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Javelin Strategy & Research’s analysts lay out a roadmap for readers by identifying the top 10 transformational trends in 2013. The trends report highlights the steps providers need to take to bring order to the rapidly changing arena for banking, payments, mobile and security. These trends depict a constantly evolving financial services arena, in which tools like mobile and social media are rejuvenating financial services delivery through multiple channels, which are proving to be both an asset and a challenge for financial institutions (FIs).
Javelin Strategy & Research’s renowned analysts identified the following trends for 2013 as a representation of the changing industry:
Many FIs will lose their positions of trust. Trust in FIs is under assault by a seemingly endless list of players, including Apple, Google, mobile carriers and scores of innovative PFM players. While FIs still have consumer trust on their side, 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.” Because so many new players are fighting FIs for market share by offering competitive consumer‐friendly services, like personal financial management (PFM) and alerts, FIs must act quickly in 2013 to demonstrate they understand their banking customer and put their financial interests first.
“It is difficult to rebuild trust once it erodes,” said Mark Schwanhausser, Director of Multichannel Financial Services at Javelin. “FIs that put themselves in position as proactive, straight-shooting advisers will reap trust and loyalty.”
Omnichannel is the next evolution in banking trends. Consumers already trust their financial information with multiple channels, but the use of these channels and their relevant data is often not interconnected and unified into one integrated, branded experience. An omnichannel experience means that consumers can select any device and any channel and always 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.
“To correct current shortcomings, FIs will need to change their perception of omnichannel banking as necessary rather than novel”, said Mary Monahan, Executive Vice President and Research Director, Mobile at Javelin. “Moreover, for FIs to increase or even maintain their competitive positions, they need to invest 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. The mobile world has drawn the interest of hackers, as evidenced by the burgeoning number of malware being detected by security firms. With two out of every three mobile devices left unprotected, these devices will prove to be an attractive new attack vector for the deployment of attacks by hackers to cripple IT infrastructure.
“FIs and other organizations with a vested interest in the security of the mobile channel will be best served through a partnership with security vendors with the goal of increased adoption of mobile security software,” said Al Pascual, Industry Analyst of Security, Risk and Fraud at Javelin. “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.”
Retailers will increasingly challenge payment networks’ pricing practices, taking greater control of the payments business. Traditional card networks still control transaction volume, but implementation of the Durbin Amendment has been a game changer for retailers, which have used this legislation’s success as a blueprint for aggressively expanding their influence. Merchants are in the midst of challenging the Fed’s implementation of the Durbin Amendment and have further powered their way toward increased control of their businesses’ payment choices and related costs. In 2013, merchants can be expected to continue to use collective actions, innovation and assertive negotiations to gain increasing control over payments options and expenses.
“To help merchants remain vested in existing payments options, providers should identify new ways to support retailer’s payment needs and reinforce the merchant value proposition,” said Beth Robertson, CCM, Director of Payments Research at Javelin. “Alternatively, traditional players can seek opportunities to form partnerships or leverage merchant developments in pioneering ways.”
About Javelin Strategy & Research: Javelin Strategy & Research provides strategic insights into customer transactions, increasing sustainable profits for financial institutions, government, payments companies, merchants and other technology providers. Javelin’s independent insights result from a uniquely rigorous three-dimensional research process that assesses customers, providers, and the transactions ecosystem.