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C ONSULTING I NSIGHTS

elcome to the Summer edition of Consulting Insights, where Corporate Insights Consulting Services team analyzes emerging financial industry trends.

Our final two articles share our latest research on investment alternative startups a trend impacting the investment and advisory industries and stock plan services, a new area of research for Corporate Insight. Please feel free to circulate this publication to your colleagues. We hope you find this issue useful and encourage you to contact us to discuss how we can help you improve your business performance through competitor insights.

Our cover story explores how financial services firms are taking advantage of smartphones built-in microphones and cameras to deliver functionality that goes beyond what they offer on their websites. We also discuss how the person-to-person (P2P) payment experience often differs between the online and tablet channels.

NEW MOBILE TOOLS MAKE THE MOST O F S M A R T P H O N E C A PA B I L I T I E S

obile finance has gone from practically nonexistent to ubiquitous in less than ten years. That time period has seen striking changes in mobile technology and its implementation by financial services firms. At first, these firms focused on ensuring that their clients Inside This Issue: could access basic private site information and transaction capabilities Smartphone Capabilities 1 on their preferred device, be it an User Experience: P2P 2 iPhone, iPad, BlackBerry or Android smartphone. More recently, though, Investment Startups 3 firms are finding new, innovative Stock Plan Education 4 ways to use built-in smartphone Brokerage Website Audit 6 capabilities for tools that do not have an online equivalent. Voice-Recognition One obvious difference between a computer and a smartphone is the built-in microphone. While this hardware is most essential for making calls, Apples Siri personal assistant popularized the notion that voice commands could replace touchscreen controls. In April 2012, E*TRADE became the first financial services firm Corporate Insight tracks to offer voice commands. Powered by Nuance, this system helps with navigation through the extensive app, including shortcuts to tools such as quotes and trades. For instance, clients can tap the small microphone icon at the top of the screen and speak commands such as Can I get a quote on [symbol name]? and Buy 75 shares of [symbol name] at limit price 9 dollars and 50 cents. The latter command would lead to the trade ticket pre-loaded with the spoken details, ready to be confirmed and submitted. In the last few months, the idea of voice commands has seen renewed interest. USAA started a virtual mobile assistant pilot program in March, expanded to all clients in April. Shortly after, GEICO added Voice Assistance personified as Lily. Both firms

capabilities are similar to E*TRADE even though the actual commands naturally vary between brokerages and insurers. For example, these apps offer easy access to services such as bill pay and auto quotes. Although only a few firms have Mobile Finance: adopted voice controls, the next 2013 Trends & Innovations generation of this technology may For more information on this already be on the horizon. IBMs years most interesting and noteWatson supercomputer, bestworthy mobile finance trends, known for dominating Jeopardy! please view our Mobile Finance: champions, has already been 2013 Trends & Innovations presenapplied in other fields such as tation on the Corporate Insight Blog health care. Next, IBM plans to by clicking here. use it to power client companies phone, online and mobile customer service. According to Forbes, early prospects for this technology include international banks such as Australias ANZ Bank and Royal Bank of Canada. Camera Another feature of the modern smartphone that has caught firms attention is the camera. The most familiar implementation of camera phone technology is mobile check deposit. In the last six months, Discover and KeyBank both added the capability, and USAA expanded its Deposit@Mobile capability to be able to scan and upload multiple checks in one transaction. Mobile check deposit is currently available from 83% of the banks Corporate Insight tracks, as well as several investment firms. Firms are also experimenting with camera integration in a wide variety of other ways. Powerful tools can retrieve details that clients would otherwise have to type in manually on the devices touchscreen. Recent examples illustrate the breadth of possibilities a camera phone offers.
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ccording to a recent International Data Corporation report, tablet sales will outpace personal computers by the end of 2013. While tablet usage has increased dramatically in the past three years, users have not abandoned their desktops or laptops en masse. Rather, many users have added these devices to their technology toolbox, employing a particular device computer, tablet or smartphone based on factors such as their location or the task at hand. With this in mind, Corporate Insight designed a usability study that focused on the mobile and desktop offerings of five leading banks Bank of America, Chase, Citizens Bank, U.S. Bank and Wells Fargo. We invited participants to the usability lab in our Midtown Manhattan offices in order to understand how mobile applications match up against traditional website interfaces both in terms of functionality and usability. Although websites offer much richer suites of account management tools, we found that in some cases, particularly person-to-person (P2P) payments, tablet apps relative simplicity led to strikingly higher success and efficiency. These and more findings available in our full whitepaper demonstrate the value that can be gained when you take the time to observe real users interacting with an interface. Methodology Website Tablet For each of the five banks, we tested five participants, all of whom had experience with online banking but little or no familiarity with the interfaces they used in their session. A trained usability professional guided the participants through the 13 tasks listed at right (eight on the banks website via a desktop computer, and five on the banks iPad application), while a second analyst monitored the session and took notes from an observation room separated by a one-way mirror. User Test Task:
Log in & check balances Transfer money Review account history Locate the nearest ATM Set an account balance alert Send money to a friend Find CD rates

