What Consumers Think About Online Fraud
From RSA, findings from the latest consumer online fraud survey of 1678 adults from 8 countries
Consumers say ‘Username-&-Password’ must go: 91% of account-holders are willing to use stronger authentication methods offered by financial institutions
Trust in the online channel continues to drop: 52% are “less likely” to sign-up for or use online banking; 82% are “less likely to respond” to banking-related e-mails
The Appearance of Security
Sitekey was touted as the great solution to avoid phishing scams. When you first log into a Bank of America account, you are asked to choose an image like a basket of fruit. That becomes your site key or indicator that the Bank of America website you logged into is a real Bank of America site and not a fraudulent one designed to capture your account numbers.
Problem is less than 10% of online customers with site keys will stop and go no further on a so-called Bank of America website that does NOT have the image.
Study finds security flaws on web sites of major banks.
Internet security experts have long known that simple passwords do not fully defend online bank accounts from determined fraud artists. Now a study suggests that a popular secondary security measure provides little additional protection.
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The Harvard and M.I.T. researchers, however, found that most online banking customers did not notice when the SiteKey images were absent. When respondents logged in during the study, they saw a site maintenance message on the screen where their image and phrases should have been pictured. The error message also had a conspicuous spelling mistake, further suggesting something fishy,.
Online Banking Gets More Sophisticated
The holy grail for all the financial providers is to get all of a customer's assets and debts in one place.
Online Banking Gets More Sophisticated
So now banks are offering new tools to let clients transfer funds between institutions, pay bills faster, analyze spending.
By getting customers to spend more time at their websites, banks hope to open more new accounts and bring in more assets.
In the latest move, Yodlee Inc., which manages online services for many financial institutions, is introducing a product today that allows consumers to track their spending across all of their accounts -- regardless of where those accounts are held -- and make same-day bill payments. Yodlee says it is currently in "advanced discussions" with 10 to 12 financial-services companies to offer the product to their customers.
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More banks are expanding their "account aggregation" programs, in which details of a clients' bank, mutual-fund, brokerage, 401(k) and other accounts are presented on a single screen. Although the service has been around for several years, banks are only now starting to use it to power personal-finance management. Last year, Bank of America relaunched its account-aggregation service by allowing customers to access it with a single sign-on from their online-banking account. Since then, the number of people enrolled in the program has tripled.
Financial sites slow to RSS
More marketing money for blogs, RSS
Devoting marketing resources to blogs, RSS and social networks is most popular among consumer products and media/communications companies, and the least attractive to financial services firms
Anthropologist to the Wealthy
Larry Samuel is an anthropologist of the very wealthy who has classified American millionaires into five archetypes, each with its own passion points and style of consumption.
They're are the thrilliionaires, the coolinaires, the realionaires, the wellionaires and the willionaires. Daniel Gross decodes the cute terms for you over at Slate.
Samuels' clever terms, including the Trend Commandments, market his services as a hip consultant and his firm Culture Planning to those who sell to the very rich.
Where Schwab beats Fidelity
More than half of the $75 billion Charles Schwab & Co took in last year came from independent financial advisors reports Financial Advisor Magazine.
The unit provides custodial, trading and support services to independent advisors. These advisors, who sell advice rather than products, house their clients' assets at Schwab, a licensed broker-dealer, and execute their trades through Schwab. Schwab also provides much of the advisors' administrative support.
Schwab Institutional is growing faster than Schwab's two other main businesses: Schwab Investor Services, the company's retail brokerage business, and US Trust, a wealth management firm serving individual and institutional clients.
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The increase in independents reflects advisors who have left large firms or migrated to the advisory business from other industries, Gallant said.
There are several reasons advisors choose to strike out on their own: the opportunity to be their own boss, earn more and create a business they can sell or pass onto their
children. Some advisors were also forced out on their own following layoffs at large firms.
Schwab Institutional's market share in late 2004 was almost 23%, compared with 8% for Fidelity Investments, its next closest competitor, Schwab said, citing data from Cerulli.
Dumbest moments
I confess it. I love lists that let me indulge in schadenfreude.
Take Business 2.0's 101 dumbest moments in business.
The winner for the dumbest moment in outsourcing is JP Morgan Chase who had to apologize for sending a form letter about its credit card services to an Arab American man in California addressed to "Palestinian Bomber."
Read the article for far dumber moments.
