the last 12 months up to March 2012
(source: Federal Reserve)

Transferring money, receiving alerts and paying bills are also highly demanded and the most commonly performed activities.

Similar findings can be seen from Antenna’s research but based on UK mobile internet users, saying that UK customers are already using or would most like to have such functions on their mobile banking solutions as checking account balance (46%), viewing transaction history (31%), transferring money between their own accounts (27%), paying their bills (25%) and transferring money to third parties (20%) (see figure 2 below).

Figure 2: Most frequently used and needed functions on mobile banking by UK users, 2011
(source: Antenna Software, Inc.)

The mobile banking usage statistics show what one assumes about mobile banking: people use it for simple transactions while more complex transactions (e.g.: managing investments) are to be carried out on another online channels.

Why do people reject mobile banking?

57% of those, who do not use mobile banking, say that they simply do not need mobile banking for their finances (figure 3.). Likewise in online banking, security is an issue for the users also in mobile banking. Important to emphasize that 10% of the people said that they do not use mobile banking because they cannot see the screen properly. My general experience is that banks do not pay enough attention to (elderly) customers, who cannot see the small letters and numbers properly.

Figure 3: What are the main reasons you have decided not to use mobile banking?
(source: Federal Reserve)

Creating richer mobile banking applications which ensure unique mobile experiences and take care of safety in mobile banking are the ways to activate even more mobile banking users.

If you are interested in the Fed survey you can access it here.

Trend 1: Connectivity is king

“Connectivity has become as essential as roads and electricity.” – Ericsson says.

Yes, connectivity is a must indeed. So, it is a high time to enable a convenient banking experience on mobile devices. Customers want to connect to their banks anytime anywhere. They will use their PC if they want to bank from their offices, they turn to their tablet when they are having a cappuccino in a cafeteria, and they use their smartphone while they are travelling. Do not neglect the importance of optimizing the services for the different devices!

 Trend 2: Everyone can be a service provider

“The race to become mobile service providers is open to everyone.”

Providing online financial services is not a privilege of the banks any more. Just take 3rd party PFM providers, or payment providers such as PayPal, or mobile payment providers like MNOs. Banks should improve their services on these areas else they will lose their business and market share gradually.

 Trend 3: Social media redefine news reporting

“Social networks have become true media hubs […] And now serious news reporting is being redefined […] Social media also provided necessary commentary when it was difficult to trust or interpret the validity of other news sources.”

Social media became a very important information source for everyone. If banks do not care about being present here, they just ignore a very important communication channel to their customers. And mobile is important even in the social media: according to the study: “More than 250 million Facebook users are mobile – and being twice as active as non-mobile users, they account for up to half of overall Facebook activity.”

 Trend 4: Mobile phones play a significant role in everyday life

“When asked what they carry with them when leaving home, 90 percent of all smartphone owners said they always take their phones and their keys – but only 80 percent mentioned money.”

It is a clear call for mobile wallet, isn’t it?

 Trend 5: Transparency greater than privacy

“People are getting used to living a more or less transparent life. They certainly also expect companies and other organizations to act as transparently.“

Transparency is a controversial topic especially in the financial services industry. What the study states, it is that people are getting less shy – they are willing to disclose more and more information about themselves – thus also about their finances.

Even more important is that people expect from their providers to be more and more transparent – also from their bank.

 Trend 6: The cloud makes things easy to use

“…36 percent (of the people) wanted to connect their iPods or MP3 players to directly download music, and 30 percent wanted to connect their portable game devices to access an online game store.”

We do not love the technology on itself: we love technology because it makes our life simpler. Cloud computing does ensure convenient services for the customers and customers became used to the intuitive user interfaces and to the easy-to-use services. This means that if you design a new service, user experience should be your main focus – if one’s new service is not easy to use, then it is better not to launch it.

 Trend 7: Women drive adoption of smartphones

“In our 2011 survey of smartphone users in the US and the UK, more men than women use lower-penetration services such as VoIP and video telephony, and they are also more likely to download new apps. On the other hand, significantly more women use higher-penetration services such as voice calling, SMS and Facebook.”

Since people use their devices in very different ways, online banking services should be designed for different ways of usage. This creates a new challenge. That is why people like using personas (that represents a group of customers) when creating online banking services: this approach helps them to identify the major user groups of the service and also their user-group specific expectations.

