We recently presented topline global results from the first quarter 2011 Consumer Financial Monitor, including evidence on the important role of confidence in providers and proactive financial management in driving product demand. 

Now you can see where your market and segments fall on these critical product demand markers.  Check out how your customers stack up in:

• Asia
• Europe
• Latin America
• Middle East and South Africa
• North America

Retail banking has reached an inflection point, where prevailing assumptions  begin to lag emerging realities. Customer behavior, competition, and business models are changing. Perhaps at no other time in the history of finance has the business model for retail banking been under such pressure. Branch traffic is declining. New entrants into financial services–from start-ups to Google–are prepared to challenge every bank activity. Meanwhile, as the graph to the left shows, many banks have built their networks on fee income that is now being stripped away by regulation.

To succeed over the next 3-5 years, banks must step back, examine their strategic positions, and question the assumptions that drive their businesses. To meet the challenges ahead, banks need a clear picture of the emerging competitive environment and the strategic steps necessary. To this end, we offer our members ”Rethinking Retail Channel Strategy.”

It is not often that an entirely new model for banking emerges, but Banksimple is preparing to offer just that. The banking industry can be defined by two key activities: holding money for customers, and then effectively distributing it as their customers request. Banksimple wants to separate these tasks. Their plan: let banks worry about holding money, since that is what they do best, while Banksimple will focus the customer-facing tasks of intuitive, simple products, algorithmically-enabled money management, and superior customer service through their web-only platform.

For more on Banksimple and other innovations, visit our Product Innovation Library.

The news: The Boston Federal Reserve recently released a study on the future of mobile payments. Key quote:

“Mobile payments are characterized by a network effects problem: consumers will not demand them until they know that enough merchants accept them, and merchants will not implement the technology until a critical mass of consumers justifies the cost of doing so.”

Our view: Google, Apple, Facebook, and mobile phone companies around the world are preparing to make the investments necessary to launch smartphone-driven mobile payments. By the end of the year, every new smartphone will be capable of near-field-communication–the key hardware component for mobile payments. Because of the revenue potential through high conversion rates on sales and the opportunity for mobile companies to charge very high payment fees, it is a matter of when–not if–mobile payments take the next step.

How we can help: For more on the future of mobile payments, see our recent study, “Rethinking Retail Channel Strategy” and our market analysis, “Mobile Banking: Observations, Innovations, and Outlooks.”

In recent interviews with more than 40 retail banking executives, 67% shared that the Dodd-Frank reforms are receiving high levels of attention in their organizations. The Consumer Financial Protection Bureau (CFPB) came in second in a ranking of their own top regulatory priorities. Join our upcoming Webinar to learn more.

In just 97 days the Consumer Financial Protection Bureau will be an official government agency. The Bureau has faced no shortage of controversy since its establishment last summer as legislators and lobbying groups repeatedly seek to repeal - or at least limit – its powers. Amidst all of the anxiety around what can be expected from the fledgling agency and how will it affect your business, our research interviews reveal a likely mix of challenges and opportunities. While many executives attribute much of their concern to planning in the face of uncertainty, they also cite real opportunity, namely enhancing the customer experience.

Given the uncertain regulatory environment, it is important to map out potential regulatory outcomes. We look forward to further exploring the challenges and opportunities presented by the CFPB during our CFPB Webinar on May 5^th.

A new consumer segment is emerging. This segment, characterized by social media prowess, is strongly influenced by a new, global bank called “The Shadow Bank.” Haven’t heard of it? Your customers have, and they are turning to it for advice.

In the last two weeks we introduced the concept that social media savvy customers are more proactive with their financial management, and that consumers who proactively manage finances are more likely to purchase. In other words, social media and financial engagement go hand-in-hand–meaning banks cannot afford to ignore social media or the vital consumer segment it is empowering.

