WASHINGTON — Keynotes by Sir Richard Branson, the $4 billion Virgin serial entrepreneur, and global strategist Jonathan Salem Baskin. Panel after panel on mobile banking, peer-to peer-payments and the rules of engagement with social media. A tentative obituary for near field communication, an innovative payments technology around which enthusiasm seems to be crumbling.

The plain message at the mid-October BAI Retail Delivery conference was that a new day is dawning in financial services, it's no longer your grandfather's spread business and new tools bring new opportunities to those who figure out how to use them.

Probably no one talk so plainly hit the perils and the opportunities in today's financial services as did Branson's opening day keynote. At first glance an odd choice. He's an innovator in music, aviation and telephony, but what does he know about financial services? A lot, it turned out because Branson now has over $1 billion of skin in the game with his purchase of the assets of Northern Rock, a failed English bank that had been taken over by the U.K. government in 2008.

Branson bought out those assets early in 2012, and his intent is plain. He plans to overturn the cozy and profitable leadership of the major British banks.

Branson believes the opportunity to overturn the established big banks is both historic and immense. “They have been badly damaged,” said Branson. And although he did not elaborate the implication was that the major banks have been tarnished by the present economic distress, significantly worse in the U.K. than the U.S., and also by repeated reports of the huge pay packets handed out to City of London financiers at a time when the institutions were near collapse.

Branson, who has made his billions by targeting industries where he can play a romantic David battling an evil, stodgy Goliath, now thinks that the public is ready to move a sizable chunk of their money into new banks, such as Branson's Virgin Money network. “It's a lot more fun being David,” Branson quipped.

Will he bring Virgin Money to the U.S.? At BAI he admitted he had a team of executives scouting for U.S. opportunities. He suggested he would come to the U.S. eventually. But he also said he had nothing definite to report at the moment.

His ultimate message was that the time is here to go on the attack against the entrenched banks because their vulnerability is huge.

And what might work for Sir Richard in the U.K., just might work for smaller institutions in the U.S. That was a take-away optimism expressed by at least some executives at BAI.

Branson may have turned on a packed house, but probably the biggest and longest buzz at this year's BAI, the sessions that played to full houses, was anything mobile and at least one big idea seemed to start to take hold. The current crop of mobile banking apps just aren't good enough anymore, not in a world populated with glitzy smartphone games and slick personal financial management tools. The antidote: mobile banking apps 2.0.

Apps developer mFoundry, a Larkspur, Calif.-based company with 800 mobile banking customers, announced at BAI that it was opening its app to include content from a range of third- party developers. mFoundry CEO Drew Sievers pointed to payments innovator Dwolla and prepaid card specialist Blackhawk Network as cases in point. Sievers claimed that not only will the more powerful app that results be more engaging for consumers, it will also produce new revenue streams for the financial institutions that hop aboard. He envisioned a three-way split of profits resulting from sale by Blackhawk Network on a prepaid card, with Blackhawk, mFoundry and the financial institution all sharing in the proceeds.

Similar splits would occur for other revenue generating tools put into the mobile banking app. “We will be the gatekeeper,” said Sievers, but he insisted there would be cuts for financial institutions that opted in.

Intuit joined in that open app party, also announcing at BAI that it was opening its apps to third- party content, either developed by financial institutions or others. There was less concrete detail in Intuit's announcement, but it pointed to the same direction, giving financial institutions more freedom to architect apps that will truly engage mobile members.

At another panel, Matthew Wilcox, a senior vice president at Zions Bancorp., a Salt Lake City-based institution, tossed out a staggering figure that validates why mobile is gaining so much popularity with bankers. It costs on average $4 per in-branch teller visit versus 8 cents per mobile banking transaction.

Wilcox added that mobile banking customers are more profitable ($450 in annual profits per head at Zions versus $350 per online banking only customers). And they are far more loyal. In a year, only 1,5% will leave the institution compared to 4% of online banking customers. Add it up, said Wilcox, and not only is mobile the lowest-cost channel in banking history, it is producing good customers.

Near field communication, the short-range payments technology, meantime seemed to elicit growing skepticism about its future among BAI panelists. Multiple panelists cited Apple's decision to keep NFC off iPhone 5. Others cited retail giant Walmart's recent proclamation that it did not see NFC in its future. Bart Narter, a senior vice president at research company Celent, said, “I don't see a clear path to NFC adoption in the U.S. The telcos won't play unless they are compensated.” And, so far, no one seems eager to split off a slice of a shrinking payments pie to compensate them.

Narter allowed that maybe NFC would figure in as a technology to deliver well targeted offers, “but you don't need NFC for payments to do offers.”

Another unsettled, and perhaps unsettling, idea put out by several panelists is that email marketing is on the rise. But email consumption is on the decline, according to Dominic Venturo, chief innovation officer at Minneapolis-based US Bank. Another panelist indicated that by his institution's count fewer than 2% of the emails his institution sent out were read. So the hunt is on for more effective contact points with today's busy, on the go mobile consumers. That might include text messages on phones, custom pop ups during online banking sessions, possibly targeted offers during mobile banking sessions. This research remains in its early days, but the sense that something better needs to be put into the hands of marketers seemed strong at this edition of BAI.

More fire erupted at a panel on person-to-person payments that brought together John Feldman, general manager of clearXchange, the payments vehicle created by JPMorgan Chase, Bank of America and Wells Fargo; Sanjeev Dheer, the lead executive at Fiserv's CashEdge; and Arkady Fridman, a 14-year employee at PayPal. The fight was clear. Would there be a bank-centric P2P solution? Or would it, to quote Fridman, be consumer-centric? This brawl is in its early rounds but know that there probably will not be a more spirited fight in financial services over the next few years. And a fight it will be because there is no reason to declare an early winner in what will be a hard fought battle for consumer mindshare and loyalty.

Important as the technology component was at this year's BAI Retail Delivery, there were strong reminders that finance, ultimately, is a human activity. General session speaker Jonathan Salem Baskin, a popular talking head on global marketing, hit exactly that note when he posited that as financial institutions scurry to get their customers more engaged with them on Facebook and Twitter, maybe they are in fact going about this exactly the wrong way. “What if you flipped the telescope around and asked, how can we get more engaged with our customers?”

Baskin's suggestion is that when enterprises do that, good things happen, for their customers but also for the institutions. His core message, one with considerable resonance in credit union circles,- is that prosperity comes to those institutions that do well by their customers and their communities. “Customers are more engaged with the brands that are engaged with them,” he said. Flip the telescope, and just maybe that is the way to see the path to tomorrow's successful business model.

Instant Insights /

BAI Retail Delivery: Branson Wows, but Mobile 2.0 Rules

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