Cross-Selling to Gen-Y Banking Consumers

Rob Rubin

72% of adults under age 30 who are shopping for checking accounts are also in the market for other banking products. To capitalize, institutions must align their channel experiences, offer rewards for deeper relationships and focus on cross-selling in the branch.

Over the last few weeks we surveyed checking account shoppers on and found that 63% of these shoppers are also shopping for other banking products. Seventy-two percent of shoppers under 30 are shopping for more than just a checking account – 36% also want a savings or money market account and 26% also want a credit card.

Financial marketers should consider these three ideas when trying to win over Gen-Y consumers:

Align channel experiences. Research has revealed that younger consumers would rather open accounts in branches because they want to make sure they’re getting what they really need. When we observe Gen-Y consumers, we see how a poor online presentation eliminates many institutions from consideration. One way to align channel experiences is to train the branch sales staff to sell using website content instead of the traditional tri-fold brochure. Of course, branch staff can’t effectively use the website to sell if it isn’t working when shoppers are alone online at home.

Reward deeper relationships. Many institutions already offer rate discounts if certain loans are paid through an account transfer from a checking account. But a small percentage of young consumers are shopping for mortgages compared to the number that are shopping for checking accounts or credit cards. Data suggests young consumers are more likely than others to be interested in additional account features like debit rewards cards. Checking accounts that reward customers for deeper engagement could persuade younger consumers to consolidate more of their financial products under your roof.

Cross-sell in the branch. Given young consumers’ product-centric online behavior, it can be difficult to get them to notice cross-sell offers through an online experience. But young consumers will go into a branch to open an account and when they do, this is going to be your best opportunity to cross-sell to them.

Consumers Who Bite on Banking Promotions Aren’t Worthless Cheapskates

Rob Rubin

You’d think consumers who go for bank promotions might be your stereotypical deal-seekers and bargain hunters. But you’d be wrong…

Over the last six weeks, over 9% of bank shoppers on selected checking accounts because they wanted to take advantage of a promotion. Interestingly, these shoppers were more demanding and had more appealing banking profiles than shoppers who weren’t motivated by promotions. Here’s what we can tell you about shoppers who take advantage of promotions:

  • Carry higher balances. 54% of shoppers taking advantage of a promotion indicated that their typical lowest daily balance is under $500, compared to 61% of shoppers not taking advantage of a promotion.
  • Use ATMs more and overdraw their accounts more. The traditional persona of a deal seeker is someone who carries a coupon organizer and only buys things when they’re on sale. But shoppers selecting accounts because of promotions are more likely to generate fee revenue because they use ATMs more and overdraw their accounts more. Poor cash management doesn’t fit the deal-seeker persona.
  • Demand more features. Despite their elevated ATM use, those selecting accounts because of promotions are in-par with other shoppers in terms of their interest in surcharge-free ATM access and ATM fee rebates. However, they do identify more “must have” features than other shoppers. Many of these are value-add features like free printed checks and debit rewards cards.
  • Please see full article here:

More Health Insurance Website Woes… and Lessons Learned

Tom Benton

By now we are all painfully aware of the problems with the launch of the Federal health insurance website  NBC News recently quoted a government spokeswoman saying that the website successfully completes transactions only nine times out of ten.

The Federal website is not the only exchange with serious problems.  The Washington Post is reporting that over the weekend (on February 23), the state of Maryland fired the vendor building their online health insurance marketplace.  Reportedly, Maryland chose the vendor in early 2012 in part due their track record with developing software that processes Medicare and Medicaid claims, reasoning that since the vendor planned to use off-the-shelf components, the project would be more likely to meet the tight deadlines – it had to be operational on October 1 2013 for the initial enrollment period ending March 31, 2014.

However, problems started almost immediately.  A Washington Post investigation uncovered that state officials failed to take action when an outside auditor warned that early deadlines were being missed, and that Maryland had not left enough time to adequately “complete, verify and test” the system.  On top of that, the contracted vendor, based in North Dakota, hired another vendor, based in Maryland, for all the technical services related to operating the website, for nearly the same amount as originally contracted to develop the site.  The second vendor proved to not have enough resources and hired multiple subcontractors.  The two vendors are now suing each other.

