Would You Like Fries with that Account?

January 28, 2009

FriesI was in the Atlanta airport yesterday and stumbled upon something I had never seen before: touch screen ordering at Burger King.  Burger King employees have probably been using touch screens to punch in your order for years.  But, these touch screens let customers make their own orders.  They looked like oversized ATM’s which led to me to wonder if I was looking at the future of bank branches.

As usual, this thought did not pop into my head by accident.  The past few months have provided us with a plethora of touch screen related articles. Forbes has an article about the proliferation of touch screens at CES in Vegas.  Gizmodo had an article about the Microsoft touchscreen initiative.  American Banker reports that NCR is working with Microsoft to provide a device that allows mobile phone users to transfer data using a touch screen kiosk.

On top of the touch screen technology, there is new image capture technology that allows ATM’s to accept check deposits without a deposit envelope.

New touch screen technology like that used by Burger King is a real improvement on current touch screen ATM’s. For one, they are larger which expands the user interface possibilities.  Larger screens make it easier to present users with multiple easy to understand options. It could also make it easier to market and cross sell to users which has proven to be very effective on ATM’s abroad.

New touch screens recognize gestures and are generally more sensitive and responsive than most ATM’s. Obviously the iPhone and its other touch screen brothers and sisters have helped us all become better acquainted with touch screen technology and capabilities.

The branch of the future is no longer constrained by technology.  The technology is ready.  The question is whether or not banks and their customers are ready for the technology.  Certainly convenience and speed of service are important to banks’ customers.  But, it will be interesting to see if customers will truly embrace a branch without any or very few tellers.

At Burger King, I was able to order my burger, pay, and get my receipt without any help, but it wasn’t perfect. For one, nobody was there to hand me my cup. I like to fill it up with ice and get started on a Coke while waiting for them to fill my order.  Plus, there was a Burger King employee standing by the kiosk helping people use it. Basically, instead of working the register she was working the Kiosk so it did not seem like the kiosks were saving BK any money.  If we are to judge the viability of the kiosk replacing the banker by the viability of  Burger King’s self service kiosk, then the jury is still out.


The Death of Free Checking

January 26, 2009

The latest edition of BAI Banking Strategies Magazine has an article by Aaron Fine, David Goldberg, and Tony Hayes titled “Sweeping Away Free Checking?

Proposed changes in the Unfair and Deceptive Acts or Practices (UDAP) statute could reduce the profits that banks now make on overdraft fees on transaction deposit accounts and penalty interest rates on credit cards. This reduction in fee income, say consultants at Oliver Wyman, could in turn prompt banks to take another look at their free checking programs, which are essentially subsidized by overdraft fees. The authors say financial institutions should prepare themselves for this eventuality now by developing new checking account and credit card strategies

Recently Colin Henderson at thebankwatch.com lamented that regulating banks like utilities will stifle innovation.  If banks are going to wait for regulators to tell them when it is time to implement new strategies, then they should be regulated as utilities.

If this regulation passes, it will be the final nail in the coffin for free checking accounts. Yes, free checking accounts are profitable, but they no longer differentiate your bank from others.  Some banks have come to terms with this and are pushing accounts that charge you for writing checks.

PNC offers a virtual wallet product that bundles several types of accounts and charges for checks. It does not charge overdraft fees if overdrawn amounts can be transferred from another virtual wallet.  This type of account probably relies on interchange revenue more than overdraft fees.  Accounts like this will continue to proliferate as banks continue to fight for deposit dollars, and customers and the government continue to increase their scrutiny of overdraft fees.  If  true mobile wallets ever become a reality, we might do way with checking accounts all together.



Tiger Woods the Economist?

January 23, 2009

I have always been skeptical of economist’s predictions. Sure, there were many who predicted our current problems (e.g. Peter Schiff).   However, they were the minority. Interestingly enough, according to a recent article by Jeff Stibel on the Harvard Business Publishing site, the most accurate predictor of macro economic conditions is Tiger Woods.  The Tiger Bears and Bulls index chart below shows the correlation between Tiger and the market.

Tiger vs. the Bulls and Bears

Tiger vs. the Bulls and Bears