Banking Industry Trends in 2006
From the Aite Group,
After three consecutive years of annual profits exceeding US$100 billion, U.S. commercial banks are thriving. In 2006, however, between volatile interest rates, bad loans, declining demand for mortgage financing, and regulatory compliance pressures, U.S. banks will find themselves navigating through rough waters. But while risk and compliance issues will remain at the forefront, Aite Group predicts that U.S. banks will nonetheless engage more aggressively in pursuing untapped customer segments, marketing innovative products, refreshing key components of their technology infrastructure, leveraging the Internet better to attract new customers and cross-sell to existing ones, and battling at the point-of-sale to deliver more value to merchants and consumers.
Top 10 Banking Industry Trends in 2006.
The Market for Online Finance Portals
The Market for Online Finance Portals
December 2005 - Unique Audience
1. Yahoo Finance - 10.6mm
2. MSN Money - 9.8mm
3. AOL Finance - 8.1mm
4. Forbes.com - 8.1mm
5. Dow Jones Online - 7.5mm (inc. MarketWatch and WSJ)
(Source: Nielsen/NetRatings via Crain's):
Time's Up
Too many customers were complaining about long waits at NatWest banks in England.
So what did the company do?
They removed the clocks. via Johnnie Moore
When will sports become an asset class?
Nellie Linde over at New Persuasion contemplates the near and new future when sports betting will be just another part of the stock market.
Financial Services - Serious Change Ahead
So what is the difference between investing, hedging and gambling anyway?
Selling your bank door-to-door
Seth Godin has seen a sign of the times. When financial services becomes a commodity, bank vice presidents take up door-to-door selling. I've seen real estate agents do the same thing.
Online banking customers scared off
Online ID theft worsens, scares US customers All I know, being required to change passwords every 3 months is a pain. I don't do it so I don't bank online. I'm waiting for the RSA SecurID Appliance. Flash demo here
"Consumers can do everything right—not give out passwords or financial information—and still become victims," said Susanna Montezemolo, a policy analyst at Consumers Union, in an interview.
An October survey commissioned by Internet security company Entrust Inc. and released at the forum found that 18 percent of Americans who have banked online now do so less, or not at all, because of security concerns. Ninety-four percent say they're willing to accept extra online security protections.
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The council, composed of U.S. regulators including the Federal Reserve and Federal Deposit Insurance Corp., expects banks to require at least two forms of authentication when the risks of online breaches are too high. The second form can include smart cards, tokens that generate random passwords, or biometrics that identify fingerprints or handwriting.
Some 10 million Americans are ID theft victims each year, the Federal Trade Commission
--Consumers, moreover, complain about cumbersome security procedures. Tuesday's survey showed 81 percent don't want to pay for extra online banking protection.
Phantoms and Rogue Banks
How ATM fraud nearly brought down British banking.
This is the story of how the UK banking system could have collapsed in the early 1990s, but for the forbearance of a junior barrister who also happened to be an expert in computer law - and who discovered that at that time the computing department of one of the banks issuing ATM cards had "gone rogue", cracking PINs and taking money from customers' accounts with abandon.
The reason you're hearing it now is that, with Chip and PIN cards finally in widespread use in the UK, the risk of the ATM network being abused as it was has fallen away. And now that junior barrister, Alistair Kelman, wanted to get paid for thousands of pounds of work that he did under legal aid, when he was running a class action on behalf of more than 2,000 people who had suffered "phantom withdrawals" from their bank accounts. What you're about to read comes from the documents he submitted last week to the High Court, pursuing his claim to payment
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Kelman thinks that during the 1990s, “the UK banking system was gravely at risk of collapse at all times because of this substantial security flaw."
Banks will Adopt Two factor authentication
Federal regulators will soon require two factor authentication for bank web sites according a letter to banks last week.
User names and passwords are just to easy to exploit by criminals.
Security keyrings are being distributed to 30,000 online customers of Lloyds TSB Bank. to provide two-factor authentication.
To log into their accounts, customers must provide a new six digit number from their keyrings. The numbers change every 30 seconds. Each keyring has a unique identity and the customer must provide a password as well.
Two factor authentication
Keep the Change
I think this is brilliant. Kudos to Bank of America as they implement the new "Keep the Change" program.
The service dubbed "Keep the Change" allows customers to round up their debit card purchases to the nearest dollar and put the change into an interest-earning savings account.
For example, a debit card purchase of a sandwich and drink for $5.45 would be increased to $6, with the extra 55 cents going into the customer's savings account.
"Our customers have told us they're not saving the way they wish they were," Diane Morais, senior vice president of deposits and debit products, said Tuesday.