USER TESTING INSIGHTS: K E E P I N G A DVA N C E D F E A T U R E S S I M P L E

Study Highlight: P2P Payments For the most part, study participants were familiar with nearly all of the assigned tasks, having performed similar actions within their personal bank accounts in the past. The one exception was P2P payments. While several participants commented that they had experience sending money to friends via payment services such as PayPal, none had prior experience using a P2P feature on their banks website or apps. Whats more, most subjects were unaware that banks even offered this service. There was a notably large disparity between task scores when looking at P2P payments on the desktop as compared to the iPad app. Less than half of all participants were able to complete a P2P payment on the desktop with relative ease, and nearly 25% failed completely. One reason for such high failure rates on the website is that banking firms have yet to establish a consensus as to where the P2P option should be located within their website structure. Some firms offer P2P payments within the Transfers section of their site, while others locate the option alongside Bill Pay. Two firms in particular illustrate these difficulties. On the Bank of America website, the P2P interface is located within the Transfers area of the website. Although this is the first place participants thought to look, nearly every participant failed to recognize that the bank categorizes these transactions as a transfer Inside the bank. Users immediately navigated to the Outside the bank tab and, when they couldnt find the interface, began browsing the Bill Pay section of the site. Similar to the users expectations we observed on B of As site, U.S. Bank participants first instinct was to look in the Funds Transfer tab. Unfortunately, the firm places the P2P feature within Bill Pay. Although most of the test subjects eventually discovered the interface, they commented that they thought the term bill pay suggested paying a company, not a person. Compared to the website, participants found it much easier to send money to a friend via the iPad apps. Participants were able to complete the task on the iPad almost 60% faster than they could on the corresponding banks website, although at the time most of the firms did not support adding new payees through the app interface (which we instructed them to do on the desktop). Users found it much less difficult to locate the P2P interface on the app, a result of the more streamlined and condensed tablet experience. Firms like Chase and Wells Fargo group transfers and payments together on their tablet apps, limiting any possible confusion between the two categories.

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We recorded audio and video from Update email 8 each session and encouraged users to think aloud in order to understand their state of mind and gain more insight into their decisionmaking process. At the end of both portions of the test, participants were asked to complete a Standard Usability Scale (SUS) survey, a ten-question Likert scale questionnaire that is used to determine individuals impressions of the overall usability of the interface.

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I N V E S T M E N T S TA R T U P H I G H L I G H T S : FOUR BUSINESS MODELS TO WATCH

backing and has seen strong account growth in their short existence though that doesnt necessarily mean theyre profitable yet. These firms have also managed to land several partnerships to plug their tools into the websites of major media outlets such as CNN, The Wall Street Journal, Yahoo! Finance and USA Today. Trade mimicking/copying: 25 firms Trade mimicking, or social trading, lets users follow (via email and/ or mobile alerts) or directly copy (via an auto-trade functionality) a money manager or successful trader. Who can a user follow? There are three approaches. The first sees the firm put forward a select group of vetted managers. The second is to allow users to copy traders who rose up through the network leaderboard, though the standards that these firms hold clients to before they endorse them vary wildly. Finally, some sites let clients copy any fellow user. These services entail differing cost structures, from free to success fees. Retail trading activity has been depressed since the financial crisis. Millions of investors still lack confidence in the market and in their own investing abilities. If trade mimicking firms are able to get investors off the sidelines and back into the market, this would be a major breakthrough and one that could inspire some self-directed players to introduce something similar.

