Mobile banking has evolved from a delivery-channel experiment to a core part of business, notes Serge Van Dam, vice-president of Market Development for Mobile Solutions, Fiserv. “In 2013, we’ll see the first bank in which mobile is the dominate channel,” he predicts.
While many banks offer mobile banking, not nearly as many are doing it well. Getting mobile right is critical: One in six consumers report that a poor mobile-banking experience prompted them to look for a new bank, according to a study by Google.
Banks that achieve measurable benefits—loyal, engaged customers who are more profitable than non-mobile customers—treat mobile as the disruptive strategy it is. Says John Finley, senior vice-president of Bank of the West’s internet banking channel, “We put mobile first. We ask what the customer wants in mobile and then apply our mobile strategy to other channels.”
The following seven lessons, culled from bankers, consultants, and vendors, can put any bank on the path to mobile success.
Don’t guess: Analyze usage trends
What do mobile users want from banks? Basic functionality such as viewing account balances and branch locations, paying bills, and transferring money top the list. The good news is that banks now have data available to analyze how customers use mobile banking, allowing them to abandon functions customers don’t want and focus on what they do, says Van Dam.
Neil Hickey, mobility lead for Accenture’s North America Financial Services Practice, agrees that there is a large untapped opportunity for banks to use analytics to hone their mobile-banking offerings. “Banks may see the number of logins, but don’t understand how clients are navigating mobile banking to determine potential value-added services,” he says.
Banks that implemented what Nicole Sturgill, research director, TowerGroup, calls “quick hit” functions like balance inquiries, fund transfers, and bill pay are now analyzing their customer base to determine which functions will make customers’ lives easier. “Don’t just shove a bunch of stuff into your mobile-banking app [application]to say you have it,” she advises. “Be thoughtful about what you offer.”
But don’t rely on current usage patterns alone. Customers may not even know what they want because they haven’t been exposed to the possibilities, notes Greg Jacobi, senior vice-president responsible for eBanking at $20 billion-assets Webster Bank. For example, customers didn’t ask for mobile remote deposit capture (RDC) but embraced it once it was available.
Mobile is not online, and tablets aren’t smartphones
“Mobile banking is not online banking on a smaller screen,” says Jacobi succinctly.
Bank of the West’s recently launched Quick Balance is an example of a feature that’s designed specifically with the mobile user in mind. Customers can get balances on two accounts by opening the $63 billion-assets bank’s mobile-banking app and swiping a finger—without logging into the app, explains Finley. Customers are downloading the updated app in droves; within three days of launch, according to Finley, there was a 10% increase in mobile-banking enrollments.
Chase, a pioneer in mobile RDC, believes mobile apps should be quick and easy to use. It recently launched Instant Action Alerts to enable customers to receive a low-balance alert on their mobile device and transfer funds from another account without logging into the mobile-banking app, explains Ravi Acharya, senior vice-president and head of digital for Chase’s consumer bank.
If mobile is not online, tablets are not just large-screen smartphones. For one, tablets have different usage patterns, says Doug Brown, senior vice-president and general manager, FIS Mobile (FIS recently acquired mobile provider mFoundry). “Consumers use tablets as a ‘second screen’ while watching TV at home,” he says. “They prefer to use apps that are designed for the form factor [size, shape] on the tablet.”
Forget generic apps
To meet the needs of specific customer segments, Chase has launched several niche apps. My New Home mobile app guides would-be homeowners through the entire home-buying process, integrating real estate search capabilities with financing resources. Customers can record notes, photos, and videos about houses, calculate payments, and locate a Chase mortgage banker. Chase’s Jot mobile app helps small-business owners keep track of receipts and track expenses.
Pittsburgh-based PNC Bank also offers specialty apps such as phone- and tablet-optimized apps for technologically inclined customers of the PNC Virtual Wallet, including a calendar view of in- and out-flows and the ability to allow customers to segregate funds for specific goals, reports Tom Trebilcock, vice-president of e-Business and Payments at the $305 billion-assets bank.
Bank of the West takes innovation seriously, and built an internal team to focus on what Finley calls “radical collaboration.” The team engages all areas of the bank and seeks to educate its business partners on mobile possibilities to spur fresh thinking. “We look for innovation everywhere, not just at other banks,” he says.
Don’t be afraid to start over
Many banks have found that their mobile-banking offering is a “hairy mess,” notes TowerGroup’s Sturgill. “Everyone was focused on speed-to-market, and now banks have to take a step back and think about the best way to serve their customers.”
Jacobi admits that Webster Bank’s first offering in 2009 was not built for the long-haul, so the bank cut its initial mobile-banking vendor loose. “The second time around we wanted to make sure we were working with a partner who was sustainable, especially for such a critical customer-facing channel,” he explains. The bank selected Clairmail (acquired by U.K.-based Monitise plc), and he notes that this current mobile iteration is “very successful.”
Bank of the West also is on what Finley calls “mobile 2.0,” a complete overhaul of the bank’s original mobile-banking platform.
Van Dam notes that most of Fiserv’s mobile-banking deals are renewals: banks throwing out what they built themselves or purchased from an upstart vendor, in favor of a mobile-banking platform designed for scalability and “upgradeability.” He uses the analogy of buying an inexpensive, used guitar when first taking music lessons to ensure liking it before shelling out big bucks for a more advanced instrument.
NCR’s Payments and Multichannel Vice-President and General Manager Steve Nogalo says banks need to consider whether or not their technology platform allows them to plan for the future. “What was good enough for a first-time offering is not sustainable.” He continues, “Banks have recognized that the platform they currently have doesn’t provide foundational capabilities to allow the bank to grow mobile as an ‘omnichannel’ and deliver cross-channel capabilities.” Last year, NCR was endorsed by ABA’s Corporation for American Banking for its Branch Transformation Solutions, a part of which addresses the need for such cross-channel capabilities.
