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Michael Ellison
Michael Ellison
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Add Intelligence to Data to Create Competitive Advantage

In the age of Web 2.0, banks are going to experience competition from non-traditional firms. In order to effectively compete against this new rival, they will need to continue to add value to their online offering. Adding intelligence to data through advanced reporting tools is one such way of doing this.

You may recall the hype that account aggregation produced several years ago when firms like Yodlee burst onto the scene. Banks and brokerages were quick to add these tools to their sites, fearing that if they didn't, their competitors would. As fate would have it, these tools never really reached a tipping point among consumers. Why? Because most of the firms that used Yodlee or other screen-scraping technology never added any value to the aggregated data. Yodlee and the other aggregation vendors did their part in gathering the data, but there was always the question of "So what?" lurking in the background.Fast forward a few years. A new breed of financial websites is again threatening to cut financial services firms off from their customers. Firms like Mint, which analyzes customer spending data to provide recommendations on ways to save money, have popped up that aim to revive aggregation as a service. And it's not just about aggregation. Small firms employing Web 2.0 principles threaten to disenfranchise established banks. However, banks are actually well positioned to defend against this - after all, the banks already have the customer data. If they can just help their clients turn the data into intelligence, real value would be added to the relationship - which, in turn, could help to increase share of wallet with the customer. In a recent Bank Monitor report, we looked at advanced reporting tools that can help clients do this. In the world of online banking, many features and tools have become ubiquitous over the last several years, including check imaging, bill payment, and recent transaction tables. Up to this point, however, advanced reporting tools that allow users to take a more in-depth look at their own transaction trends have not achieved similar widespread rollout. While the banks clearly had all the data, with a few exceptions, the only way for clients to truly analyze this information would be to use a financial software package like Quicken or Microsoft Money. Indeed, of the firms that we track for Bank Monitor, just 33% offer advanced reporting tools: B of A, E*TRADE Bank, HSBC, KeyBank, and Wells Fargo. While some other firms offer links to outside tools or aggregation services offered by third-party providers, these five banks have taken the lead in providing reporting tools that are either proprietary, heavily integrated within their private site, or in most cases, both. While just five firms offer these tools, capabilities vary widely. Most notable is the degree of client input required in order to make the various tools useful. Only two firms, Bank of America and Wells Fargo, automatically assign category tags to each transaction a user makes. (Note: B of A's My Portfolio can be used as an aggregation tool as well as a reporting tool; only spending from B of A accounts is automatically tagged with a category.) The remaining firms require clients to manually add tags to each transaction in order to make category-based reports - a central part of each firm's offerings - possible. This time consuming process almost certainly reduces the number of users who actually take advantage of reporting tools, though it does allow E*TRADE, HSBC, and KeyBank to offer user-defined categories. The process at B of A and Well Fargo, meanwhile, may not be foolproof - indeed some transactions end up tagged as "uncategorized" and need to be manually adjusted by the account holder - but the automatic inclusion of tags help create immediately usable reports. There are, of course, several other factors that define a robust reporting tool, which our report addresses. Here's a taste of some of our recommendations for building a best-in-class reporting tool:

  • Integrate graphs and charts - In addition to offering clients easy-to-access data tables, banks should offer some different visual representations of the data they are reporting. Pie charts showing categorized spending and bar graphs showing aggregate spending over time are both effective visual aids that could help users understand their purchasing and saving patterns.
  • Offer linked transaction tables - Instead of offering full transaction lists within different report documents, more visually pleasing tools will link from summary reports, where spending for a number of categories is shown as total dollar amounts, to itemized lists of the transactions that fall with that category.
  • Provide ample account history - To be effective, reporting tools should offer access to at least 12 months of data. This helps users gain a more accurate picture of long-term spending and saving habits. In addition, tools should allow users to set the date range for the report, rather than forcing customers to stick to rigidly pre-defined time periods.
  • Allow users to correct errors - While reporting tools automatically categorize users' purchases, firms should allow users to override the system's choices and change the category assigned to a transaction. In addition, firms should consider allowing users to create new spending categories or rename existing categories to more accurately reflect their spending.
  • Include tools to track saving or incoming funds - In addition to tracking client spending patterns, firms would also do well to provide tools to help users see their income and savings. These tools can help users step back and see if they have made consistent contributions to their firm-based savings or retirement accounts, as well as providing information on when users are spending more than they are earning.
  • In the age of Web 2.0, banks are going to experience competition from non-traditional firms (e.g. Mint). In order to effectively compete against these new rivals, they will need to continue to add value to their online offering. Adding intelligence to data through advanced reporting tools is one way to do this.In the age of Web 2.0, banks are going to experience competition from non-traditional firms. In order to effectively compete against this new rival, they will need to continue to add value to their online offering. Adding intelligence to data through advanced reporting tools is one such way of doing this.

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