Predictions for 2012 and beyond

Leestijd: 7 minuten

Door Chris Skinner

During 2011, many things began to appear on the banking scene that were of note:  Google Wallet, Banksimple, Movenbank, Bitcoin and more; but the key themes seemed to focus upon mobile as a platform combined with Personal Financial Management (PFM), and these themes will continue through 2012.

Mobile as a platform

Mobile financial services matured nicely in 2011, with everything from Africa through to America being turned upside down by changes to banking through mobile.

In Kenya, just over three years after launch, Safaricom’s mobile money transfer service M-PESA reported 56% revenue growth with 14 million subscribers across 24,000 outlets generating $130 million in revenue.  In America, almost 30 million people now access their financial accounts (bank, credit card or brokerage) via mobile devices according to comScore, a 54% increase over 2009.

This is a revolution in banking and in life, as almost every person on the planet now has access to wireless infrastructures via mobile devices, and is the reason why banks will continue to focus upon these areas during 2012 as this market is not yet mature.

Deloitte America surveyed senior executives from a wide range of companies with close ties to mobile payments in late 2011, and found that there’s still a lot of dialogue around the business models to be used in this area.

According to survey respondents, the two most likely business models are partnerships between mobile carriers and financial institutions (43% of the vote); and an open federation model that brings together mobile carriers, financial institutions, merchants and others, to deliver multiple payment services on a common platform across different devices (26%).

Similarly, PayPal commissioned research from Forrester in late 2011 that predicts the UK market for mobile payments will grow 42% per annum  to be worth £2.5 billion by 2016.  They commissioned this research as over one million PayPal UK customers have sent a payment on their mobile devices by 2011, with most customers making an average of five mobile transactions a month.

Meanwhile, to illustrate how immature this marketplace still is today, the European Financial Management & Marketing Association (EFMA) published a report in August 2011, after surveying 150 European banks with McKinsey on mobile banking.  Their findings are that banks believe mobile will fundamentally change retail banking within five years, and yet the majority have under ten employees working on mobile and have yet to make any change in their operations to exploit this capability.

Therefore, mobile will continue to be a big focus through 2012.

Personal Financial Management (PFM)

Similarly PFM has been a hot topic of dialogue through 2011 and this will also continue in 2012 as banks implement PFM capabilities.

PFM is a functionally rich set of financial tools that help consumers – and businesses for that matter – aggregate their financial transactions services across multiple providers into an advisory engine that can help them get better returns from their money.

PFM will link with other users like you and show you how to improve your financial returns based upon what people like you do; PFM might link to your mobile and social networks, allowing you to do a lot more intelligent financial structuring and operation; PFM can alert you to budgetary and balance issues, payments and billing notices, and interest saving or gaining opportunities.

In fact, dependent upon which PFM provider you go with, PFM can pretty much do anything with your banking service you want … and the PFM providers are all popping up to show different capabilities in what is an increasingly crowded space.

Some want to focus on the social aspects of finance, whilst others on the financial management aspects; some want to provide offers and coupons, whilst others want to provide advice and analysis of your financial behaviours; some want to provide PFM online, on the mobile and on the tablet PC, whilst others only care about functionality rather than interface; and so on.

In other words, all of these PFM systems are slightly different with some easier to use than others, some more functionally rich than others, and some clearly in the lead over others.

And with Mint leading the way over the last few years as a PFM provider of choice through third party services, all banks are rolling out some form of PFM over the next few years to be competitive.

In particular, Iceland is leading the way.

We usually only ever hear of Iceland’s woes and troubles but, after the crisis hit, the banks retrenched, refreshed and relaunched as new banks.

In particular, the new bank Íslandsbanki has been leading the way to show themselves to be at the very forefront of all technological developments in Europe and the rollout of PFM as a platform is a key for the Icelandic banks.

