"Financial institutions have tons of information about customers and transactions, but until recently, they have done very little to understand customer behavior. Now customer data and preferences are increasingly important in targeted marketing campaigns," said Steve Ramirez, CEO of Beyond the Arc, a provider of customer experience and advanced analytics solutions for financial services and other industries.
Financial institutions will use more internal customer data as well as third-party data to target their own customers for cross-sales opportunities and to target potential new customers, Ramirez said. "Banks are gaining momentum in their use of Big Data. Last year was more of a proof of concept, 2015 is when they will put this into widespread use."
Though financial institutions have had access to some of this in-house data for years, it wasn't until recently that technology systems gained the power, speed and automation capabilities to quickly perform detailed analyses of data to initiate, augment or change marketing messages. Analysis which used to take several months can now be done almost instantaneously, to make the right offer to the right customer at the right time through the right channel, Ramirez said.
As more consumers replace mobile feature phones with smartphones, they want to use the devices for shopping, messaging and for conducting their banking wherever and whenever they desire. While financial institutions have introduced mobile banking apps, mobile payments are expected to dominate the discussion in 2015.
Apple Pay's mobile wallet was introduced in the fourth quarter of 2014 and is expected to gain significant traction in 2015. Others, including Samsung and CurrentC, a mobile payments solution from a retailers' consortium, will debut later this year, giving further fuel to the mobile payments fire. Forrester Research declared 2015 "the year of Apple Pay" in one of its reports. Capgemini's 2014 World Payments Report predicts that mobile payments will grow 60.8 percent in 2015.
Banks and credit unions should seek to offer payment options as part of their mobile banking apps, said Danny Piangerelli, co-founder and chief technology officer of Malauzai Software, a provider of mobile banking apps for financial institutions.
Besides the convenience, one of the major advantages of Apple Pay is the built-in fingerprint technology on the iPhone 6 and 6s that provides another layer of security for the payments, added Piangerelli, who expects more biometrics to be used to help protect against fraud in 2015.
The recent hack of insurer Anthem again points out the need for financial services companies to be diligent about protecting their data, said Sanjeev Dahiwadkar, president of Indisoft. That means the ability to protect the data not only of current customers, but also ensuring that unneeded records are not retained, including those of former customers -- some of which were compromised in the Anthem hack. Dahiwadkar expects to see an increased use of electronic data shredding to make sure such unneeded electronic information is destroyed thoroughly.
Similarly, Ramirez expects not only fingerprint technology, but biometrics such as voice identification and eye scanning to come into more common use as part of layered security measures to authorize access to customer information.
Consumers have embraced mobile check deposit, the ability to take a picture of a check to deposit it rather than going to the branch. According to San Diego, Calif.-based Mitek, 47 million consumers used the feature in 2014, up from 33 million in 2013. The popularity is expected to grow strongly again in 2015 as more consumers purchase smartphones and choose to use the mobile banking feature.
Additionally, according to Sarah Clark, Mitek's vice president of product, banks will start accepting mobile deposits of business checks this year, enabling small businesses like contractors and roofing companies to accept and deposit checks immediately, rather than waiting to get to a branch or paying an interchange fee for credit card payments.
After a couple of slow years, many financial industry experts expect a pickup in merger and acquisition activity in 2015, further shrinking the number of banks and credit unions. As a result, Kris Bishop, president and CEO of Integrated Legacy Solutions, a Birmingham, Ala. company, expects financial institutions to employ browsers to enable them to use data from older systems if they can't fully convert the data to newer formats. This ability to read disparate data will be pushed out from the headquarters to the branches and off-site locations, he added.
Integration is still a problem that financial institutions will need to address in 2015, agreed Richard Milam, president of EnableSoft, an Orlando, Fla., company. "Financial institutions are still doing a lot of manual stuff in the back room. They can't move at the speed of business. The regulatory pressure is up." So banks under $1 billion in assets need to grow just to meet the regulatory burden. By integrating systems to "move at the speed of business," banks can accelerate their grown, Milam said.
Compliance with state and federal laws is becoming increasing cumbersome and time consuming, but failure to comply is not an option, so Dahiwadkar expects financial institutions to increasingly rely on technology to meet this burden. Financial institutions need to be more proactive than reactive in determining when they can legally initiate a foreclosure, authorize a loan and in making other decisions with potential regulatory implications. "It's accepted now that compliance has to be proactive; this can no longer be done after the fact," he said.