Everyday Bank Blog

Think Your Loyalty Program Keeps Customers Loyal? Think Again.

The hard truth about retail banking loyalty programs is that they do not always keep customers coming back.

Loyalty programs in financial services are expensive and expansive, but not differentiated. In fact, the market is flooded with look-alike programs. And as leaders in other industries transform their loyalty focus from vanilla rewards to customer value, banks will find themselves chasing customer expectations. Some already are.

The Lagging Loyalty Landscape

Eye-opening results from Accenture’s 2015 North America Consumer Digital Banking Survey—our multi-year survey of over 4,000 consumers in the United States and Canada—reveal just how low customer participation and perception of loyalty programs are:

  • Poor participation. Only a third of customers participate in bank loyalty/programs—54 percent do not participate at all.
  • Information vacuum. Seven percent of customers are not sure if they participate—and 6 percent are uncertain if their bank even has a loyalty program.
  • Program stickiness. Only 9 percent of customers cite loyalty programs as the reason for staying with their primary bank.
  • Customer switching. Under-delivered loyalty programs are a key driver of switching.
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View the image.

What Customers Want

Our survey also shows that customer expectations for loyalty programs are high—and specific. Consider the loyalty landscape from the customer perspective:

  • Design for digital. The ability to redeem loyalty points from multiple channels is a key characteristic of loyalty programs in customers’ eyes.
  • Count on convenience. Over half of customers say that the most important characteristic of a loyalty program is offering cash or open loop prepaid cards.
  • Deliver the good life. Nearly one-third of customers think the most important loyalty program characteristic is the offer of points for quality of life experiences such as travel.
  • Make it personal. Over half of customers want their banks to locate and curate discounts on their behalf in purchase areas that are relevant to them.

Taking the Long View of Loyalty

It is clear that banks have work to do to transform this loyalty lag into loyalty that lasts. After all, leaders know that they can’t risk losing customers in such a disrupted banking landscape. There are too many other players eager to lure customers away by upping the ante in many areas, including loyalty.

Getting more from loyalty programs requires a mindset shift for banks. Loyalty initiatives can no longer be viewed as an isolated part of the business. Instead, loyalty programs must be addressed as part of the banks’ larger purpose to maximize customer value. It’s about giving the loyalty organization a wider mandate not only within the enterprise, but also within customer’s everyday lives.

Learn more about Accenture’s latest consumer digital banking survey.


Real time payments: how to align legacy systems?

As commerce around the world continues to evolve into a 24×7 real-time ecosystem, there is growing pressure for payments infrastructure to keep pace with today’s realities transferring funds in real time.

“Real time payments” can be defined as an interbank account to account payment that is posted and confirmed to the originating bank within one minute, so the payee can use this value instantly and the payer has confirmation of the status of the transaction. The instant confirmation of the transaction won’t be enough in the future, it is the real time availability of funds that matters.  The ‘real-time’ payment infrastructure may enable passing of greater data (ie, the use of ISO20022 messaging standard) and also addressing of payments to alternate addresses (ie mobile telephone numbers).

Customers expect payments to be fast as alternative payments networks (e.g., PayPal, Venmo and digital currencies) are already able to provide real time payments within their ecosystem.

Regulators are actively promoting real time payments in different ways. The revised Payments Services Directive (PSD2) will ease interbank account to account payments, allowing third party providers (TPPs) to initiate payments directly from the account of consumers and corporates. At the same time through EBA Clearing in Europe and the Federal Reserve in the US, they are kicking off industry task forces to support the creation of real time payments central infrastructure.  In Australia, the New Payments Platform (NPP) program has already embarked on the creation of real-time payments infrastructure.

Real time payments are not new: 31 systems have been built or have gone into development so far, of which 4 initiatives launched in 2014 (Fig. 1). However some of the systems have been in existence for over 10 years (eg: Switzerland, Brazil, Mexico); some, over 40 years (eg: Japan)

Fig 1 – Real time payments systems adoption worldwide

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View the image.