Some of the issues revealed by this unfortunate situation are ones commonly seen in insurance core system projects.  Among them:

  • Unrealistic expectations – state officials set an aggressive timeline and did not allow enough time for testing once early deadlines were missed, according to auditors.
  • Poor communication – Maryland claims that the vendor misled them about the maturity of the available software, and the vendor hired a subcontractor that did not clearly understand the resource requirements, leading the subcontractor to hire multiple sub-subcontractors.
  • Poor governance – the project lacked overall accountability and did not have a process in place to reassess the project to correct issues raised during the outside audit.
  • Lack of attention on testing – though not specifically mentioned in the article, the auditors questioned the time allowed for testing.  As with most major projects, testing was likely trimmed back and not adequate for validating the major functions of the system.

The result of the poor execution of the project is that Maryland is now forced to find a vendor to rescue the system, while at the same time processing applications through more manual work and increasing the amount of call center support.  State officials recently revealed that Medicaid participants cannot be properly identified by the system, costing the state over $30M.  As any CIO who has lived through a failed implementation would tell you, you will always spend more money fixing issues than if you had taken the time and resources to get them right in the first place.

New Report: Business Intelligence Solutions for Insurers

Martina Conlon

The continuing hype around “Big Data” is focusing ever more attention on insurers’ data management and BI capabilities. Analysis of data, creation of predictive models, and the ability to take action based on the outcome of those models has always been at the core of the insurance industry. But BI tools and platforms, big data technologies and the availability of data analysts and scientists is spurring interest and adoption even further.

On Friday, Lis Maguda and I published the updated Novarica Market Navigator report on Business Intelligence Solutions for Insurers that profiles the solutions and tools in this space. The report contains a brief profile of each vendor solution: 4Sight Business Intelligence, Cover-All, Guidewire Software, IBM Corporation, InEdge, Information Builders, Innovation Group, InsFocus, Insurity, Microsoft, Policy Administration Solutions, SAP, SAS, SNL iPartners, Tableau Software, and Yodil. Most of the solutions profiled in this report provide insurance-specific models, dashboard, and reports. A few offer industry-agnostic tools to enable the insurer to develop their own custom BI environment, and a few others offer both tools and insurance data models/visualizations. All offer products that can accelerate delivery of a robust BI environment.

Business intelligence continues to be one of the most common areas of investment for insurers. The rising tide of Big Data threatens to overwhelm enterprises that have not yet gotten the most out of “little data” (structured enterprise data). Implementing a comprehensive analytics and business intelligence environment is a major step on the road to data mastery. Many insurers recognize that leveraging internal, external, and big data is the key to improving their business performance, and are investing accordingly. This report can assist insurers in assessing the options for enabling this critical capability.

Uber and Insurance

Matthew Josefowicz

There was an interesting article by Brad Stone in BusinessWeek a little while back about how Uber is disrupting the taxi business by creating a customer-focused application.

Here’s the money quote:

Dispatchers at the major cab companies didn’t seem to care about prompt customer service since they make money primarily by leasing their cars to drivers [emphasis added]. David Autor, an economics professor at the Massachusetts Institute of Technology, says the industry is ‘characterized by high prices, low service, and no accountability. It was ripe for entry [by startups] because everybody hates it.’

Next time you call your local cab company, remember, you are not really a customer. The driver is the customer. So the cab company has only minimal incentive to provide any kind of customer service.

For some reason, this reminded me of all those insurers who say the agent is their customer. At least for cab companies, it’s true. The driver pays them. But many insurers still believe the person or business who writes the check is not the real customer.

When those customers have an option to deal with a company that treats them like the real customer, watch out.

What Mobile Bankers Want

Rob Rubin

Research reveals that mobile bankers are demanding, and expect an array of modern features.

In the fourth quarter of 2013, over 25% of bank shoppers at FindABetterBank indicated that mobile banking is a “must have” feature when choosing a new checking account. But as most product marketers know, potential customers are rarely interested in one feature. We found that 92% of shoppers that must have mobile banking also indicated other “must have” features.