Trend 8: Making shopping easier

“When we recently asked smartphone users in Berlin, New York, Paris and Shanghai, 67 percent said they wanted to be able to make small payments using their phones. Sixty six percent were interested in mobile banking. But payments should not be seen in isolation. … they quite clearly told us that going directly for their wallets is not the best approach. Mobile payments must be put in the context of everyday shopping habits.”

This is a clear statement; there is no need for any comment here.

 Trend 9: Everything connects

“Ericsson ConsumerLab has for many years seen an interest among consumers in directly interacting with places and things in their urban surroundings. This is now happening as homes, cars, ticket gates, vending machines, cash registers and facilities are increasingly getting connected to the internet.”

It is time to connect all banking devices, like ATMs or kiosks, to the internet. But I also want to see online banking services to be better integrated into our daily life.

 Trend 10: Uncertain times – consumers strive for control

“A change in disposable income is also driving demand for consumer control of services consumed. Better overview and control bring increasing benefits for everyday life.”

All in all, the Ericsson study showed us, how the technology changed our daily habits and thus ourselves. Banks, keep on following these trends and enormous changes!

You can access the entire Ericsson study here.

Today it is clear that customers do want PFM features. Just take mint.com which has nearly 8 million users. What is even more interesting, that more than 90% of the users say they have changed their financial habits as a result of using the service!

HelloWallet is another example, where users are willing to pay almost 9 USD per month for this service.

The need from the users for PFM is obviously here. What can a bank win if they offer PFM for their customers? 

Higher customer retention

A study made by Gartner Research in 2006 presents that the cost of acquiring new customers is about five times higher than the rate of retaining existing ones, and those new customers are unlikely to be as profitable as expected. Although, the cost of acquiring a new customer varies country by country, it is averaged around 100 – 300 EUR per retail customer.

According to the PFM vendor Lodo, the annual member retention rates are 98% among those users who used PFM. This is higher than the retention rate for those customers who did not use PFM. If PFM helps reducing the customer attrition ratio only by 1 % point per year, it is already a remarkable saving for the bank.

Defending the mostly visited communication channel

The independent services, such as Mint.com or HelloWallet could be a big threat for banks:  if people start using these kinds of services, they will find less need for their banks’ online banking services. As a result, less customer contact would lead to a decrease in banks’ sales opportunities. This is a disaster in these times when most banks have to reduce their branch network. Therefore, PFM keeps users at the bank’s online channel offering the bank an opportunity to communicate with its clients and for cross-selling.

Longer customer lifecycle

PFM can be used for an extended lifecycle management with a customer. The value of the extended lifecycle management is not only on the customer’s side but on the bank’s side: this ensures that the student, who has a student account with the bank, will take his first mortgage here, and after buying the first flat, he can start making investment with his very first bank. This factor is very important since the #1 reason for switching banks is a shift in the life circumstances.

Direct revenue generated by PFM

If the bank offers useful PFM services, the customers will be more satisfied, and will come back to the online channel of the bank more often – this results an increased number of transactions. Besides transaction fees, PFM users generate more revenue by owning more financial products. Lodo says that PFM users own more accounts than those customers who do not use PFM.

Furthermore, banks with PFM usually see an increased usage of electronic payments at those customers who use PFM regularly – because these payments are categorized automatically. 

Customer insight

PFM data offer a great customer insight which help in targeting the offers more precisely. A common experience from the online world is that general banner advertisement’s performance is very poor. However targeted ads perform very well – this is the only way for banks if they want to sell online successfully.

Building a business case for a PFM implementation is a complex task. However customer acquisition cost, conversion rates, transaction fees, customer attrition rates are exact figures which can be a solid baseline for calculating the return on this investment.

I asked Mr. Tuomas Toivonen Co-Founder and CEO about Holvi.com.

Tuomas, could you please introduce Holvi!

Holvi replaces the plain old bank account with a current account built from the ground up for group activities. We help our customers collect more money, better understand their finances, and save time for their core activities. Customers include, for example, event organizers, sports clubs, and student associations. Our customers can do all their banking with Holvi, without needing another bank account.

Holvi is regulated as a payment services provider by the Finnish Financial Supervisory Authority (FIN-FSA). We have the necessary banking partnerships in place to operate payment accounts for our customers on a pan-European basis.

Holvi is currently open for customers in Finland on invitation only basis. We will be expanding to other European countries later in 2012.

Who are your targeted users and why do they use Holvi?