This is because it provides excellent user engagement as these metrics from the bank demonstrate.  After 18 months of PFM usage amongst Íslandsbanki’s customer base:

  • Over 25% of online users signed up for stand-alone PFM within 6 months
  • Over 75% of new PFM users use PFM again within two weeks
  • Over 25% of new PFM users use PFM five times or more in the first month, and spend more than double the time in PFM compared to online bank (the average time onsite is 12 minutes, with 35 pageviews per PFM session)
  • More than half of all PFM users are still active a year after signing-up

And their customers love it:

  • Over 80% of users are “pleased” or “highly pleased” with PFM
  • 9 out of 10 users say they’d recommend PFM to others
  • 66% say PFM has helped them see how they can improve financially
  • 41% say they have improved financial behaviour after starting to use PFM

According to Íslandsbanki:

  • Active PFM users have increased the total number of Íslandsbanki accounts (current, savings, credit card) by 19,4% on average after using PFM for 1 year. Other groups show no or slight increase only.
  • Active PFM users have increased Íslandsbanki transaction volume by 4,5% on average after using PFM for 1 year. Other groups show no increase.
  • Affluent customers are significantly more likely to use and be pleased with PFM than other groups
  • There is also evidence of significantly improved retention of PFM users with 71% of users saying that Íslandsbanki‘s PFM offering increases their loyalty

There’s many other stats but the most telling comment is when the bank says that PFM is now replacing their online bank.

In other words, PFM is their online bank.

Nevertheless and regardless of the above, 2012 will see people talking less about Mobile and PFM and talking more about Connectivity and SFM, or Social Financial Management.


Connectivity is the realisation that it’s not mobile we should be focused upon, but the chip in the mobile that enables it to connect to the network.  That chip is going to be in so many other devices in five years, that the consumer’s mobile wallet will no longer be relevant.  What will be relevant is how the chip connects to other chips to transact.

We can see this already today as all banks focused on mobile, then mobile apps and now tablet PCs, which are just PCs with a SIM card in flat form.

This is why it is important to think of connectivity rather than mobile, as the consumer’s chip may be in their mobile telephone or tablet PC, but may just as easily be in their wristwatch, earring or clothing.  The consumer will choose how they wear their chip. It might even be embedded in a tooth.

The chip may enable telephone calls and communications, access to wireless electronic services and more, but will also be a fundamental transactor of commerce.

It will transact with chips in merchant stores; chips through QR and NFC; chips in walls, pavements and doors; chips in cars, caravans and casinos; chips in anything and everything in fact.

Conservative estimates believe  there will be ten billion mobile connected devices in 2020 whilst others predict over one hundred billion wirelessly connected devices in 2020 if you include cars, fridges and televisions.

And with everything as a connected transaction engine, banks will be looking to leverage wireless connectivity at the where the customers is, rather than thinking about mobile as a channel or device.

This leads to the second fundamental around SFM.

Social Financial Management (SFM)

PFM is already out-of-date.  PFM talks about personal, as though it’s private, and yet everything has shifted to social, as in sharing.

Sharing financial information is not what consumers want, but they do want banks to be part of their lives rather than the bane of their lives.

What this really means is that banks must proactively leverage far more about their customer’s data to intimately understand their lifestyle preferences and shopping habits to become more relevant.

It means taking the tsunami of data from social, commercial, governmental and global sources – these days referred to as Big Data –and mining it deeply to gain Big Ideas about customer needs, and then proactively reaching out to the customer to gain Big Relationships.

Examples are already out there, such as Google Wallet that demonstrates coupon offers and spending integrated with payments and transactions in a contextual form.

What this is demonstrates is that Google is moving onwards towards analysing all of the data from the digital footprints of each individual to provide relevant offers at their point of living:

  • using geolocation allows you to locate where the individual is physically present;
  • using that location allows you to automate contextual offers proactively to the individual;
  • using data allows you to make sure the offers are both relevant and not in breach of permissions and privacy; and
  • using the combination of banking, retailing, searches and devices allows the operator to integrate spending and saving with shopping and living.

Forget the point of sale or point of purchase, the point of life is where the action will be.

And the point-of-life – not the meaning of life – is the point of where I’m living at that moment in time and being relevant to that point.

That’s what SFM will be about, and that’s what banks will be focused upon in the next wave of change.

In conclusion, the big themes of retail banking in 2012 will continue to be around mobile and PFM but will broaden into banks considering the wider implications of connectivity and social networks.

This article was written by Chris Skinner. He is best known as an independent commentator on the financial markets through his blog the Finanser ( 

Photo credits: Simone Ciliberti

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Trackbacks & Pingbacks

  1. […] how much they could save by skipping occasional indulgences. Iceland is amongst the leaders, with Islandsbanki’s PFM platform […]

  2. […] in de financiële sector « De trends voor de financiële sector voor 2012 (1) Predictions for 2012 and beyond […]

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