Real time payments infrastructures may have different origin: they can be launched as domestic infrastructure to modernize the national payment system (e.g.: UK, Denmark, Singapore and Australia) or as a market driven initiatives to face competition from non-banking players (e.g.: Poland and Sweden).

To become a real time payments institution, it is not enough to connect to a new infrastructure, it requires investments and a wide transformation program.  In the UK the cost of building and maintaining the immediate payments infrastructure – Faster Payments Services – amounted up to £70-£80 million for each participating bank, but the cost of execution to upgrade their infrastructure and change processes for some banks was up to ten times higher. Today banks can be better equipped with some real time capabilities already in place if compared to 2008 when the UK Faster Payments Services was launched, but the complexity of this change can’t be underestimated.   This is even more so if both the ISO20022 standard and non-account addressing are also included in the program.

As found out in a recent poll done by NACHA at Payments 2015 conference, execution and high investments will be the major challenge also for US banks: for 37% of payments executives execution difficulty is the major barrier followed by high investment required (30%)[1].

Once the plans at industry level are finalized for how real-time payments  will be implemented, banks – especially in Europe, US and Australia – are going to look internally and define strategy and investments to migrate their entire infrastructure, technology, operations, systems, processes, fraud, risk systems from batch processes to 24/7/365 operations.

Legacy systems will have to fit for real time and new capabilities will be required. Account keeping systems and transaction banking portals updates will need to be in real time across channels like the funds’ availability. Funding and settlement for nostro/vostro accounts will change since real-time payments systems will likely have predefined funding cycles which create positions that need to be settled at least twice daily. 24/7/365 operations means also that customer services and exceptions handling are always available.

Despite these challenges, if banks want to become Everyday Banks where they are integral to their customers’ digital lives, then they have to provide real-time payments. Some banks are discovering the benefits of their real time payments infrastructure offering a multitude of innovative overlay services – such as Paym and Zapp in the UK – enabling P2P, in store and online payments directly from their current account.  In Singapore, a number of services have already been launched by the participating banks.  Other banks are evaluating crypto-protocols, like Ripple, to infuse real time capabilities in selected services like cross-border payments (e.g.: Fidor Bank, Cross River Bank and CBW Bank) and inter-bank transfers (e.g.: Commonwealth Bank of Australia)

In our view, banks need to take this imperative on board—and change their mindset to view the real time payments opportunity from the perspective of an Everyday Bank.


3 Millennial Myths Debunked

According to the Pew Research Center, Millennials will overtake Baby Boomers this year as the largest living generation in the United States. This is an undeniable signal that 18 to 34 year olds are an increasingly influential customer segment for banks.

The results of Accenture’s 2015 North America Consumer Digital Banking Survey—our multi-year survey of over 4,000 consumers in the United States and Canada—offer insights into who Millennials are and how they like to bank. And they may not be the people that you expect.

Our survey findings debunk three common misperceptions about this unique generation:

1. Millennials are tomorrow’s customers.

Millennials today are already significant contributors to consumer spending. While some younger Millennials are in college or starting out in their career, older Millennials are more established. They have been working for years and have reached key life milestones that create a need for financial services and advice—from buying a home to saving for retirement.

The survey results reveal that, for now, Millennials manage fewer banking products and providers and tend to have basic banking products. But as this generation ages, we can likely expect their banking needs to expand. This is why it is so important for banks to start connecting with Millennials now.

2. Millennials are all digital all of the time.

Banks should avoid generalizing about just how technology savvy Millennials are. Certainly, their experiences are shaped by digital—they focus more on digital services than other age groups do. For example, more Millennials purchased/signed up for mobile banking software/apps in the past 12 months—22 percent compared to just 13 percent of 33 to 54 year olds and 6 percent of those 55 and over.

Even so, developing more digital products and services is not the only way to win Millennial customers. Consider this surprising survey finding: Although Millennials value digital channels for banking, more than a quarter also expect to use the branch more by 2020. Banks must focus on using digital as a catalyst to bring new value to Millennials’ financial and non-financial lives.

