Personal Finance Interview with Carmela Melone on Banks and Technology
MyPrivateBanking Research is a Swiss-based, global research firm that focuses on the best use of online, social and mobile media in the financial services sector. Given how technology is changing the landscape of how we manage our finances and Mint.com is a part of that change (and given some of the recent Bitcoin drama), we thought it would be interesting to catch up with Carmela Melone from MyPrivateBanking Research for more information on banks and technology.
Tell us more about your research.
In our research, we focus on the user's view to provide financial services firms with the required insights to improve the customer orientation of the digital channels. We are fully independent and offer our research in dedicated research reports that provide our clients with thorough analysis and detailed recommendations on how to optimize their websites, social media presences and mobile solutions.
Are banks keeping up with technology trends?
One of the most remarkable technology trends is the increasing number of mobile apps for tablets and smartphones while the penetration of such devices is increasing, especially among the important target group of wealthy clients. These clients nowadays prefer to handle their financial matters digitally and independently.
Banks should therefore bear in mind that in today's technological world, a poor mobile performance increases the threat of losing clients. Though we can see progress in this area, there are still critical shortcomings banks must confront because they often cover only the most basic features clients expect from mobile apps which is not sufficient, especially for high net worth clients.
As our recent report on mobile apps for wealth management has shown, only 43 percent of the institutions provide portfolio analytics or, still even worse, only 30 percent offer trading/brokerage functions on their mobile apps.
How is today's technology changing the way we think about and manage our money?
A client of a bank or wealth manager nowadays has technology at her fingertips for managing her finances that a few years ago only a financial specialist had. The role of the financial advisor turns into a supporting rather than managing function because the customer is able to manage and monitor her own finances through increasingly professional tools on her PC, smartphone or tablet.
Clients are much more "up-to-date" concerning their accounts, savings and assets and know a lot about the opportunities and threats of the markets which makes them more independent and self-determined. Another development is that the financial advisor will increasingly face competition by the so-called robo-advisors that generate individual solutions based on software algorithms. Advisors will change into a coaching or psychological role, representing the "human" side of the advisory activity.
How do you think tools like Mint are contributing to this change?
Tools like Mint and other personal finance platforms contribute to this change by providing the possibility to view, analyze, discuss and share information about all sorts of financial matters. Bank clients are freed from their providers' platforms and can take matters in their own hands using sophisticated technology and highly developed analytical tools. In fact, a bank client today is able to use highly sophisticated software on the Internet that was only a few years ago available to big banks with even bigger technology budgets.
Are banks providing enough information to the general public?
Imagine a young person who plans an investment or a bank account and tries to make a profound decision of which bank to choose. The first step she takes is definitely digital. And here is the point where banks become the biggest winner or the biggest loser: The potential client expects first and foremost transparency concerning important information about costs and fees, financial performance of the bank and the bank's stability. According to our research, especially private banks and wealth managers act rather defensive online, holding back information and showing too little public transparency.
How is social media changing the way we see money?
Social media is an important tool for brand building and offering a room for debate and customer service. Social media channels are also platforms where people can share and discuss their investment ideas or other financial matters like, for example, on the platform Stockpickr or The Street.
Social media is also about to become itself a channel to make payments or other financial transactions. There are already several banks with Facebook branches offering transactional capabilities. Banks must bear in mind that technology is developing unpredictably fast so they must be ready to cope with these developments rapidly and adapt their strategies on the fly.
Even though we could figure out a few private banks with outstanding social media performances, our report on social media in wealth management showed that still less than 50 percent of the surveyed banks and wealth managers offer dedicated presences in the main social media channels.
Carmela Melone is an analyst at MyPrivateBanking Research, and holds a degree in International Economics and European Studies with a focus on International Trade and Finance. Carmela specializes in the analysis of mobile apps and social media.
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