n addition to our competitive intelligence and user research services, Corporate Insight pays close attention to emerging trends with the potential to impact the financial services industry. One such trend is the rise of new firms that challenge the traditional concept of investing through a retail brokerage firm. These firms which we refer to as online investment alternatives can be broken down into roughly a dozen different business models. In this article, we turn the spotlight on four such models, discussing the basics of each as well as reviewing the success these models have achieved in terms of venture capital funding and account growth. Algorithm-based advice using account aggregation: 7 firms These services rely on aggregating clients' outside investment accounts similar to what Mint.com does. They provide automated investment advice specific to the users portfolio. The best firms offer fundspecific buy/sell/hold recommendations for the clients holdings, either for free or for a fee. The recommendations are based on identifying high cost and/or poor performing funds and suggesting better alternatives. These tools can also include general guidance on risk, costs, diversification, asset allocation and/or tax efficiency.

While investors should take free advice/ analysis with a grain of salt, these tools tend to provide more actionable and transparent advice than the planning tools available from retail brokerage sites. As these services catch on, advisors will also have to come to terms with that fact that VC funding & client numbers: In terms of funding and account numtheir clients can use online tools to easily scrutinize their investment bers, firms that focus on forex trade-mimicking services lead this choices and their compensation structure. category. Such firms are generally older and have already established themselves with a significant client base. Examples of firms VC funding and client numbers: Of all the groups we track, the seven that offer forex trade-copying with strong growth include Currensee, startups who offer algorithm-based investment advice have, on aver- eToro, FXStat and Zulutrade. age, the most impressive numbers in terms of client assets and financial backing. Each has several million dollars in venture capital (Continued on page 5)

(Smartphone Capabilities, continued from page 1)

Conclusion Clearly, mobile finance apps can be much more than just simplified versions of the firms private site. According to Corporate Insights customer surveys, basic account and market information remains a priority for clients, and financial services firms must make sure their mobile platforms present this data effectively. However, firms can make their mobile apps stand out by finding creative new ways to use everything the modern smartphone has to offer.

Its been over a year since E*TRADE and TD Ameritrade added the ability to scan a barcode during everyday shopping to find a quote for the parent company. More recently, American Express and Chase offered their small business card holders receipt capture, storage and organization capabilities through their apps. USAA now uses camera capabilities to expedite account opening. Eligible clients can use an image of a blank check to pre-fill initial deposit information, or a drivers license photo to load personal information.

In March, U.S. Bank partnered with Mitek Systems to become the first firm to offer Mobile Photo Bill Pay. The new service automatically For more information on Mobile Monitors latest research, click here, or conextracts relevant information from a picture of a paper bill and auto- tact Dan Wiegand at 212-832-2002 x118 or dwiegand@corporateinsight.com. populates the fields required to make a mobile payment. To date no additional firms have added similar capabilities, but those who would like to can turn to the established third-party provider instead of designing it from scratch.

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E M P OW E R I N G S T O C K P L A N S E RV I C E S CLIENTS WITH EDUCATION

tock plans are a valuable and popular source of employee compensation and come in many varieties, including stock option plans, ESPPs, restricted stock awards, and stock appreciation rights, to name a few. Understanding the ins and outs of different plans and their respective tax treatments, however, can prove difficult for plan participants. For this reason, it is important for firms administering stock plan services online to provide in-depth educational content on their websites and tools to help participants manage these assets. Earlier this year, Corporate Insight took its first look at the stock plan participant online experience, reviewing seven leading stock plan providers and comparing their site features, functionality and design. We reviewed all aspects of the online client experience, from access and navigation to account information and transactions. In this article, we share some of our findings related to the tools and resources that help employees learn more about their stock plans, their value and online capabilities. Educational Content Varies Across the Board

