Kristin Moyer

A member of the Gartner Blog Network

Kristin R. Moyer
Research Vice President
14 years at Gartner
more than 20 years IT industry

Kristin Moyer is a Research Vice President in Industry Advisory Services/Banking and Investment Services. She has more than 20 years of experience across the global high-technology industry in a variety of roles. Ms. Moyer's research coverage includes… Read Full Bio

The Tragedy of the Euro Fiscal Commons

by Kristin Moyer  |  December 9, 2011  |  Comments Off

Contributed by David Furlonger

As announced on the BBC (and other media outlets) today: Euro crisis: Eurozone deal reached without UK it appears on the surface as if consensus has been reached between many Eurozone countries on addressing the crisis. All but the UK whose current leader believes such a deal is not in the UKs best interest.  Tweets on #euro (from presumably UK “supporters”) seem to back this view. Indeed the Chairman of Tullett Prebon was quoted with no little irony as saying “UK as isolated as someone left on the dock in Southampton as the Titanic sailed away.“ Yet, it should not be forgotten that the UK banks are still exposed to euro debt: Revealed: UK banks’ exposure to eurozone debt

Even if Mrs Merkel believes that the “Eu has learned from its [past] mistakes”, I think it is a very long shot to believe that all is now rosy in the euro garden.

Whether the goal of fiscal union (one of the scenarios in upcoming Gartner research) can be achieved or evenly partially manifest in a tax and budget pact remains to be seen. Mr Sarkozy and Mrs Merkel have certainly bought time – at least politically. However, the markets do not usually play by politically oriented rules or indeed politicians’ time lines (memories of the ECU/EMU come to mind). Indeed, it won’t have escaped the market’s attention that yet more money (lending) is promised as part of this deal.

 Perhaps more importantly, and from a long-term perspective, the tragedy of the commons has not been addressed – rather this announcement from Brussels seems to reinforce it. There is a great article yesterday in the Hoover Institution Journal: The Euro & The Tragedy of the Commons that neatly explains the challenge before Europe, and indeed the US and its own debt crisis.

So, should CIOs and senior corporate executives (and the public) breathe easier? No! This situation is not resolved – at least not until amended treaty ratification occurs (and that is extremely uncertain), which is unlikely before March. Scenario planning remains an essential tool to uncover the implications and outcomes facing organizations and governments.

It is critical therefore that clients refer to Gartner research over the coming weeks to gain a better understanding on how to manage through this crisis: CIOs Should Address the Impacts of the Euro Crisis on Their Enterprises Now, as well as attend the January 19th webinar on this topic: Euro Crisis Webinar.

We will also be releasing the results of our survey: Euro Crisis Survey over the next few weeks as clients reveal their contingency plans.

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The Euro Crisis – Are IT Professionals Prepared for the Fallout?

by Kristin Moyer  |  December 8, 2011  |  2 Comments

Contributed by David Furlonger

Today’s WSJ suggested the Euro currency was finished: Banks Prep for Life After Euro

This is another news article, in a continuing stream, that has become more intense over the last several months. The question is, are IT professionals, as opposed to economists and maybe politicians, prepared for a redenomination of a major world currency?

Our clients offer a mixed response. Some clearly have been running contingency scenarios. Others seem oblivious to the fact that full euro currency disintegration, or some form of eurozone realignment should influence their 2012 strategic plans. Many seem unsure of what they can do, regardless of the scenario that unfolds.

Certainly, this is more than just a financial services or governmental situation. Any organization with European interests needs to understand the impact on its business and critically IT organization should there be such a substantial a change in the political or financial environment. At a macro level, euro redenomination would also have a global impact, affecting trade flows and consumption patterns.

For CIOs it is essential immediate consideration is given to this crisis. Following initial research completed in 2009 and again in 2010, Andrea Di Maio (a Government analyst colleague – see) and I have written another research note to help guide our clients during this difficult period:

CIOs Should Address the Impacts of the Euro Crisis on Their Enterprises Now

Clients should view this research as just the beginning. Upcoming research will highlight alternate scenarios that may play out in the market and thence the IT implications that CIOs need to address. Gartner will also be providing specific guidance for various roles within the technology operation and a stream of research will be forthcoming over the next few weeks.

We also encourage you to attend a webinar (Gartner Webinar Schedule) that will take place in January.

We encourage your comments as we update you on this interesting and challenging environment.