"We designed a very simple way to do it with what they do every day," she said. "It provides an easy way to save so they won't miss it."
To drum up interest in the "Keep the Change" program, the bank will match all contributions to the savings account for the first three months. After that, the bank will match 5 percent of the total. The matching funds would be credited annually.
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The bank has an annual cap of $250 for "Keep the Change" deposits. And the bank requires a minimum balance of $100 for a customer to obtain the service.
"It's very simple and that's the beauty of it," Morais said. "It's easy to understand and our customers get it immediately. And the response has been great."
While the savings rate in the United States was as high as 11 percent in the post-World War II era, it has plummeted to less than 2 percent in recent years.
Morais said the program is not aimed at any particular type of customer. "It has universal appeal," she said. "Everyone wants to save money for their children's education or for special purchases."
Retail Banking Trends
Number of branches (1994 – 2004) up 6%
Number of banks (1994 – 2004) down 29%
Average retail banking customer attrition rate: 12% to 15%
Cost to acquire a new customer: 5 to 10 times more than retaining an existing one
From an invitation for a free web seminar hosted by Microsoft and Getronics and featuring the Tower Group.
Money Against Data Theft
Soaring 900% this year says Tech Confidential
In an analysis of Fortune 1000 companies, the Ponemon Institute LLC, a Tuscon, Ariz., think tank, projected that spending on technology to safeguard private information will soar more than 900% this year as compared to 2004, with these corporations collectively spending more than $150 million – or $478,000 each – in 2005.
Trusts in Brokerage Firms
When you think of trusts, you probably think bank, private bank. And yes, banks have a lot of personal trust assets. The Bank of America has over $125 billion, Wells Fargo has $62B, PNC Bank has $38B, and JP Morgan Chase has $28B in personal trust assets.
But times they are a changing and so is the source of wealth which is most likely to come from an individual's own efforts than from inherited wealth. That, coupled with dissatisfaction with the performance of many banks, has led many people to brokerage firms,
Today, brokerage firms have a 32% market share of institutional and personal trust business, up from 5% in 1991.
Many banks have been slow in coordinating the various departments involved in asset management. Mergers disrupt long-standing relationships between upscale customers and personal trust officers. These factors create two distinct advantages for brokerage firms. First, an increasing amount of US wealth involves “first generation” money; the emerging affluent crowd is heavily populated by entrepreneurial business owners and corporate executives. Second, younger consumers prefer integrated and automated services and view regional brokerage offices as a reasonable substitute for bank branches.
Source. Tiburon Strategic Advisors, Report on Leading Distribution Channels, July 8, 2005
Dear Mastercard
Loren Steffy has written what we all would like to - Open Letter to my Dearest Creditor in the Houston Chronicle
Dear Mastercard
This is to inform you of a change in our credit agreement. It has come to my attention that you are unable to keep my credit and debit card information safe.
You recently revealed that data on more than 40 million accounts may have been exposed to fraud because of a security breach at a payment processing company. Information in about 200,000 accounts is known to have been stolen.
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What are we, as consumers, to do? I spent a lot of time over the past few days wrestling with this question, and then the answer came in the mail. It came in the form of a notice from one of my credit card companies (not you, this time) that had decided to change the terms of the credit agreement and tell me about it after the fact.
It's funny how you guys can't keep track of our account information, but you have no trouble keeping track of the sundry fees you levy against us.You probably see where I'm going with this. What's sauce for us consumer geese is sauce for you, the credit card gander.
Revised agreement
So here goes:
Effective May 1, 2005, any compromise of my data will result in a $50 liability for you, the card issuer, owed to me, the card holder.
Cashing the payment check I sent you last month (which you did) shall constitute your acceptance of this agreement. Subsequent security breaches will compound the fee.
I will spell out the terms of just how much these fees and related costs will escalate as soon as I find a typeface that is small enough.
Failure to comply with these changes will result in finance charges, compounded monthly and based on the average daily balance of the amount lost to fraud.
By the way, I recently incorporated myself in South Dakota, which means I can now engage in usury as much as you can. Therefore, I have selected an annual percentage rate of 28.7 percent. However, failure to make payments will force me to raise this rate to 73.9 percent, just because I can.
And one more thing. I expect my payment to be on my desk by 12:37 p.m. on the day it's due. I'm usually at lunch at that time, so I will consider it late if it's not there by 11:24 a.m. After that, all the previously listed finance charges will apply. The date the payment is mailed is irrelevant.
