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Thursday, Mar 28, 2024

Tech Changes Appeal to Youth

Lately the barrage of television advertising for banks is taking a decidedly different turn. There’s the Citibank commercial that shows a couple making their last car payment with the push of a few cell phone buttons while driving in their car. And there are the Washington Mutual bankers opening checking and savings accounts in the buff. The commercials herald some of the newest technologies hitting the industry and they highlight the latest stage on which banks will compete. Advancements in technology, new laws that lift some of the need for paper and, perhaps most of all, a desire to capture 20- and 30-year old customers is driving a push by banks to adapt more and newer technologies. Among them: electronic deposit capture, which allows the user to make bank deposits remotely, checking and savings accounts that can be opened entirely online and mobile banking that can be done from a cell phone. “The banks are rapidly adopting mobile banking as an extension of online banking as a first step,” said Red Gillen, senior analyst at Celent. “All of the top 10 banks in the U.S. have either announced or launched a mobile banking initiative.” With competition for banking customers steep, the banks are using technology to enhance the services they can offer. The thinking is, the more services a customer uses from its bank, the less likely that customer will be to switch banking relationships, Gillen said. Some of the services are designed for convenience by eliminating the need to travel to the bank branch to conduct a transaction. Consider E-Deposit, a service geared to commercial users from City National Bank. The system, rolled out in March, 2006, uses a specially developed scanner to prepare and submit checks for deposit. City National, one of the earliest adopters, has since been joined by many banks offering similar services. “When this product was first rolled out we thought it was going to be more attractive to bigger businesses,” said Nadilee Russell, senior vice president, cash management for City National Bank. “We found small businesses are adapting it the fastest.” Small business owners like medical and dental offices and even mom-and-pop shops, would typically make one or two trips to the bank to deposit checks each week. With remote deposit capture they can make deposits daily, bad news for customers who had previously banked on a few day’s leeway to cover checks but a boon to the owners’ cash flow. In addition, the system automates the process of photocopying and tallying checks and manually preparing a ticket for the deposit. “Now you transmit, and what’s been saved is the prep time, drive time, standing at the branch or the cost of roughly around $100 a month for a courier,” said Russell. One of the simpler technologies now launching, the move into remote deposit capture was less about advancements in technology than it was about legislative changes. Check 21, the fed’s Check Clearing for the 21st Century Act, for the first time allowed banks to process checks electronically without having to transfer the actual paper check, clearing the way for remote deposit services. “It’s really a must-have product solution for U.S. banks today,” said Don Rhodes, policy manager, payments and technology at American Bankers Association, the industry’s trade group. “I think you’re seeing it in all the largest banks and even in the large, regional banks and community banks because it’s such a convenience to everyone in the supply chain.” The loosening of paperwork requirements for banks also facilitated WaMu’s newest online checking and savings account services. Although most banks allow customers to conduct some aspects of opening a checking or savings account online, the transaction usually has to be completed either by sending a signature card into the bank by mail or walking it into a branch. What WaMu has done is eliminate that step by creating technology that allows it to use the first check a new customer writes instead of completing a signature card, a move made possible by changes in electronic disclosure requirements along with some very sophisticated technology. The bank claims customers can now open these accounts online in under 10 minutes. With the introduction of the online service last year, WaMu is opening about 1,000 net new accounts per day. “Prior to us launching this, we did far under 10 percent of the volume of accounts we’re doing now,” said Richard Blunck, director of e-commerce at WaMu. But perhaps the strongest impetus behind the move relates to changing demographics. “The other big motivation is to really pursue a demographic group that is growing up much more electronically enabled than other demographic groups,” said Blunck. “If you look at 18- to 30-year-olds, they are going to be doing stuff online and it’s really important to us to have a great solution online.” The younger demographic is also behind the drive to mobile banking. Although so far, the systems are limited to such things as checking balances and other records like checks paid, most see mobile banking evolving to include many other features, not the least of which is making payments directly from cell phones. “We did some surveys and asked Gen Y types if they would use their mobile phone as a wallet at a store,” said Gillen. “Forty-four percent of respondents said they would like to use their phone as a mobile wallet. The technology doesn’t even exist yet and 44 percent said they are interested in it. That’s an astounding fact.”

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