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Do You Know Investment Management?

by Kristin Moyer  |  June 16, 2011  |  Comments Off

The Gartner Banking & Investment Services (BIS) team is adding an analyst in the Investment Management area (i.e. asset management and wealth management). Full details of the role and how to apply or refer a friend/colleague can be found here. Please note that this search is global (although it is listed as an EMEA hire) and location is not paramount so long as you have an Internet connection, can work remotely and are close to an airport! Most important is that the successful applicant should have great analytical skills – able to generate new ideas and critique existing ones – and then apply these skills to recognize business trends and deliver IT advice to senior executives. That will require an open and inquiring mind as well as deep experience of both the business and IT sides of this sub-sector of the FS industry.

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It’s Not Always Technology that Makes the Difference

by Kristin Moyer  |  April 8, 2011  |  Comments Off

Don Free and Kristin Moyer here.  In anticipation of a potential government shutdown in the United States at midnight on April 8th, Navy Federal Credit Union has taken steps to engender customer loyalty.  They have announced that they will cover the April 15 payroll for those active duty members who have their direct deposit of pay at Navy Federal.  Navy Federal will also expedite approvals for lines of credit, overdraft programs and credit card limits.

Although active military won’t get paid if the government goes offline on Friday, their pay is being accrued and is guaranteed by the US government.  So Navy Federal is not really taking a big risk by depositing the regular pay into their customer’s accounts, but they are building mega loyalty in the process.

It’s not always technology that makes the difference – smart play.

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Getting mobile, consumers, and innovation

by Kristin Moyer  |  January 6, 2011  |  Comments Off

Stessa Cohen here.  Mobile banking sounds simple, but it may still be confusing to bankers trying to sort out the hype from the opportunity.  Is it like online banking but on a smaller screen? Is it a browser on a phone or a bunch of cryptic SMS codes that only unbanked consumers in India or Kenya will use?

It’s not confusing to consumers who enjoy extending self service to their mobile devices.

And,  perhaps unlike other researchers, mobile, mobility & banking and the role they play in the lives of consumers are  not confusing to Gartner Banking Industry analysts.  As early as 2005 and 2006, I started writing about multichannel integration and the need for banks to adopt channel agnostic approach to retail delivery.  In fact,  the example I used in presentations was the ability to deliver banking transactions to an iPod.

From the start of our coverage of mobility and banking, my colleague Christophe Uzureau and I identified mobile financial services — the intersection of banking and payments on the mobile device. Our latest research, The Fundamentals for Success with Mobile Financial Services, reflects the evolution of our holistic thinking about the role of mobility in banking.  Gartner has long written about synergies that appear in that intersection that may not have been possible in other “channels.”

As exciting as mobile banking is, customers have a life outside of banking. Alistair Newton’s  note will help you design effective and personalized products your customers will want to use. 

Of course,  we have data to back this up.  David Furlonger’s Gartner Innovation Survey: Culture and Executive Buy-In Essential to Successful Banking Innovations takes a hard look at innovation, changing organizations and measuring effectiveness.

So, I guess this post is a bit of a plug — Gartner analysts get mobile  and how it fits — and will fit — into your bank’s business and technology architecture. Don’t let the hype confuse you.

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Fed Proposal on Debit Interchange Requires Radical Retail Banking Profitability Re-engineering

by Kristin Moyer  |  December 23, 2010  |  Comments Off

The banking industry is undergoing radical transformation, and banks must adapt.  Debit cards are the latest area of transformation needed for US issuers.  The Dodd-Frank Wall Street Reform and Consumer Protection Act included provisions regarding debit card interchange fee and routing.  In response to this, the Federal Reserve Board unveiled a proposed rule that would establish debit card interchange fee standards and prohibit network exclusivity arrangements and routing restrictions on December 16, 2010:  Regulation II, Debit-Card Interchange Fees and Routing.  Debit card interchange fees are established by payment card networks and paid by merchants to card issuers for each transaction.  The new rules would take effect July 21, 2011.  While the Fed estimates that this would reduce debit interchange fees received by issuers by more than 70% below industry average, others estimate it is more likely between 84% to 90%. The Federal Reserve is now requesting comment on this proposed rule.
Debit cards now exceed all forms of noncash payments in the US and represent 35% of total noncash payments.  In 2009, debit card interchange fees totalled over $16 billion.  Two of the largest issuers in the US, for example, derive 2.5% of their revenues from debit interchange.  Contrasted to this, it is unclear what impact this rule would have on non-bank payment providers.  While the proposed regulation of debit cards will create a 70%-90% reduction in fee income down from the 120-130 basis points for banks supporting consumer deposit accounts, some believe that non-bank payment providers may still achieve 300-400 basis points of revenue from online (often smaller) merchants via ACH for approximately 5-7 cents.
Regulation II is currently a proposed rule and could be altered, but pressure has been building on placing limits on interchange for some time.  Banks must therefore assume that radical profitability re-engineering in not just their card portfolios, but across the entire retail banking relationship, is an urgent requirement regardless of the ultimate fate of Regulation II.  While this particular rule is focused on debit cards and deposit accounts, prepaid and credit cards could be impacted by future rules as well.  Profitability re-engineering is an even more urgent matter for banks to accomplish because in addition to its substantial financial impact, consumers trust debit and credit card providers to support their payment needs (see “Banks, Check Your Fundamentals Before Launching New Payment Instruments”).  Future research will identify technology strategies and applications that will support radical profitability re-engineering.
One thing that Regulation II does is fundamentally alter the value proposition of contactless and mobile.  What are your thoughts – will this be the tipping point for mobile in the US?  What about EMV?