3. Millennials are not loyal.

Our survey results reveal that as a group, Millennials switch from their primary bank at a pace nearly double the average of other age groups. They report that high fees and poor loyalty programs are the top reasons why they are dissatisfied with banks.

Yet to automatically equate Millennial switching with a lack of loyalty is short sighted. In my view, this data suggests that Millennials are prepared to leave if they don’t get what they want from banks—they are not buying banking products/services, they are buying value. So, it’s up to banks to deliver against their expectations to keep them coming back. When we asked Millennials about the kinds of services that could improve their loyalty, their top six responses are non-traditional bank services:

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Millennials are an important customer segment for banks to capture—now and in the future. Breaking down the myths to develop a rich understanding of the Millennial mindset is a good place to start developing strategies tailored to their unique needs.

Learn more about Accenture’s latest consumer digital banking survey.


Payment Predictions for 2015 (3 of 3)

Bank operating models and the infrastructure landscape will start seeing some major changes. Outsourcing of core back office payment processing will be on the agenda for banks, even large ones with scale in interbank payments, especially in Europe; and existing payment processors will develop new capabilities to meet this demand. Demand for real-time payments to support real-time customer experiences in digital commerce will drive banks in many countries to implement national real-time interbank payment infrastructures.

Finally, from a technology perspective, the payments industry will start exploiting tokenization, host card emulation, NFC, application programming interfaces (APIs), mPOS/POS integration and blockchain technologies (and the USA will embrace EMV for cards).

Operating Models

  1. Outsourcing of interbank payments processing, especially in Europe, will become a viable alternative for mainstream banks instead of replacing internal payment processing platforms.

Interbank Infrastructure

  1. Real-time payments will grow and attract investment from the banking industry as regulatory pressure and the urgent imperative for real-time mobile payment consumer experience overcome historic difficulties in building industry consensus for national infrastructure
  2. At least two countries in Europe will commission national real-time interbank payment infrastructures
  3. Cross-border interoperability of new real-time interbank payment infrastructures will become a major theme of debate, especially in Europe
  4. Open access to national payment systems by non-bank Payment Service Providers will become a major theme of debate in many countries – in the UK, changes are likely (catalysed by the Payment Systems Regulator)


  1. APIs (application programming interfaces), where Payment Service Providers (including banks) expose their payment systems to third parties, will become a key technology disruption in payments (alongside tokenisation, host card emulation, NFC, crypto-currency and blockchain technologies).
  2. Retailers deploying mPOS solutions inside and outside their stores will integrate them with existing POS and ecommerce infrastructure to create omni-channel payment capabilities.

Each of these predictions has important implications for our banking and payments clients, and focusses on the emerging trends and innovations we will see in the payments domain in the coming years. I will report back in 2016 on the actual outcomes!

To read the rest of the predictions, view post 1 and post 2 in this series.

Invest an Extra Billion. Here’s Why

Why should major Banks in Italy make additional investments of over one billion Euro in information and communications technology in the next three years, as suggested in a brand new report from Accenture? And why is this a golden opportunity – and not a provocation? The reason lies in the new internal and external context of the Banking industry which is pushing for strong change. As a direct consequence, there is a need to rapidly evolve the predominant business operations model which is no longer economically sustainable.

Technology and information systems can make a difference in this scenario by providing new models to defend Banks’ business and re-launch it in a more sustainable and profitable proposition. In addition to the lasting crisis during which the cost of credit for the Banks virtually exploded, there are two main factors accelerating change.

The first is digital disruption, driven by customers who have radically altered their behaviors and who have a whole series of new needs. They demand new and better levels of service and want to interact with their Bank easily, rapidly and safely, especially using digital channels. The volume of physical transactions in Branches is sliding by approximately 15% each year. Indeed, Branches are increasingly empty. As a result of these new customer behaviors, the traditional value chain is being stretched out to incorporate what happens both before and after the actual financial transition. This, in turn, is having an enormous effect on customer loyalty and the Banks’ capacity to create new sources of profit. All of this is giving rise to a new ecosystem in which the Banks will have to defend their central role and ward off encroachment from digital natives such as Google, Amazon, PayPal and others who are progressively invading service niches. Recent analyses by Accenture show that this phenomenon is putting at risk between 20% and 30% of the total revenues of Italy’s banking sector.