What other features do mobile bankers want?

Online Billpay. Over the last 8 quarters, we’ve seen overall interest in online billpay decline by 33%. In Q4 2013, 24.8% of shoppers said they want online billpay. But nearly half of those who must have mobile banking also said that they must have online billpay.

Mobile Check Deposit. In Q4 2013, 12% of shoppers overall said mobile check deposit was a must have and 43% of those wanting mobile banking also want mobile check deposit. When a shopper wants mobile banking and only one other additional feature, mobile check deposit is the most popular choice.

Email Alerts. Shoppers’ demand for email alerts correlates with smartphone ownership and take-up of mobile banking. This is because people with smartphones receive emails immediately and consumers want immediate access to alerts about their accounts.

Surcharge-Free ATM Access. We expect to see the correlation in interest in other electronic services, but a whopping 42% of people who want mobile banking also indicated that they want surcharge-free ATM access.

Please see full article here:

Who Wants a Reloadable Debit Card vs. a Checking Account?

Rob Rubin

Are reloadable debit cards a viable alternative to checking accounts? Or are they a solution for the unbanked and those who don’t qualify for checking accounts?

For the last four months, FindABetterBank has presented four different reloadable debit cards to consumers shopping for a new bank or credit union. In Q4 2013, shoppers selected these products only 2.6% of the time. For comparison, shoppers selected a free checking account 50% of the time, while 47% of shoppers selected a checking account with a monthly fee.

Who interested in reloadable debit cards?

  • Shoppers with lower balances. The average lowest daily balance for shoppers selecting reloadable debit cards is significantly lower than shoppers who selected traditional checking account products.
  • Shoppers with fewer requirements. Reloadable debit card shoppers identified fewer features as “must haves” than shoppers selecting traditional checking accounts.
  • Young shoppers. In Q4 2013, 11.6% of shoppers checked off that they wanted student checking accounts included in their results. Those selecting reloadable debit cards were 32% more likely to have requested student accounts (15.3%).
  • Shoppers that use ATMs more frequently. 74% of people who chose reloadable debit cards indicated they use an ATM machine at least weekly, compared to 65% of all shoppers. It’s not surprising that surcharge-free ATM access is the most popular feature with these shoppers.
  • Shoppers that over draw their accounts. You can’t overdraw reloadable debit cards, but 76% of shoppers selecting these products indicated they’ve overdrawn an account at least once over the last year, compared to 61% of shoppers who selected traditional checking accounts. This suggests reloadable debit cards appeal to shoppers that don’t qualify for traditional checking accounts. Many “second chance” checking accounts have high fees compared to reloadable debit cards.

Please see full article here:

Mobile Matters

Rob McIsaac

It was fifty years ago that the Beatles arrived in America and changed the world. When it was happening, you knew it was somehow big, but even the most prophetic among us could not have imagined just how important it was. As a wee lad, I remember watching the Ed Sullivan show with my grandparents that night, somewhat transfixed. It was a different world on Monday.

Some years later, when Team Apple rolled out the iPhone and iPad, I recall thinking that this was interesting … but didn’t seem to solve a problem I had. My PC, laptop, TV, Blackberry, camera and stereo were all state of the art. Why would I need a new thing? Visions of another Newton danced in my head.

Boy, was I wrong.

While I still have all that other stuff, it is used far less often than it once was. And I now plug the iPhone into the stereo and control the TV from my iPad. I plug the iPhone into my PC in order to suck off the pictures.

Regardless of whose device is used now, mobile devices matter. A lot.

In fact, they have changed the world. I knew it had reached a tipping point when my wife, also a Baby Boomer, albeit one who doesn’t fancy technology, was peering over my shoulder while I was checking for flights on a laptop. In a gentle arc, her index finger gracefully touched the screen and gave it a gentle swoosh. Nothing happened.

Well, something happened. I doubled up in laughter … and realized that it is “game over”. The device is headed the way of my grandparent’s 78 rpm records and the rotary phone. They still work, but who cares?

Last week, my Greatest Generation mother announced that she was tired of going to the computer room to use the PC. What tablet should she get? Confirmation: put a fork in it.

