Asset Based Lending
Chief Investment Officer
Commercial Loan Automation
BirdsEye Viewinsights from google usage patterns
Google has more information about banking (and everything else, for that matter), than pretty much any private entity in the world. Which is why, when Financial Brand's annual recap of Google search trends comes out, I listen. The following charts paint a fascinating visual picture of the current banking landscape. Several of the charts reinforce steps many have already taken, such as moving away from free checking and making investments in mobile and tablet services, as well as key areas of focus for 2014, including Big Data, Omni-channel banking, and the need for a presence on Facebook and other social media. Most of the words are mine, but some comments come directly from Financial Brand.
1. Banks vs. credit unions
People searching for banks on Google outweigh credit unions by a factor of at least four, but the gap appears to be narrowing slightly. Credit unions are holding steady while banks seem to be in an ever-so-slight decline. This is interesting especially since banks perceive credit unions to be an important competitor to them in many markets. Also, CUs always win the war for customer satisfaction. And yet, as this chart shows, banks have a much better opportunity to acquire new customers - as an industry vs. any individual bank - than CUs.
2. Checking accounts vs. free checking
More and more people are searching for just plain old "checking accounts," while fewer consumers are using the more specific search term "free checking." Maybe people just expect checking to be free these days. Or perhaps the decline in the number of institutions offering free checking is having an impact on people's search behaviors? Customer acquisition trends reported at our forums seem to indicate that free checking accounts are still a more effective acquisition engine, but the quality, low profitability and longevity of these accounts bring into question that acquisition strategy. The general experience of those who have switched from free to fee has been positive - fewer accounts but more deposits, both overall and per account.
3. Debit vs. prepaid cards
After experiencing a slight lull during the Great Recession, searches on Google for both debit and prepaid cards are growing at a healthy clip. In 2004, people searched for prepaid cards more than they did for debit cards, but now it's the other way around. Twice as many people are looking for debit cards as they are prepaid cards. I find this particularly fascinating since in late 2012 the "next big thing" for many SuperCommunity Banks was the prepaid card. The product was introduced in some banks without a clear focus, definition of success, or targeted segments. It hasn't done too well in many banks, as opposed to the continued success of debit cards. The Google data supports this anecdotal experience.
4. Big data is a trendy topic on the rise
A mere three years ago, the subject of "big data" was barely a twinkle in data analysts' eyes. But starting in January 2012, the topic started to weave its way into business vernacular. Now it's a full-blown trend. Executives are searching for the term "big data" more frequently, as everyone continues to wrestle with what it is and how they might implement it. My "take": while I believe in being on the cutting edge with mobile offerings, I'd approach Big Data with caution. Be very specific and quantitative regarding expected results, whether financial in nature or not. The trend smacks too much of CRM to me, which was another buzz-word with much promise and too little returns in many (but not all) installations.
5. Credit scores concern consumers
Consumers are increasingly concerned about the importance of their credit scores. As you can see, there appears to be a degree of sawtooth seasonality to people's searches for information related to "credit scores." You'd think this trend might suggest a possible renewed interest in consumer lending... that is, until you look at the next chart.
6. Consumer lending: auto loans are the only bright spot
You can see the spike in lending searches occurring somewhere between 2006 and the middle of 2007. But lending-related searches have been down and have generally stayed down for the last five to six years. The only exception is car loans, which appear to be making a rebound to pre-crisis levels. Of course, vendor management risks might put a curb on this one...
7. Home equity loans flat line
Millions of borrowers are upside down with their mortgage. Many have been foreclosed. Others sold their homes and now rent. Looking at Google search traffic volumes, it would appear that the home equity lending market will remain depressed for some time to come.
8. Credit cards climb steadily
According to Google trend analysis, consumer interest in credit cards is greater than it's ever been, well above levels seen before the financial meltdown. I've been a proponent of owning your credit card portfolio for many years, and this figure just validated what we already know. This is a core product, a growth product, and a profitable product. Banks know how to manage credit risk, and if they don't, there are plenty of vendors who can help them do so effectively.
9. Bank branches are wildly popular
Google searches for bank branches are surging at a mind-numbing pace - up roughly 200% in the last six years. What this means isn't entirely clear - particularly in light of the charts that follow - but it certainly doesn't suggest that "branches are dying" (as many pundits have predicted). My "take": this confirms what we have suspected all along: branch proximity is an important criterion for bank selection. It is where major purchases of financial services take place. But this does not mean that routine transactions should not be moved to self-serve channels.
10. Mobile banking's meteoric rise
Seven years ago, practically no one searched Google for anything related to mobile banking. And then... the iPhone came along. Now consumers see smartphones as an integral part of the financial toolbox. Consumer interest in mobile banking is climbing at a sustained 30° angle, with no signs of letting up. Do you need any more convincing that mobile devices are the future cornerstone of transactional banking? Then look at the next chart...
11. iPad and tablet banking take off
If it weren't for Apple, banks and credit unions would be minus two extra delivery channels they have today (iPhone and iPad). As you can see, the introduction of iPads all of a sudden spurred a whole new wave of innovations that spark consumers' curiosity, resulting in a surge in Google searches.
12. Video banking loses its luster
Video banking seems to be a concept that saw its zenith around 2010. Interest appears to have tapered off, but at least it's holding steady. Don't expect this trend to continue though. At some point in the not-too-distant-future, video banking (and similar video chat services) will be commonplace in the banking world. Too many pilots are going on, and too many branches need to be closed. Video banking seems to offer a practical solution to both customer and shareholder needs.
13. Omni-channel banking: a concept that's in vogue
Now there are so many retail delivery channels to manage that we need new terminology to describe the process. In the last 24 months, the concept of "Omni-channel" strategies have become the latest rage to sweep through the banking world. It's just a new buzz-word for offering all channels to all customers and let them choose. My hero, Dick Kovacevitch, coined the term "where, when, and how" the customer chooses to interact with the bank. Today's translation: Omni-channel banking.
14. Facebook and Twitter: Banks vs. Credit Unions
One look at this chart and you'd quickly conclude that Facebook is the only social channel that matters in banking. By comparison, Twitter barely registers. Searches for credit unions on Facebook (green line) are about half as frequent as searches for banks on YouTube. I find this to be an outstanding opportunity for banks who do not have strong presence in social media to participate in the conversations about them and the industry, and therefore to influence it. Banks seek to control the conversation, which is impossible, and therefore limit access to social media. The irony is, the conversation is taking place anyway. Being absent from it doesn't stop it. People today communicate through social media. It's an opportunity that should not be missed, or else it will turn into a threat.
As to monetizing social media, we should learn from others in the space. First you get the eyeballs, then you get the business. We have no followers to speak of, and therefore cannot monetize this offering.
15. Content marketing: a new code word for "social media"
Expect to hear about "content marketing" more and more in the years to come. First it was called "web 2.0." Then it was called "social media." These days, the vogue term for social media is "content marketing." Practitioners will tell you content marketing encompasses more than just social channels (e.g., newsletters and email), but at the end of the day, the bulk of the output is generated for social platforms - primarily Facebook, YouTube, Twitter and blogs. It has to do with the eyeballs mentioned above. People are attracted to content, not to advertising per se. Hence, put out solid content and the eyeballs will follow. Banks have not focused much on this opportunity, but they should.
Take a moment to consider what these data points mean to you and your bank; where you should invest precious resources, and how you plan on capitalizing upon the opportunities revealed by the data. This coming year can be a year of great prosperity, but only if you focus, marshal resources, and avoid the fads that have always plagued us, now more than ever.