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Chase Online Banking Outage: Another Opportunity to Revisit Customer Communication & Social Media

by Kristin Moyer  |  September 16, 2010  |  2 Comments

Stessa Cohen here. A couple of years ago, we went through the initial shockwaves of the financial crisis.  A couple of financial services firms like Lehman Brothers and some others suddenly went out of business.  Consumers had questions, were fearful of what would happen to their retirement and bank accounts.

 Remember that?

 Two years ago,  I, along with other Banking research colleagues, wrote several posts about the importance of transparent, readily available customer communications and why it was necessary during the financial crisis. And why it might be important for banks to address problems upfront.

 Now, Chase’s online banking functionality has been offline since Monday evening through much of Wednesday (13-15 September 2010) for a number of days.  On 16 September, an explanation appeared sometime on Wednesday evening or Thursday.

 I think I’ve been through this before.

Let me be clear: Fixing the problems are uppermost on the minds of Chase IT and product staff right now. I am sure — I know — that they were and are extremely busy and working several 16 or 20 hour or longer days.  But the lack of communication left a void.  And a missed opportunity. 

The financial crisis offered banks an opportunity to reevaluate their customer communications and figure out to incorporate new means — eg social media — into their repetoire. Some did. Some did not.

Instead of hearing about the outage directly from Chase, customers probably read about it on twitter.  And from maybe more traditional, reliable  news sources, suc h as online newspapers (disclosure: this article does quote me ), and news aggregation sites.  Over a couple of days, consumer panic, fear, anger grew, which may lead to more serious fallout from the outage (from the NY Times):

A system outage of this length communicates to me that they really don’t have a handle on their systems,” said Vic Caterina, a Chase customer in Chicago who does all of his banking online. “My relationship with Chase is now under reconsideration.”

Direct communication with customers might have reduced customer frustration that grew to anger and threats and thoughts about switching banks.

So, what’s the answer? A twitter account or Facebook page ? Social media is going to solve Chase’s (and other bankss) problems?

Yes: If your customers are there.  But remember, consumers go a lot of places. They are at Youtube.com and Linkedin. Are those potential places to communicate?

Communicate via all available methods.  Don’t expect your customers to come to you.  

But if they do, inform them. Not by press release, but straightforward, honest as you can communication.  Make it easy and simple for customers to know where to find you.

Plan for customer questions and concerns at all channels and destinations, whether at the branch, drive-up window, ATM, telephone banking, contact center.

Remember the power of the social network. Use social media to spread the word. Customers can help by spreading the word to their friends and contacts in their social networks.  Doing so will also help the bank manage the overflow of customer demands on branches and contact centers, for example.

Too many social media outlets to manage? Might be time to consider tools to manage that.  Of course, Gartner has you covered with the Hype Cycle for Social Software 2010

I hope the IT problem have fixed the tech problems.  I do. I also hope others at the bank see the customer communication opportunity and seize it.

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There are Plenty of Unbanked Initiatives, but are there any Real Success Stories?

by Kristin Moyer  |  July 28, 2010  |  Comments Off

The Financial Access Initiative (FAI) believes that 2.5 billion adults worldwide do not have access to formal financial products (such as savings accounts, insurance) with either a traditional (regulated bank or carrier) or alternative financial institution (such as a microfinance institution). Approximately 90% of the unbanked live in Asia, Africa, the Middle East and Latin America.