When a group opens a Holvi account, they get three things: (1) a group current account with easy sharing between group members; (2) automated and integrated bookkeeping as part of the Holvi online banking service; and (3) online payment acceptance with credit cards and online banking e-payments, as well as inbound and outbound SEPA credit transfers.

With Holvi there is no need to maintain a separate bank account and accounting software. The Holvi account does your accounting for you.

We make this possible by what we call “rich transactions”. Each inbound or outbound payment on a Holvi account can include metadata such as categorization, comments, tags or images. In addition to accounting and reporting, this data is used to generate member lists for an association, reports on people purchasing tickets to an event, and also for social media distribution (e.g. on fundraisers).

Holvi is targeted to group activities, a broad market that ranges from student and sport clubs, to event organizers and NGOs. We have also had very good reception with political parties who want to streamline campaign financing and enhance transparency. We see Holvi’s market being very much underserved by the traditional banks. That is also true for accounting software which tends to be notoriously hard to use. Holvi is squarely targeted at the non-accountant, the person who just needs to understand her group’s finances.

How can your customers open an account with Holvi?

Opening a Holvi account is a 100% online process. Holvi is currently in private beta, but you can register for the waiting list at Holvi.com.

How do you support invoicing?

Holvi comes with integrated, easy to use invoicing. No need to manually track whether invoices are paid. Holvi automatically marks invoices as paid whenever the payments come in. Or you can send reminders for late invoices.

How can the users, an NGO for instance, collect financial aid by your support?

Organizations can ask for donation via the web: this is the easiest and most efficient channel for them. Holvi has merchant features, similar to a webshop, where the user can set up “products”, which can be “purchased” by the customers. The advantage of this approach is that with the Holvi online store groups always receive both the payment and the necessary information. For example, you never get just a membership payment for a club, but always get also the member’s required details like contact information. The collected data automatically form a simple CRM.

It is important to note that Holvi comes with an integrated merchant account. After registering a Holvi account, groups can start accepting payments instantly.

OK, we have a user, who has just started receiving payments. How do they manage the incoming and the outgoing payments?

The Holvi account is built around the budget of the group or activity. When designing the product we talked to a lot of prospective customers and for most of them the budget was the key starting point. So whether you’re thinking about organizing an event or the activities of your club for the next year, you need to plan where the money is coming from and where it goes. The Holvi budget is a “living document”: whenever payments come in or go out, the realized budget is updated.

Automatically and in real-time the group can see how well they are doing against their budget.

Financial reporting

Currently you can accept payments on your Holvi account with the major credit and debit cards (Visa + MasterCard). For our Finnish customers also online banking e-payments are supported (similar to eOLV in Germany or iDeal in The Netherlands). For inbound and outbound credit transfers we have full SEPA support. Our customers can receive and make payments in euros to anywhere within the European Economic Area.

Through our banking partners we have the capability to support domestic payment instruments also in the non-EUR countries in the future.

How do you present the account history to the users?

The traditional bank account statement is not a very useful document. Looking at debits and credits doesn’t give much of a context.

Naturally, you get a traditional account statement from Holvi, but much more useful is the Holvi activity feed. Not unlike your Facebook feed, in the Holvi activity feed you see the incoming and outgoing payments and can tag and comment at will. For example, expense claims can be approved right from the feed.

The enriched transaction history by Holvi

In the future we want to bring more actionable data to the feed. For example, from the accounting data we can provide a “financial weather forecast”: how is your income and expenses stacking against the budget? Is there a cash crunch coming? Are there invoices that are late? Who should you focus on for receiving that late payment and avoid that cash crunch? We can show our customers whether it is looking sunny or stormy, say, two months ahead.

All of this is something that has been out of reach of our target customers unless they’ve been willing to invest a lot of time inside Excel. We want to allow them to focus on their core activities and let our system worry about their money management.

We’ve tried to make Holvi as visual as possible. For example, you can get an understanding of your planned and realized budgets at a glance.

We’re bringing out more visualization and reporting capabilities later this year.

You mentioned several social and collaborative features. Is social money your credo?

Holvi is from the ground up social. The Holvi group account allows three levels of access: (1) the read-write access allows a user to access all functionality and makes outbound payments. Usually the group treasurer and chairman have read-write access. With (2) read-only access a user can see transactions, budgets and other group data. Read-only access is often granted to all the board members of the group or the event organizing core team. Finally (3) summary information can be shared publicly. For example, a fundraiser for a charitable cause can allow the donators to see an overview of how the money has been spent.

