The challenge for institutions is not merely to find the right reconciliation tools, but also to create a middle-office process focused on reconciliation. Without a continually renewed and updated reconciliations function, that most essential question in the post-financial crisis era, “What is my position?” cannot be answered with sufficient speed, accuracy, and confidence. Read More »

To help you better assess performance, set direction for improvement, build a business case, and compare yourself against global benchmarks, CEB TowerGroup has launched a new Data and Trends  tab across the main landing page of all our websites. Situated between our CEB TowerGroup Edge blog and Technology Analysis, this rich resource provides a user-friendly interface to access four categories of content:

1. Consumer Trends — Links to our proprietary Consumer Financial Monitor, which tracks consumer financial sentiment and activity in a survey of over 8,000 consumers across ten countries each quarter. Use our findings to uncover segment and regional trends, discover the major drivers of product demand, and establish global benchmarks within key consumer indicators.
2. Economic Trends — Links to our proprietary, Business Barometer Report, which takes a forward-looking view on key drivers of economic performance in the financial services industry. Use our quarterly report to understand executives’ expectations regarding revenue growth and cost pressures in their companies and industry. In addition, our Country Profiles contain information on demographic and economic characteristics, financial services landscape, IT trends, as well as consumers’ sentiments and product purchases for 24 leading economies.
3. Employee Engagement and Performance — Links to our proprietary Global Labor Market Briefing, which provides insight into employee value propositions, organizational volatility, business confidence, and employee engagement and integrity on a quarterly basis. This research brief provides labor market intelligence to inform your global recruiting strategy.
4. Technology Trends — Contains our proprietary Technology Analyses, Technology Spending, Adoption and Investment, and IT Roadmap reports to facilitate making better technology and business decisions.

We believe our compendium of resources will allow you to better solve challenges across product strategy, industry alignment, sales effectiveness, and marketing influence by:

• Utilizing our end-user data to validate strategic assumptions
• Injecting emerging capital markets business trends into product roadmap planning
• Increasing awareness of your brand and build standing in the capital markets industry
• Educating your leadership team on capital markets business issues and senior executive challenges

If you have questions or would like to learn more about any of these diagnostics and reports, please contact your CEB Primary Analyst or Account Executive.

Life insurers struggle with a key competitive question:  Should we compete on price or service?

Ideally they would do both, but with low interest rates and a sluggish economy, insurers lack enough investment income to do all things for all people.  Plus, a solid brand polished by a reputation for service contributes to demand and lessens the need for predatory pricing.

There’s also another factor in play.  With greater available life insurance product knowledge and the ability to buy directly on the web, financial protection products are becoming commoditized.  Service at the point-of-sale and throughout the policy life-cycle is a key market differentiator.  So while insurers always talk about being customer-centric, today’s economics and sales environment demand moving to true customer-centricity.

Today insurers look at the policy administration system that administers their products as the “core system.”  Tomorrow, customer-centric insurers will leverage their CRM system as the true core system.  The architecture does not need to change, the mindset does.  Changes in the way technology is used will make that happen.

Already, insurers are getting to know their customers better with predictive analytics and leveraging their CRM systems to retain customers.  Look for more insights in 2013 on how life insurers can move closer to customers, hear their voices and respond by using CRM as a platform for case management that adapts to the needs of individual agents and consumers.

The growth in the digital channels has resulted in a challenge for the attended channels. Mobile will grow at a CAGR of 17% through 2015 to over 800 million transactions, overtaking the contact center in volume by 2014. Although the branch will maintain its dominance in channel volume for the foreseeable future, transaction volume will decline through 2015 as will the number of branches. This decline at the branch has triggered many Canadian banks to consider newly designed bank branches with technology such as touchscreens and remote expert via video.

The automated banking machine (ABM) is also poised for change in Canada. After steady transaction volume increases since 2004, volume will now decline through 2015. That does not mean that ABM deployment will cease, but new ABMs will be deployed at a slower rate through 2014 before starting to decline in 2015. The replacement market will, however, be healthy as Canadian banks are showing interest in image deposit ABMs.

Total transaction volume is staying relatively flat at a CAGR of .62% through 2015, which means that Canadian banks overall may be accomplishing something that other developed markets are not – true channel migration. Instead of simply adding channels and transactions, Canadian consumers seem to be replacing one channel with another. The low value transactions are moving to the low cost channels, a goal that others strive for but have yet failed to meet.

Two important metrics came in close to expectations.  Now that US consumer spending is rebounding, we expected an increase in card loads.  Similarly, spillage or unused value, has been improving since the CARD Act.  

Our estimate on electronic/virtual gifting last year was that the sector would hit $3 billion during 2012 and it looks like we were too optimistic.  This fledgling area has strong potential, but the US market is relatively slow to adopt mobile payments.  Asian and European markets are far beyond the United States.  Canada is launching several interesting options.  Latin America is a prime market for prepaid mobile.

The US card market continues to deliver almost half of global transaction volume, but it remains reticent to leave the traditional plastic payment card.  Similarly, near field communications (NFC) is still floundering.  MasterCard and Visa are attempting to bundle their industry mandate for smart cards (EMV) to the NFC format to ensure the relevance of their brands. 

At the same time, Apple launched its latest iPhone without an NFC link, suggesting the possibility of yet another (potentially competing) format in the near future.  Gift cards will follow electronic adoption trends; they will not lead it.  This payment form is a small part of the $4 trillion US transaction market, which is still unsettled between merchants and banks that bicker about interchange.

The second area of mention is about fraud and gift cards.  Our recent Card Fraud Technology Analysis showed how best-in-class companies such as ACI, Actimize, FICO, and SAS provide strong defenses against credit and debit fraud.  Prepaid cards and the gift card subset are the newest variations to the payment card and have the lowest level of protection.  Ironically, consumers have the least protection with prepaid cards and the risk is often borne by the consumer, not the card issuer or merchant.