Financial institutions have struggled to provide financial services to the poor because of lack of credit history, lack of collateral, no proof of identification, lack of proximity to traditional financial services locations – and perhaps the biggest concern of all, profitability.

Despite these barriers, an ecosystem beyond microfinance institutions has begun to develop in many emerging markets. This ecosystem is comprised of financial institutions, retailers, mobile operators, airtime resellers, lottery branches, post offices and many others. But have any unbanked initiatives really been successful yet, or is a lot of money being spent without results?

It depends on the measurement you use for success – but in general, the answer is:  all of the above!

Many (perhaps even most) financial services providers are struggling to make their unbanked initiatives successful. However, there are at least five examples of unbanked initiatives that have produced positive results: Grameen Bank, ICICI Bank, M-PESA, GCash, Smart Money and Bolsa Familia Conta Facile.

Grameen Bank

Bangladesh

Repayment rate: 98.6% repayment rate

% of borrowers that have crossed the poverty line (according to Grameen Bank): 64%

M-PESA

Kenya

Mobile money

9 million wallets (~25% of the population!)

GCash

Philippines

Mobile money

1.2 million wallets

Smart Money

Philippines

Mobile money

9 million wallets (~10% of the population)

ICICI

India

Self-help groups

Cost effective operating model

Also partnering with MFIs

Bolsa Familia Conta Facile

Brazil

G2P

Caixa Economica migrating G2P recipients to conta facile (Visa debit card)

10 million accounts (~5% of the population)

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Card Management MarketScope Now Available

by Kristin Moyer  |  June 22, 2010  |  Comments Off

Card management software is at the heart of the life cycle of a payment card, whether a financial institution is leveraging the card management software in-house or whether a processor is leveraging card management software to process transactions on behalf of a financial institution.

A high level of card management software decision cycles is currently under way on a global basis for a variety of reasons, including the sunset of Base24 (from ACI Worldwide), regulatory change, migration to the EMV standard and others. Financial institutions should use card management software replacement as an opportunity to move more deeply into payment modernization, rather than to replace like-for-like software. Product road maps, therefore, deserve special attention and should include a strategy to either interoperate with or become a payment services hub.

Banks and card processors that are replacing their card management software should leverage our 2010 MarketScope (available to Gartner clients), just released today, to identify the strengths and weaknesses of vendors that provide multiregional solutions.

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Hey, Checks, We’re Just Not That into You…..Anymore

by Kristin Moyer  |  May 6, 2010  |  Comments Off

Stessa Cohen here. There’s an infamous episode of Sex and the City in which one of the main characters, Miranda, talks about a recent date. At the end of the evening, the man in question says to her,  “I’ll call you.” The four friends, Carrie, Samantha, Miranda and Charlotte discuss the merits of this “I’ll call you” and analyze all the possible reasons he didn’t prolong the date or call her. Berger, Carrie’s beau who is also sitting at the table, gives his blunt “guy” interpretation, “He’s just not that into you” — which turns out to be true. Miranda listens and uses Berger’s insight to move from preoccupation witha guy who didn’t want to date her to her next date.

In a recent article “A New Goal: Checks without Paper” (behind a paywall)  The American Banker analyzed all the ways that banks can leverage their existing legacy check processing infrastructure to create “electronic checks.”  Sex & the City may be off the air, but the banks are the new drama queens creating this hot air around these “new” checks: “Native electronic transactions” “electronic payment orders (EPO)”  “Digitally Originated Checks,” or DOCs.

But you know what? Consumers feel about paper checks the same way Miranda’s date felt about her:  They are just not into checks. And they don’t  plan to be anytime soon. They aren’t looking for new ways to write checks. They want more personalization and they want to be able to manage their money (behind paywalls too).

How do we know this? SmartyPig’s goal-based savings account growth ($400 million in deposits in a couple of years), the continuing decline of paper checks and growth of electronic payment methods (According to the US Federal Reserve 2007 Payment Study (which covers payments made 2003 – 2006, so it’s already out of date) paper check usage declined by 6.4% while debit card usage increased 17%), the swell of hype around person-to-person (P2P) mobile payments.

Obviously checks and check processing are an investment that banks care about. But should they be focused on how to drive customer interest in a payment methods they aren’t interested in? I’m working on research now about why they should avoid re-treading old technology, old methods, to extend the value of checks — and why banks should focus on what their customers are doing, how they are doing it and how developing trust in mobile-based banking services may be key.

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