All Holvi purchases can also be shared on social media channels. Last autumn we worked with a number of pilot customers to test this functionality and the response was very positive. For example, a block party organized in Helsinki was able to get many more attendees and in a short time raise over 1000 euros in extra funding (in addition to sponsors). Online payments capability and social distribution of the purchase of “supporter tickets” was the key to enabling this.

Do you think that “social” is the future of our finances?

Yes and no. Our customers work in groups and there the social aspect is very important. Often it is the activity participants who also fund the activity. It is important for the organizers to be transparent and accountable to the paying participants, and Holvi enables this.

Transaction feed and collaboration

On the other hand, on the personal finance side we don’t think social is as strong a driver. Either people want to keep their finances private (most of the cases) or the finances simply aren’t that interesting. Same goes for social commerce. Most routine purchases are not generally interesting for sharing, but some definitely are. As with all social sharing, if the purchase represents an aspect of the buyer’s personality they consider important, they have an incentive to share. With Holvi this has worked very well in cases where the incentive is to broadcast “I supported this good cause!”

Tuomas, thank you for the interview, and I wish a bright future for Holvi.com!

HelloWallet targets low and middle income users, those, who need careful planning and professional advisory how to keep their finances under control. And this is exactly, what HelloWallet does. It is a for fee service (membership is 8,95 USD/month) but they generate a real value for the customer. Interesting to see, how!

 HelloWallet’s value proposition is based on three pillars

• Financial data management and reporting
• Financial education
• Financial advisory

 Pillar 1: Financial data management 

HelloWallet is an independent service so it has to be fed with financial data. The users can enter their financial data in 3 different ways to the system:

• They can connect their bank account directly from HelloWallet
• They can enter financial transactions manually
• They can upload their Quicken data

It is always a big issue for third party providers how to feed the solution with data: if it requires lot of manual efforts, then it reduces the usage of the tool. But HelloWallet offers direct access to lot of financial services providers.

“This is the beginning of a beautiful friendship.”

HelloWallet offers all the “must” PFM features, like categorization of the spending, setting up budgets, creating savings goals, analysis and reporting. The charts are nice; however, I found some of them a little bit too complex. 

Setting up savings goals is a general feature of PFM software but HelloWallet does it in a very sophisticated way. The savings goals feature has different categories, like education, rainy day savings, house goal, retirement goal or debt goal. Each goal is treated differently and you receive advice why and how to set up them. It is very nice that there are default values you can choose from! It makes the process easy and smooth and you have the feeling of a real advisory process. Default values come from your data or from benchmark data. 

Piggy-bank for pauper times.

Pillar 2: Financial education

HelloWallet puts a big effort in educating the customers how to manage their finances. Email learning is one of the tools they use: they regularly send advices and hints, how to improve financial situations. When setting up your account, a 6-month email course starts teaching how to “build wealth”. Webinars are also used to educate users, how to use HelloWallet.

How to become Scrooge McDuck.

 Financial advisory 

Financial advisory is an important asset of HelloWallet. The advices come up proactively, after the login page or in emails. Some of the advices are based on the user’s financial situation, some are not. 

Hints, tips & tricks.

Do not forget, that the users of HelloWallet are not financial expert at all! An average user will appreciate the advices, coming from HelloWallet – advice is even more important for him, than a report, with full of numbers and charts. Banks usually provide a big load of figures and reports, and they let the users analyze them and take actions based on the figures. But for the average user it may be too challenging – he does need exact advice, what to do and why. 

Highlights of HelloWallet 

Highlight1: Proactivity 

Compared to similar services, HelloWallet is very proactive. They act as a real advisor: They give exact ideas on how to improve your financial position. If you enter to the system, you get hints what to do and why. Default values (e.g.: when setting up a new saving goal) also support the users.   

Highlight 2: Social benchmarking 

Benchmark data are very interesting and useful. The user gets ideas on where he should improve, and where he is outstanding in his group.

Benchmark data are very motivating. 

Highlight 3: User experience

I hope that the screens above convinced you that HelloWallet is a thoroughly well designed service with a great usability. You do not need to be a banking expert to understand and to capitalize on this service which is a very important success factor of the service! 

+1:

The concept of HelloWallet is very clear, and the functionality is very well aligned with its mission and with the target group. This is a very important success factor and ensures a high user engagement. 

There are still a lot of interesting features to explore with HelloWallet, so you may want to use the benefits of the one month free membership!