Beyond the basics, leading firms offer extensive libraries of educational content. These educational centers offer articles related to tax issues e.g., withholding, reporting and filing requirements as well as how life and job events may impact an employees stock plans (e.g., disability, termination, stock splits). Some sites also address more advanced issues related to international tax codes. While much of this content is provided in-house, some firms rely on third-party educational sites such as mystockoptions.com. Such third-party content tends to be comprehensive and objective, but often directs users away from their account information with no clear path for returning, creating navigational difficulties.

When it comes to the nuts and bolts of their websites, three out of the seven firms we studied present tutorials that E*TRADE provides videos explaining plan types guide users through the process of exeand transaction capabilities cuting certain transactions, such as exercising an option or selling shares. The more advanced tutorials use video animation, while others consist of screenshots with detailed text instructions. Valuable Interactive Tools are Few and Far Between

All seven firms we reviewed recognize the necessity of educational content, yet the types and depth of resources vary. Each of the sites offers basic descriptions of the different stock plan types, as well as offering frequently asked questions and glossaries. For some sites, educational content stops there, unfortunately.
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Less common on these sites are interactive tools that help users make sense of their account information and assist them as they execute transactions. Fidelity and Morgan Stanley offer the most
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System Usability Scale (SUS) Survey Results After completing the usability tests on both the website and the tablet application, participants were asked to complete a standard, ten-question System Usability Scale survey. This common questionnaire is used to determine an individuals perception an interfaces ease-of-use and learnability. An average SUS score is 68. Based on our findings, participants expressed a strong overall preference for tablet apps 86.5 average SUS score over their traditional website counterparts 61.1 average SUS score. The data reinforces the idea that users prefer interfaces that are simple, straightforward and predictable. With most financial firms offering content-rich websites, it becomes even more important that the website is designed in a straightforward and user-friendly way. While complex tools and offerings can be a great resource for clients, they become useless if they are not simple enough for every client to find and utilize.

Corporate Insights User Testing Services

Should you feel that user testing is right for your company, Corporate Insight is here to help. We can:

Collaborate with you to design a study that tests the key features of
your website or mobile app, and/or the platforms offered by your key competitors

Recruit participants that represent your target audience Provide you with a detailed analysis of test sessions Assist you with your existing usability efforts by moderating tests
you have designed or hosting tests at our facility, conveniently located above Grand Central Station in Midtown Manhattan For more information, please contact Alan Maginn, Director, User Research, at amaginn@corporateinsight.com or 212-832-2002 x116.

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Low-cost online managed accounts: 12 firms Several newcomers are taking the online managed account concept and offering their own products for a low rate on par with a target date fund or even for a flat subscription fee (e.g., $X a quarter). These services are stripped down to the lowest cost possible all clients buy into the same portfolio (or handful of portfolios) of ETFs. The difference between clients is their allocation, which is determined by an investor questionnaire. While we do have some reservations about the quality of the questionnaires at some firms, these services are more customized to the clients needs than the one-sizefits-all model of a target date fund. VC funding & client numbers: Many of these firms have only recently launched and/or are based in the United Kingdom. In the United States, Betterment and Wealthfront have seen the strongest account growth in their relatively short lifetimes and have raised significant amounts of venture capital.

JOBS act these rules may be changed in the near future, however, to allow a broader group of investors to invest a certain percentage of their income via a crowdfunding platform. The concern with crowdfunding real estate is that location is such an important aspect of a successful real estate investment, but is hard to gauge sitting in front of a computer far from the property in question. Just as buying a REIT represents an investment in the wisdom of its managers, using one of these online services requires faith in that firms vetting process. Unfortunately, most firms do not discuss their standards and expertise in sufficient detail. VC funding & client numbers: Of all the groups we track, this is the newest many of these firms are still in beta or have only recently launched. This space could change radically once the SEC opens the doors to non-accredited investors, though. Conclusion