We plan to focus on this area in our next gift card review, but in the interim suggest you remember the product was never designed to be a savings tool.  If you get one this holiday season, use it (…or re-gift it)!

Related Content

In Search of a Profit, Merchant Payment Solutions Unlikely to Challenge Existing Payment Card Options

Payment Card Challenges for Merchants in 2012

Card Fraud Management Systems: Technology Analysis

A primary theme that emanated from the 2012 AFP Conference, held in Miami in October, was how the expanding role of corporate treasury is challenging the available support structure in terms of systems and resources. A reverberating tone revolved around how to build (or transform/adapt) a treasury management function that is best prepared for the changing regulatory demands, competitive pressures, and emerging risk (operational, financial and strategic). Read More »

Portfolio management systems can have a powerful impact at wealth management firms in many ways: they can increase advisor productivity, strengthen advisor-client relationships, and give clients a clearer view of their portfolios.  However, as the case study of a recent CEB TowerGroup Technology Analysis shows, some wealth management firms overlook an advantage of the more powerful systems: portfolio management solutions can be used to consolidate disparate systems into one integrated and more efficient offering.

Arch Financial* had multiple third-party systems that handled its trading, portfolio accounting, and portfolio analytics.  Adopting a portfolio management solution that encompassed all of these functionalities allowed Arch Financial to discard three systems and replace them with a single solution that was more efficient and automated.  After years of overburdening its employees with manual data entry and formatting, Arch Financial managed to double its number of accounts without adding any new personnel simply by streamlining the company’s portfolio management system and by unlocking the capabilities of the system.

The Portfolio Management Systems Case Study of Arch Financial discusses this improvement, as well as other improvements made during the upgrade.

*Arch Financial is a pseudonym for a privately-owned independent investment advisor located in New York. Arch Financial provides investment management advice to individuals and institutions.

More About the Case Study

In each of its Technology Analyses, CEB TowerGroup highlights the experience of a financial services institution that uses the analyzed technology in an inventive way or the platform of a vendor that exceeds the typical offerings of the system.

The Portfolio Management Technology Analysis highlights the way that Arch Financial used the technology in a unique and powerful way.  By consolidating the functions of three disparate systems onto a single portfolio management system, Arch Financial increased efficiency and cut costs.

To learn more, members can download Portfolio Management Systems Case Study: Arch Financial.

The Business Barometer is a quarterly report of business conditions and expectations within the financial services industry. It provides a network-enabled, 12-month outlook on key drivers of economic performance in financial services. The report is based on a quarterly cross-functional survey of top executives from the largest global companies and is fielded in the first week of every quarter. Data in this report reflects the responses of senior financial services executives from the global sample.

In this publication of Business Barometer we inquired about FS executives’ expectations in four key areas:

Revenue growth and cost pressures: Sixty-nine percent of executives expect their companies’ revenue to increase in the next 12 months, but only marginally. Further, 71% of executives expect cost pressures to increase.

Growth and investment indicators: More than half of the executives expect an increase in sales to new and existing customers. However, expectations regarding investments continue to remain low, with only 33% of executives expecting an increase in either R&D or discretionary IT capital expenditure. Less than 50% of executives expect the number of M&A deals to increase during the same period.

Cost indicators: Half of the executives expect an increase in hiring volume in the next 12 months. Sixty-nine percent of them expect a slight increase in labor costs in the same period.

Credit expectations: A little less than 75% of executives expect to enjoy the same or easier access to credit along with unchanged or lower interest rates during the same period.

You can access the Business Barometer report either on the Retail Banking & Cards or the Commercial Banking & Payments website.

In our recent survey of financial services senior executives, 77% of executives identified their organization’s ability to be adaptive and agile as the top attribute for a better performing workforce over the next three years. For insurers, the ability to be adaptive and agile will come to bear in a number of key initiatives, including enterprise adoption of BYOD. Read More »

The seventh annual CEB TowerGroup Gift Card report is now available to members.  Strong growth continued with an 8% increase in transaction load volumes; we anticipate winter holiday sales will position full year 2012 sales at $110 billion and that unused value will fall well below 2%.

CEB TowerGroup expects two trends to continue over the next three years.  In contrast to the volume decrease during the recession, gift cards will experience growth between 6 and 10% annually through 2015.  By 2015, CEB TowerGroup projects that US gift card spending will reach $138 billion.  Additionally, the positive reduction in unused value, which we estimate at an all-time low of $1.8 billion, will see further improvement as a result of regulations from CARD Act of 2009.

This year’s report identifies the importance of creating fraud management infrastructure to protect consumer funds from abuse.  In contrast to other card products, which scrutinize purchase behavior based on previous customer experience, gift cards transact anonymously and usually deplete after a single transaction.  Unlike most credit and debit cards, gift cards do not have protections against loss, misposting, or theft, which leaves the consumer, rather than the merchant or card issuer, exposed to financial risk.

Although the card act made significant strides in ensuring transparency for fee, consumer funds still do not receive adequate control.  In addition to fraud risks, limited protections exist in the event of retailer bankruptcy, abuse of funds, or processing irregularities.

Despite the financial flaws, gift cards still appeal to both givers and receivers.  Consumers enjoy the convenience of these electronic products, merchants like them because they captivate funds for an upcoming sales and network cards fall outside the governance of Dodd-Frank price controls.

Related Content:

Gift Cards 2011: Coming of Age in a World of Chaos

New Regulations Wipe Out Gift Card Junk Fees & Reposition Market

Gift Cards: Still Better to Give than Receive

Charred Card: Private-Label Gift Cards Stumble in a Weak Economy