FIS’s Brown believes standalone mobile vendors have underrepresented the challenge, cost, and complexity of integrating mobile banking with other back-end banking systems. “The most successful mobile-banking deployments are implemented with a platform plan in mind. Integration makes a difference in speed-to-market, performance, and user experience,” he says.
Kristen Ranking, SunTrust Mobile Channel manager, says that it’s important to be flexible, noting that the $173 billion-assets bank changed its mobile roadmap to speed delivery of mobile RDC based on customer feedback.
According to Fiserv’s 2011 Consumer Trends Survey, 41% of respondents have not used mobile banking because they are concerned about the security of their financial data.
In it’s briefing paper, “Breaking the mobile banking glass ceiling: Five factors will drive consumer adoption,” Fiserv recommends that banks educate customers about mobile security by including security FAQs on their websites and providing assurance that customers have the same money-back guarantee they enjoy with online banking. Going one step further, banks should advise customers that they can elect to receive immediate text messages if there is account activity that may be unauthorized.
The mobile device can enhance security as well, says TowerGroup’s Sturgill. “Use the mobile device to send out one-time passwords or activate/deactivate debit and credit cards,” she says.
Banks have to be wary of going to the other extreme in which security is so cumbersome that it annoys customers, explains Sam Kilmer, vice-president of Market Development at Harland Financial Solutions. In addition, customers also have a great deal of confidence in banks, says Kilmer, and recognize that their banks will likely not hold them liable for any security breaches to their accounts.
Kilmer’s associate, Nigel Prince, senior manager for Self-Service Channels, recommends banks take a cross-channel approach in which authentication experiences are the same at all touch points.
Integrate mobile into all other channels
Integrating mobile into other delivery channels goes beyond just ensuring that account transactions initiated in one channel are reflected in other channels. According to a study by Google and market researcher Ipsos, 46% of consumers that begin a banking activity on one device continue that activity on another device.
In fact, many banks are struggling with channel consistency between mobile and older channels since mobile has brought a new design paradigm and end user experience to customers, says Derik Sutton, director of Business Development, Computer Services, Inc. (CSI). He recommends that banks consider putting someone at the bank in charge of consistency and ensuring that each channel has a voice about customer delivery.
“Mobile...crosses the boundaries of the digital and physical worlds,” adds NCR’s Steve Nogalo.
Last June, NCR launched Mobile Cash Withdrawal that lets customers pre-stage ATM withdrawals from their mobile devices and scan a barcode at the ATM to withdraw money.
TD Bank, with $211 billion-assets, markets mobile banking through other channels. Montresa McMilian, senior vice-president and head of Financial Transactions Services Online Channel, says the bank displays quick response (QR) codes and a text message that allows customers to directly download the mobile-banking app to their device while in a TD Bank store.
Bank of the West is infusing mobile technology into its branches to integrate the digital and physical channels, installing “QR Bars” that provide tablet access in several branch lobbies, says Finley.
At Community & Southern Bank (CSB), a cross-channel strategy is foundational, notes Matt Hames, director of Enterprise Architecture at the three-year-old, $2.6 billion-assets metropolitan-Atlanta bank. CSB was a relatively late entrant to mobile banking, rolling out its first iteration in late 2012. Says Hames, “Mobile will continue to evolve, and while it won’t replace other channels, it will likely become a preferred channel for most customers.”
Banks are still evolving their cross-channel strategies, according to Accenture’s Hickey. “Banks are unsure if they want to use mobile to drive traffic into branches or whether they want to encourage self-service with mobile. Neither strategy is right or wrong; it depends on the types of customers banks are pursuing, and how they want to engage with those customers,” he explains.
Keep an eye on payments
Mobile payments and mobile wallets should be on the radar, and every bank executive should seek to understand the ramifications of different mobile-payment business models, advises FIS’s Brown. “The payments space is being led by non-banks such as Google Wallet, Isis, and PayPal. As the mobile-wallet business model evolves, banks run the risk of disintermediation from their customers, becoming only a funding source and missing out on revenue drivers,” warns Brown.
Sutton agrees that banks should remain vigilant about payment trends but that it’s still too risky for community banks to invest in a new payment platform. “The Visa and MasterCards of the world will drive payments for community banks and we haven’t yet seen what they will do,” says Sutton.
Although most consumers are using mobile banking to view account balances, TowerGroup predicts usage will shift once a mobile-payments standard emerges, estimating that mobile payments will grow at a 57% compound annual growth rate.
Lisa Stanton, executive vice-president of Payments, Monitise, calls 2013 “the year of mobile commerce.” “Consumers are comfortable with using mobile, so this is a great opportunity for banks to augment payments with the commerce side of the equation, and bringing merchants and consumers together.”
Jeff Dennes, head of Digital for SunTrust, notes that mobile payments comprise a large ecosystem, and banks need to be ready to jump in when appropriate. “There’s a lot of innovation happening and banks are going to want to get in the middle of that ecosystem sooner rather than later,” says Dennes.
(ABA recently formed an Emerging Payments Advisory Group to identify policy trends, risks, and opportunities in the changing payments environment.)
Bottom line: Put mobile first
When it comes to mobile, the customer comes first, advises Chase’s Acharya. “It’s all about creating options for the customer. If you put customers first, then you build mobile features and functions that make it easy for customers to do business, regardless of the channel they choose.”
“I can foresee a day when customers prefer the mobile channel for bank interactions,” says NCR’s Nogalo. “We’ve seen the first mobile battles, but the war has only just begun in how banks will harness mobile to grow their business.”