And then I thought about other things in the last year. When I rent a car now, I get checked out on a tablet. When I went to a restaurant in China, the menu was on a tablet. When I took a helicopter ride at a local air show, the GPS hanging in front of me was on a Smartphone. When I had a chance to fly on a WWII bomber to commemorate the Doolittle Raiders, I checked in on an app … and the crew chief’s pre-flight checklist was running on a tablet as he prepared a plane built in 1942. And of course I can now pay bills, trade stocks, get my flight boarding pass and ride on Amtrak based on things I do or keep on a mobile device.

And my favorite recent experience: we recently went to see a Symphony performance. After warming up and while waiting for the conductor to arrive, a lead violinist pulled out his Smartphone and deftly flicked through some work. I wondered if he was updating his Facebook profile.

Which then gets me back to insurance which feels a bit like stepping through a time warp. I recently needed to replace a 10 year term life policy which had naturally and happily run its course. I was stunned to find just how arcane, antiquated, wasteful and expensive the whole process was. In fact, I’m pretty sure I saw no technology in use that hadn’t been invented before 1980. Heck, back then I was still buying Beatles albums. On vinyl.

I was truly astonished at the lack of progress that has been made (probably since John, Paul, George and Ringo landed) in this area. For insurers this should be a wakeup call. I’ve probably bought my last Beatles album (this Internet thing looks like it might work out …) and I’ve probably bought my last life insurance policy. When I describe the Beatles landing my kids can’t quite figure out what to make of all the screaming … but they are consumed by spasms of laughter when I describe current life carrier processes and (lack of) consumer technology.

For carriers, the time to start thinking about mobile capabilities is now. Mobile matters. And cassette decks, VCRs, reel to reel tape and the Beatles aren’t coming back. Save nostalgia for another day.

Oh, and the Beatles record label was … Apple. Imagine that.

Gamification in Insurance

Karlyn Carnahan

Great article titled “Getting into the Game” by Lori Chordas in the February edition of Best’s Review about Gamification in insurance (pages 37-38 in print edition). In the article, I shared some key thoughts from our upcoming executive brief on Gamification. Carriers are employing more creative and engaging gamification tools in all aspects of the insurance value chain. Carriers started using games as branding, moved into training and education, and we’re now seeing game techniques used in the quoting process to drive customer acquisition.

The key to a carrier’s success with gamification is to clearly identify the goals and strategy of their initiative and design the game with that in mind. A game should not only be fun, but should also deliver results.

Consider how to build basic gaming techniques into other aspects of the business processes. Often mundane tasks can be made more engaging by adding fun tools to the process. Using basic game techniques – rewards, surprise, and social aspects to name a few reward users for their efforts, and users will in turn share these tools with others. A fun, viral game that is aligned with strategic goals can drive results. Not all carriers have gaming experts on staff, but there are a number of universities and colleges that have gaming programs. You may want to work with them to get help and provide students with opportunities for real world practice.

Update: Here’s the video interview from AM Best…

IT Planning: Mergers & Acquisitions

Rob McIsaac

We recently published the latest in our CIO Checklist series of executive briefs, focused on the actions that can best prepare IT organizations for supporting mergers and acquisitions. With margins tight and competition levels high, M&A opportunities may represents an important element for some carriers’ strategic growth plans. Mergers can also represent an important complement for organic growth as carriers look to create geographic diversification, expand sub-scale business or extend into new markets.

Irrespective of the reason for an acquisition, IT organizations are pivotal to the successful execution of a transaction and the ultimate integration of a business entity into a carrier. Mergers represent potentially significant and complex undertakings, however. Proper planning is crucial to achieving the economic goals that drive the transactions in the first place. In order to properly support these efforts it is important for CIOs and their teams to effectively prepare well ahead of the point of execution. In reality, an acquisition has many parallels with the development of disaster recovery and business continuity plans.

This brief provides a practical list of actions that can be taken in anticipation of future events which can dramatically improve the potential for near term success while also helping an organization build the kinds of strength that can be used to support multiple acquisitions in the future. The full report can be accessed from Novarica research library by following this link:>