These are only the most intriguing approaches among the 130+ new firms we track. Other areas include online financial planning, tuition Its also worth keeping in mind that online managed accounts at the financing alternatives, search tools to find a financial advisor and major self-directed brokerages have seen impressive growth over the more. Broadly speaking, however, these firms share three common last few years. In recent years, managed accounts have been one of strengths relative to traditional retail brokerage firms: greater transthe few bright spots among discount brokerages who have been hurt parency on price and performance, more modern websites and moby lower commission revenue post-crisis. bile apps, and lower fees and transaction costs. Inevitably, many will fail, but as a whole these services compound the challenge facing Real estate crowdfunding/microfinance: 16 firms investment firms as they try to sell Generation X and Y on a traditional relationship. The crowdfunding wave has hit one of the largest asset classes out there real estate. These online platforms let clients invest in real estate opportunities or home equity. These services are currently only For more information on online investment alternatives, please contact Grant Easterbrook at geasterbrook@corporateinsight.com or 212-832-2002 x131. open to accredited investors per SEC requirements. As part of the

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helpful features in this regard, allowing users to model transactions so that employees can get a sense of their potential proceeds after a sale is executed. After completing this exercise, users can opt to submit a real transaction based on the model.

Stock Plan Transaction Timeline on their private site homepage. This tool offers users a quick look at their account activity over time. Users can filter the chart by transaction type, plan and date. The Importance of Education

Employees who have earned company stock are often dealing with unfamiliar asset types and webMorgan Stanley takes this helpful sites. As such, firms administering tool a step further by including a stock plans online should aim to wizard to assist users with the provide thorough resources and model order inputs. For instance, tools to educate participants. Our the wizard will ask for the users research revealed a striking gap goal in selling shares (e.g., to minibetween the leaders and laggards mize or maximize gain, or to sell among the firms reviewed. A select E*TRADEs Value Modeler newest or oldest acquisitions first) few websites went beyond stock and will then select the appropriate plan fundamentals to provide exstock to be sold in the transaction. tensive educational libraries and interactive tools. These offerings create a more dynamic, client-friendly experience, in an area of perOther firms offer interactive tools to help users better understand sonal finance where such support is especially critical. their account value and transaction history. E*TRADE stands out for offering a value modeler on the private homepage that estimates the For more information on Corporate Insights Stock Plan Services Websites: hypothetical current market value of clients stock plan holdings The State of the Industry in 2013 report and findings, please contact James based on the price and vest date they select. Instead of entering McGovern at jmcgovern@corporateinsight.com or 212-832-2002 x105. numbers manually, participants can use interactive sliders to set their desired values. Morgan Stanley also presents an interactive

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Corporate Insights 2013 Brokerage Website Audit is now available! Since 2004, the Brokerage Website Audit has helped firms identify weaknesses and improve the online user experience they offer prospects and clients. The Audit grades your firm's brokerage website and competitor sites across hundreds of key online attributes. After analyzing the results, our experienced analysts offer actionable recommendations to help you improve your website. Your custom Brokerage Website Audit includes:

Competitor Benchmarking & Demographic Insights - The Audit identifies strengths and weaknesses in contrast to competitors and assesses your site's effectiveness in serving different demographic groups (e.g., mass affluent, active traders, etc.). Scores Reflecting Investor Preferences - Audit scores are determined by more than website evaluations. Results from our in-depth Investor Survey are used to create weighted scores to better reflect the importance of specific online features to actual investors. Flexible Framework - We provide your scores and the scores of all competitors at the category, sub-category and attribute level, allowing you to perform in-depth competitive analysis. Tailored Recommendations for Improvement - The Audit report will provide you with hundreds of specific, detailed recommendations to improve your brokerage website. Competitor screenshots are also included to illustrate industry best practices. Free Investor Survey Report - Audit purchasers will also receive the Investor Survey Report. The report uses survey data to explore the behaviors of key demographic groups including self-directed investors, advised investors, social media and mobile users, active traders and more.

For more information on the 2013 Brokerage Website Audit, contact Bob Burlin at rburlin@corporateinsight.com or 212-832-2002 x115.