|How 10 mobile banking leaders make it pay|
7 strategies you can build on
“One institution reported an investment return in excess of three to one through various revenue streams including the float from the increase in customer deposits, cross-selling, and decreased customer attrition”
By Robert Hasson, Accenture Mobility Services, mCommerce lead. (Please see a note regarding mobile devices at the end of this article.)
Is mobile banking worth chasing?
That’s a key question facing bankers these days, given the cost of establishing a mobile offering and the accelerated pace at which the mobile landscape is evolving.
The short answer is “yes”—if you go about it right.
A flurry of activity has swept mobile banking lately, with banks, telephone service providers, payment companies, and non-traditional players all vying to establish market position. As with any relatively new channel, banks have taken widely divergent paths in developing and rolling out their mobile offerings. Some have struggled to make any impact, but others have emerged as market leaders.
To identify winning ways, Accenture recently analyzed the strategies and capabilities of ten financial institutions across the globe whose mobile offerings have helped them to reap rich rewards, including new customers, improved revenue, and returns on investment.
Getting it right—and soon—is critical. Financial institutions are at a crossroads with mobile banking. As the field becomes more competitive with both traditional and non-traditional players skirmishing for market share, waiting on the sidelines is no longer an option.
Payoff is there
Banks could potentially generate revenue as high as three times their investment in mobile banking, according to our research, which was conducted by TowerGroup, a Corporate Executive Board company. The essentials are: taking a strategic approach; emphasizing customer convenience; providing a rich exchange of information between the bank and the customer; and closely tracking customer usage and satisfaction.
The research further found that a range of banks--from those with a basic mobile deployment to those with more advanced capabilities--have produced substantial results at reasonable investment levels. However, to sustain a mobile program over the long haul requires a vision to nurture the channel; commitment from both the business and technology sides of the institution; a comprehensive technology platform; and an innovative mindset that can drive new features and functionality.
Potential keys to success
While the financial institutions that Accenture studied took different approaches to building out their mobile strategies, their paths to work towards success have remarkable similarities:
1. Educate customers. Remember that mobile banking differs markedly from online banking. Cell phones are not an intuitive financial vehicle.
• One large bank achieved high adoption rates less than three years after offering mobile services by piloting its initial marketing campaign around educating customers on how to use their mobile devices, rather than trying to cross-sell.
• Another financial institution coupled a major educational campaign with a multi-channel strategy, integrating mobile banking with its other channels to enable increased customer acceptance of mobile devices as a banking tool. As a result, more than half of its customer base-- over six million customers--registered to receive transaction alerts. Today, after adding other mobile functions, the bank enjoys a return on investment in excess of three to one.
2. Emphasize convenience. One bank accelerated mobile customer acquisition by convincing customers that it is easier to deposit their paychecks by phone, rather than waiting in line at their local branch. Another bank reported increased mobile usage by permitting customers to register for mobile banking online or through the call center. Using a digital mobile telephony system, another bank introduced a locator function, enabling customers to find the nearest ATM or branch, regardless of what type of handset they use.
3. Select flexible architecture. A flexible architecture allows banks to increase service complexity, establishing a path towards improved market position over time.
• One bank started out with text messaging alerts to customers, then introduced an iPhone® application upon the initial iPhone release, then rolled out applications for the Android™ platform- and BlackBerry® -based phones. Eventually, this facilitated remote deposit capture followed by interactive services such as investments and trading. Next on the horizon: exploring marketing and cross-selling opportunities afforded by the iPhone.
4. Minimize fees. Financial institutions with successful mobile banking programs generally seek to minimize customer fees in order to improve adoption and greater customer engagement. One bank achieved high returns in its mobile channel by offering customers several pricing options, including pay-as-you-go and low fixed-cost bundled premium services.
5. Generate revenue. Many banks view mobile as a lower-cost channel--a way to divert customers from the branch and call center. However, some banks are generating revenue from their mobile operations.
• One institution reported an investment return in excess of three to one through various revenue streams including the float from the increase in customer deposits, cross-selling, and decreased customer attrition.
6. Measure outcomes. Most leading mobile banks monitor outcomes. Tracking customer usage and satisfaction, volume, profitability, and costs can provide valuable insights when developing future fee-generating or customer retention initiatives.
7. Execute with the right collaborator. Building a mobile presence is about much more than simply making a marketing splash. It requires a technology collaborator that assists in providing support structures and methodologies to help ensure that the mobile applications are developed and maintained in a secure and sustainable manner.
Beyond an alternative channel
Rapid advances in mobile technology are creating major opportunities for banks to build better and more loyal relationships with their customers, to enhance service, and help drive additional revenue by seeking to answer customers’ needs at the right point in time.
For example, a customer with a low balance who is about to buy a new sofa at a department store could open up a line of credit at his bank, using his mobile phone to do so and thus facilitating the purchase. Indeed, mobile technologies are raising customers’ expectations--the smartphone has reinforced expectations of ubiquitous service.
A mobile program done quickly and haphazardly could easily result in a poor customer experience and reputational damage. Or it can be done the right way: strategically and with a vision of what is actually possible, such as richer engagements with customers and potential revenue generation.
Done correctly, mobile banking is certainly worth chasing.
Footnote regarding mobile devices mentioned in this article:
iPhone® is a registered trademarks of Apple Inc. Android is a trademark of Google Inc. The Trademark BlackBerry® is owned by Research In Motion Limited and is registered in the United States and may be pending or registered in other countries. Accenture is not endorsed, sponsored, affiliated with or otherwise authorized by Research In Motion Limited.
[This article was posted on October 28, 2011, on the website of ABA Banking Journal, www.ababj.com, and is copyright 2011 by the American Bankers Association.]
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