Also, given the widespread nature of the security problems, I am going to share information with my fellow consumers. If I determine you failed to secure their private account information, I may be forced to enact the terms specified in this agreement even though you did not violate the agreement with me. Call it universal default in reverse.
One more thing
Before I close, let me take a minute to tell you about an exciting new offer: security breach insurance.
For the low, low price of just $45 a month, I will agree to waive the fees described in my new fraud prevention agreement. Finance charges will still apply. I also require a $30 processing fee. It's a small price for piece of mind. Just think, no longer will you have to worry about the cost of your incompetence. Just think of the savings!
I believe that these changes will greatly enhance our mutual credit experience. I look forward to the benefits of our new and improved relationship.
Fondly,
Your loyal customer.
Year of the Data Breach
It's up to 50 million now. Fifty million accounts that have been exposed to the possibility of identity fraud in this year of the data breach.
Jonathan Krim explores why in the Washington Post, Ubiquitous Technology, Bad Practices Drive Up Data Theft.
There's a great graph as well, just click for a large image.
Meeting customer needs
From Tom Brown's Bankstocks - Gallup on Banking: how Wachovia's focus on meeting customer needs is producing sharply better returns for stockholders.
DUH.
Online ID theft
According to a recent survey, some 17% of people have stopped banking online and 13% have stopped shopping online because of concerns about identity theft.
Holistic Money & Life Advice Franchise
You've probably never heard of SEI Investments even though it administers $291 billion in assets with offices in 12 countries and more than 2000 employees.
CEO Alfred West Jr wants SEI to become as much of a household name as American Express and he plans to do it with storefront franchises offering financial advice to the 50+ market.
West said the program was launched because he believes that baby boomers are not having their accumulated wealth managed well enough by the myriad stock brokers, insurance agents and estate planners that sell specialty services but do not consider an individual's total needs or goals.
"The baby boomer does have different needs than the previous generation, and the financial service industry is not set up well to cater to this individual," West said.
Under what SEI calls a "holistic" approach, the SEI Wealth Network franchises provide not only financial, estate and risk management but also advice with aging family care, life and career redirection, business transition and philanthropy. Instead of being charged a fee based on a percentage of assets, clients are charged an annual fee based on the complexity of their financial and "life" situation.
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SEI has already opened two franchises and an additional four or five have signed on to become franchises. Locations include Philadelphia, Chicago, Seattle, San Diego and Little Rock, Ark. SEI also runs company-owned wealth management offices in Boston and Philadelphia. SEI uses the offices to help develop services for the franchises.
.....SEI would like to have 200 franchises within four or five years.
Well, they've got the market pegged right. Most of the money is with the boomers. Holistic approach works too. I'm going to watch this one.
I can dream, can't I?
From Huzzah! UK banks move toward two-factor authentication by Scott Pinzon
And I say, now that they're heading in the right direction, I hope they hurry. Maybe it'll goad the U.S. into following suit.
ZDnet UK reported last week that British banks are close to agreeing upon a standard for using a physical device that each banking customer will carry. It generates a one-time-use password each time the customer needs to authenticate their identity (that is, prove who they are). The devices could be in everyone's hands in as little as nine months to a year.
Quick review: identity can be proven by
▪ Something you know
▪ Something you have
▪ Something you are
Most of the systems we encounter each day make us prove our identity by "something we know" -- a password or a PIN. Requiring any two of the three points above is called two-factor authentication and can provide much stronger security than passwords alone, which are notoriously weak authenticators.
The U.K. move looks particularly enlightened when juxtaposed against recent U.S. security developments. Consumer database giants LexisNexis and ChoicePoint both revealed to a Senate committee that their systems have been breached many times, yet both companies withheld that fact from the affected customers. The personal records of 310,000 customers were compromised. ChoicePoint's President admitted there have been "45 or 50 breaches." A LexisNexis executive admitted that of breaches there, "All but 4 or 5 ... were due to compromised passwords."
Until further legislation compels U.S. businesses to be honest about their sloppy security practices, it's every consumer for himself.
Can you see why I think two-factor authentication is a good move? Even the lamest consumer can't compromise a one-time password he or she doesn't know. I'd rather have banks dealing with the fact that people might lose their authentication devices, than dealing with the fallout of blabbermouth employees or customers revealing passwords that jeopardize the private accounts of us all. Godspeed, U.K. banks! Wise up, America! -
Every banking customer with an RSA SecurID is my dream. It opens up an immense market for our ESOL online.