The second factor pushing Banks to invest more heavily in technology is the new environment introduced by the European Central Bank. The criteria by which capital requirements can be modified now impact business functions and the information systems they rely on as well as the quality of integrity of data, cybersecurity and operational continuity. To put this in context, Banks were fined over 180 million Euro between 2009 and 2013 from domestic authorities alone.

An information system that has been certified and approved and that responds rapidly to new regulatory norms can change capital requirements and generate enough value to marginalize the cost of the information system itself.

Post originally published in IlSole24Ore, Tuesday May 19th, 2015

Bleeding-Edge, not Bleeding: The Role of Technology in Branch Reinvention

There are so many industry articles proclaiming the death of the bank branch that I’m reminded of that Mark Twain quote that goes something like this: “Reports of my death are greatly exaggerated.”

It is true that the branch is not what it was. However, rather than being at the end of life, the branch is on the cusp of a new life—if banks make changes.

Through consumers’ eyes

Our latest consumer research study—the 2015 North America Consumer Digital Banking Survey—surveyed more than 4,000 consumers in the United States and Canada. Data revealed trends in consumer attitudes toward the branch, including the following:

  • The majority of consumers (86 percent) would not switch branches if their local bank branch closed.
  • For the first time, consumers rank good online banking services—not convenient branch location—as the leading reason for staying with the bank.
  • Some consumers over 55 (43 percent) prefer the online channel to branch locations.

These results suggest that customers are redefining banking convenience. It is increasingly about online access over proximity to the branch.

Even so, customers don’t want to totally abandon the branch. They simply have new expectations of what they want the branch experience to be.

A hunger for technology options

Banks have opportunities to meet these changing customer expectations—and technology has an important role to play. This is exciting news for banks looking for ways to bring customers to the branch beyond hiring a barista and investing in comfortable seating.

As part of the survey, we asked consumers to rank a number of in-branch services and technologies in the order of importance. This chart shows their preferences:

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View the image.

The data tells us that the top three technologies that consumers are most interested in having accessible to them at the branch are interactive screens, self-service remote advisors and biometric technologies.

The branch as a technology hub

The survey reveals a watershed moment for banks in developing their branch strategies. This moment involves changing the mindset about the relationship between technology and the branch.

Because online and mobile are inherently technology-driven banking channels and the branch is the prime physical channel, it is easy to think of the branch as the “non-technical” channel. But it does not have to be this way.

Banks can bring interactive technologies to the branch, and some are already doing this. The vision is to create a hub where customers can learn about and use technologies to complete financial transactions or improve their financial literacy. Customers can take what they learn into their activities outside of the branch. Technology becomes a bridge between channels rather than an either-or proposition.

When we talk about branch reinvention, it goes without saying that while technology is non-negotiable, it is only one element of a broader transformation. The end game for the new branch experience must be immersive and meaningful customer experiences.

Learn more about Accenture’s latest consumer digital banking survey.

On Thursday, June 12, join me and Wayne Busch, Robert Mullhall and Jodie Wallis of Accenture for a Twitter chat to discuss the Accenture North America Consumer Digital Banking Survey 

Chat questions will cover the customer digital experience, becoming more than a transactional bank and the #EverydayBank. Chat is 3pm-4pm Eastern and led by Accenture Banking Twitter account, @BankingInsights. Chat hashtag is #NABankStudy.

 If you do not have a Twitter account, you can still watch the conversation by following #NABankStudy on Twitter (account not required).

To participate in the chat, log in with your Twitter account and follow the #NABankStudy hashtag. Official chat questions will come from @BankingInsights.

Payment Predictions for 2015 (2 of 3)

In my second blog in the payment predictions series, we address the developments in the cards domain.

Loyalty solutions for digital commerce will emerge, providing seamless integration of loyalty point redemption and discounts with payments processes, in support of omni-channel retailing. A driver for this is margin pressure from regulators capping interchange fees, forcing payment service providers to focus on new revenue streams and value added services.