The new segment is armed with advice from a bank other than ours. They come to us pre-advised by the large and growing information network we have termed the “Shadow Bank.” Nearly overnight, the Shadow Bank has market share that rivals the largest consumer banks in the world.  Social media has not just created a new channel for us to consider, it has created a new competitor. Read More »

Consumers who use social media are two-times more likely to proactively take actions such as shop for a new bank, and move balances between banks, versus a less connected consumer.

We told you last week that consumers who proactively manage their finances are more likely to purchase financial products and report much higher satisfaction with the products they purchase. Social media is now a key area where customers are now engaging with their finances.

How are people engaging with banks through the social media world? In the Council’s recent survey of over 3,000 banking product consumers, over 30% reported using social media to communicate and learn about banking related issues.  More specifically,

• 18% of consumers are sharing frustrations
• 17% are using their networks to aid in financial decision making
• 12% are making bank recommendations to others.

But the implications are more important than you may think. Learn more about the social media savvy customer and the ways in which they interact with their bank by reviewing early findings from the Social Media Consumer Survey or by joining our upcoming webinar on 20 April or 28 April.

Given tremendous global economic changes, you might expect consumers to be more proactively managing their finances.  Yet only 29% of global consumers have engaged in at least one of three important proactive activities over the past year.  Specifically, only 20% kept a formal written budget.  Half as many had a formal written financial plan, and only 6% relied on a financial advisor.

That’s a problem for financial providers because proactive financial management links strongly to product purchase.  Why?  The Council suspects that activities like budgeting and planning boost awareness and openness to how financial products and services can help.  In fact, those who proactively manage their finances also report much higher satisfaction with their financial products—not surprising given that they are more attuned to their financial needs.

Join our webinar on 7-8 April to learn more about consumer financial engagement and the implications for your business.

You might be thinking that your market or your customers are immune, but the data tell a different story.  We surveyed over 18,000 consumers representing 24 countries and found surprisingly low proactive financial management regardless of geography, wealth tier, or age.

The impact of low proactive management is just one of several unsettling findings we’ll cover in our upcoming webinar.  Join us to hear our full analysis of global findings.

Not a member? We invite you to join us for this kick-off webinar by visiting the public registration page.

With everything going on in the world, it’s not surprising that consumer trust and confidence are in short supply. Our recent survey found that customer confidence in our industry is alarmingly low. Only 14% of consumers have complete confidence in the capabilities of financial providers–while 46% have almost none at all.

This is frightening because the purchase of financial products is driven in large part by the consumer’s confidence in providers.

Join our webinar on 7-8 April to learn more about consumer confidence, other drivers of engagement and their implications on your business.

If  you’re thinking, “Well, not in my country,” or, “Not with my customers,” think again.  We surveyed over 18,000 consumers representing 24 countries and found that the data barely changed regardless of geography, wealth tier or age.

This lack of confidence is just one of several startling findings we’ll cover in our upcoming webinar. Join us to hear our full analysis of global findings.

Not a member? We invite you to join us for this kick-off webinar by visiting the public registration page.

Earlier this month, Republicans successfully leveraged their “Pledge to America” campaign strategy to take back a majority in the House of Representatives and secure a stronger minority in the Senate. Taking control of the House and strengthening their position in the Senate will increase Republicans’ influence over the direction of future financial regulatory reform and more specifically, the direction of the Consumer Financial Protection Bureau.

Republicans say that they will use the House Financial Services Committee to ensure that regulators such as the CFPB and FDIC do not introduce overly restrictive rules to the banking industry. Representative Jeb Hensarling, (R-Texas) who serves on the committee, commented, “We don’t want them to regulate capriciously, arbitrarily, without engaging in a cost-benefit analysis.” Many Republicans view their victory as a mandate to overturn much of the Dodd-Frank Act which they see as “overreaching.” Rep. Randy Neugebauer (R-Texas) claimed, “One of our bigger fears is that when the regulations and implementations are started, that they’ll be even more far-reaching than the legislation. And if that’s the case, then I think you are going to see us try to take some action to make some corrections there.”

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