It's simply the best protection available against identity theft, phishing and internal corporate thieves.
Unmet Needs or Making Women Smile
Some people are just naturals when it comes to understanding and marketing to women. Take this guy Bill, a natural. And you can tell by his 28 ways to make a girl smile.
So is Jory des Jardins at Pause. She writes about the recent Marketing to Women conference
Those whose livelihoods depend on marketing to women are fairly screwed; imagine resting your career on an ever-shifting market. The opening presentation, given by Frank About Women, asserted that demo targeting is a no-no when marketing to women. Afterall, who is, say, the typical mother of a small child? Today, she's in her teens, 20s, 30s, 40s, 50s, or older if she's the primary caretaker of a grandchild. She's got a husband, or no husband, or maybe a wife. She spends her husband's money, or she spends her money on her husband. She floats between monikers of stay-at-home Mom, career woman, desperate housewife, DIY home renovator. Whoever she is, she prefers that you provide her with a solution, not a lifestyle option--she's already made her choices there, thank you.
I was comforted to know that Superwoman has been killed off; products will do well that don't promise to help women do it all. Good marketing must acknowledge the parts of her life that CAN be salvaged. Calgon sort of did that eons ago, but today there's less of a Sylvia Plath-like response to the competing pressures of career and domestic responsibility. Nor do women relate to themselves by job title. Over lunch I met the CEO of a multi-million-dollar company. She introduced herself as an entrepreneur.
I know, understanding women is a tall order, but I want to help. I'll start by telling you what I want, or what I think I want, as the sad story for women like me is we often know more about what we don't want. Here are some of my "touchpoints," mundane opportunities that marketers can exploit to make me a customer for life. Do with them what you will:
To read her touchpoints, go here.
Don't miss her takedown of the Bank of America and their terrible practice of charging small businesses to deposit checks via ATM in Banks: a notoriously inhospitable industry. Now Jory is a prominent woman blogger who writes engagingly on "working without a net" which is what she calls self-employment.
She also is one of the organizers of the Blogher conference for woman bloggers on July 30. Her story has and will travel widely in the blogosphere, among people who connect to each other to share stories and help each other live better lives. How many people won't set up accounts at Bank of America because of Jory's story and the discussion in her comments. If banks will pay $300-$500 for a new account, how much have they lost because of Jory's post.
Does anyone at Bank of America keep track of what bloggers are saying about them on the world wide web? If they did, they would be making changes more quickly then they are. When the richest source of new accounts is new businesses by middle-aged men and women, why do banks make it so hard for the self-employed? Why aren't they reaching out to the self-employed, figuring out what they need, and creating local support networks to attract new customers?
Shoshanna Zuboff writes in "The Support Economy: Why Corporations Are Failing Individuals and the Next Episode of Capitalism" (Shoshana Zuboff, James Maxmin) that economic value is distributed in the unmet needs of individuals. She also writes that history teaches us that those enterprises that move decisively to reconnect with an alienated population get rich first.
What about it Bank of America? Why don't you make your self-employed women smile?
Wealth Managers Do Better
What makes a successful independent broker-dealer?
Well you have to do a lot more than manage investments which appears to be turning into a commodity business. You have to do more, offer more, give better value to your clients. Those that do offer additional wealth management services do significantly better according to a recent article in Financial Advisor magazine.
A survey of 1028 broker-dealers in January by AssetMark found that wealth managers by offering more services do much better than pure investment managers.
What kind of services - estate planning (20% offered), life insurance (19% offered), income tax planning (16% offered), charitable planned giving (16% offered), and asset protection planning (8% offered).
Interesting too is the source of referrals. Among investment generalists almost 70% relied on accountants while wealth managers depended more heavily on attorney referrals (58%).
Ladies Banking
Okay, so they don't let women drive or vote, but the Saudis do allow women to control their own money. Still I was gobsmacked to learn that Banque Saudi Farsi is breaking all tradition to advertise on TV and in print. their "Ladies Banking"
Eric Phanner has the story in the New York Times
"You have your dreams. You have your ambitions," a voice-over says in Arabic. "You are not alone," it continues. "With you is Banque Saudi Fransi."
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A similar print ad uses a simple image of a woman silhouetted against a fiery sky. Jean-Francois Benazet, a marketing manager with the bank, said Saudi women "need to know the bank will be a friend and help them through life stages."
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As the account executive said, "If you can show women, you will look especially at their needs, you can do a lot of business."