Card fraud and data breaches will continue to be a big issue, particularly in the USA where magnetic stripe cards are still widespread. Companies with millions of cards-on-file for e-commerce/m-commerce will be vulnerable.


  1. Loyalty 2.0 will emerge as a theme, with common, omni-channel solutions appearing in the market, integrated seamlessly into digital payments processes.

Margin Pressure

  1. Payments companies will continue to face downward pressures on fee structures and will search for new revenue streams and value added services to replace lost revenue from regulatory caps and legal restraints.

Card Fraud

  1. Massive data breaches of magnetic stripe cards will continue, particularly in the USA – companies with millions of card on file for ecommerce/mcommerce will be vulnerable
  2. The industry will be more engaged to implement remedial actions such as EMV, tokenisation, and end-to-end encryption
  3. However, these remedial actions may not be implemented fast enough in vulnerable countries such as the USA to stop new data breaches.

My next and last blog in the series will cover the predictions on Bank operating models, infrastructure and technology, so stay tuned for further information.

Channels to Watch in Retail Banking

It feels like a lifetime ago that banking only meant going to the branch. Digital disruption has redefined the channel landscape in retail banking. Consumers have more channel choices than ever as they select among branch, online and mobile banking options.

Changing the channels

If there is one thing to know about digital disruption it is this: it is never static. As technologies evolve and new ones emerge, digital continually raises the bar on itself, revolutionizing what is possible through continuous innovation, often at a rapid pace.

Most of us have had the experience of buying the latest digital gadget only to find that it is essentially outdated at the point of purchase. This is because the next big thing is on the horizon.

Tuning into consumers

This kind of advance of digital will impact the banking channel landscape. The results of Accenture’s 2015 North America Consumer Digital Banking Survey—our multi-year survey of about 4,000 consumers in the United States and Canada—bear this out in interesting ways.

Beyond their growing acceptance of primary digital channels, consumers are showing emerging interest in some digital channels that were not even on the radar for our 2013 survey:

  • 3 percent of consumers say they use wearables at least weekly for banking activities today. Banks have opportunities to explore the use of wearables in connection with biometric identifiers, which can improve security in wholly new ways.
  • 15 percent of consumers report using tablets weekly for banking. Banks have opportunities to integrate the use of tablets into the branch banking experience.
  • Video conferencing. 2 percent of consumers are using video conferencing weekly. With banks investing in video conferencing technology both within and outside the branch, it will be interesting to see how these percentages changes in next year’s survey.
  • Social media. 5 percent of consumers report using social media at least weekly for banking. However, most prefer this channel for information access, not for banking.

Multiple channels, one view

Read the report.

Read the report.

While uptake of these channels is still in the earliest stages, banks can benefit by monitoring how they mature in the coming years. In addition to tracking specific channels, banks should have the big picture in mind too. It is important to understand the specifics of each channel and how the channel mix aligns for a unified customer experience.

Channel integration will become increasingly important as the channel mix grows. Our research shows that banks continue to have an opportunity to improve channel integration. Data indicate that only 34 percent of consumers believe that the cross-channel experience is completely seamless. Moreover, about 20 percent say that the customer experience is not at all seamless.

As the channel mix shifts and consumer usage and preference patterns change, banks must ensure their channel strategy has flexibility to account for the continual impact of digital disruption.

Learn more about Accenture’s latest consumer digital banking survey.

Using Social Media to Provide Advice, Facilitate Access and Offer Value to Customers

In our last post, we discussed two of the innovative ways financial institutions are driving the customer experience through digital. In this final post in the series about banking innovations recognized during the 2014 Efma-Accenture Distribution and Marketing Innovation Awards, we’ll look at how banks are using social media to provide better value to customers.

A bank account fully integrated with social network platforms

Kotak Mahindra Bank of India has launched the Jifi program—the first fully integrated social bank account that incorporates social networking platforms with mainstream banking.

Offering a seamless on-the-go banking experience through social media, Kotak targets digitally-savvy and socially active customers. Customers who use the Jifi network can:

  • Earn transaction-based loyalty points for specific banking activities.
  • Earn social loyalty points for inviting and adding friends to the network.
  • Share points with friends through social networks.
  • Receive banking account updates through Twitter.

The program bypasses the need for local branches, lets the bank participate in its customers’ social network ecosystems and benefits customers by eliminating the need for them to remember passwords or account numbers.

An app that integrates bank accounts with Facebook

La Caixa of Spain has developed a free Facebook banking app. The app is hosted in a fully secure and private environment—Facebook has no access to any personal or bank information.

The app allows customers to:

  • View account balances and transactions.
  • Pay bills.
  • Personalize new cards, choosing from their Facebook photos or from a catalog of over 1,000 different designs, based on their preferences and Facebook “likes.”
  • Make micro-donations of up to €15 to charities run by La Caixa Welfare Projects.

Eventually the app will also allow person-to-person payments.

By successfully targeting Facebook users and social media-savvy customers, these banks are showing that financial institutions can have a place in the social network ecosystem, providing advice, facilitating access and offering greater value to their customers.

If you would like to learn more about these and the other banking innovations recognized by the Distribution and Marketing Innovation Awards, a joint initiative from Efma and Accenture, visit the other posts in this series.

Is there Enough “Retail” in Retail Banks?

Can you remember when banks had no competitors?

The market’s saturation with competitors from within and outside of the financial services sector has almost conditioned us to believe that banking disruption has always been as pervasive as it is today. But we know better. It is an unprecedented time for banks, with competitors coming from all sides, including the retail industry.

The retail advantage

This banking trend is not so surprising. After all, beyond the products and services that retailers sell, the essence of the retail business is about developing strong customer relationships and delivering customer experiences that go beyond pure transactions. This is certainly something that banks want to master for their customers.

And the retail industry as a whole has been a digital pioneer. The industry has led the way in providing non-stop digital customers with relevant, personalized and seamless experiences across their channels of choice, including their physical presence.

On the offensive

As such, the question that banks should be asking—and many already are—is clear. What lessons can we learn—and what practices should we implement—from the retail industry?

One of the things that I am excited to see is that some banks are taking an offensive and proactive stance here, rather than a defensive and reactive one. In other words, their approach is rooted in the philosophy, if you can’t beat them, join them.

Results from Accenture’s 2015 North America Consumer Digital Banking Survey—our multi-year survey of over 4,000 consumers in the United States and Canada—reveal how important this is for banks. For the first time, consumers rank online banking services as the top reason that they stay with their banks.

As online and mobile channels continue to come of age, and new digital channels emerge, the challenge for banks is to reinvent the branch’s critical role in the customer relationship. Some banks have already started to do this using retail-inspired models.

A community experience

Consider the story of Umpqua Bank’s flagship store in San Francisco, winner of a 2014 EFMA- Accenture Distribution & Marketing Innovation Award in the physical distribution category. Note that the use of the word “store” over “branch” is not an oversight. I’ve seen many banks use this word over the last decade, but it has often been used in the wrong connotation as a place to amass products instead of as a place to shop for the product they need.


What is Umqua doing differently? To connect with and welcome customers and the broader community, Umqua designed this store, which opened in August 2013, to envelop customers like the best retail stores do—and then some.

In addition to its strong design sensibility steeped in local and regional influences, the San Francisco store includes breakthrough features and services not typically found at a bank branch, such as:

  • External screens with community information.
  • Public access to tablets.
  • Comfortable chairs in inviting conversation nooks.
  • A “demo bar” to showcase key products and services in an interactive manner.

This store is a reflection of the bank’s longstanding “store” concept. Umpqua develops branches that are more public gathering spaces than they are narrow destinations for financial transactions.

This spirit of innovation focused on taking what the retail industry does well and then making it better is an important lesson for all banks feeling new retail competitors nipping at their heels. Retail banks should use their local branches as a strategic advantage in keeping those non-bank competitors at bay by making better use of their stores as true places to meet their needs.

Learn more about the 2015 North America Consumer Digital Banking Survey.