November 15, 2011

By John Ginovsky, TechTopics editor

It seems like there are more banking channels today than on cable TV. And every week brings a news survey on one or more of them, not infrequently with conflicting data. A few weeks ago, for example, the big thing was online banking. Then there was a splash about social media and how that’s becoming a banking channel of sorts. This week, as can be seen, it’s all about mobile.

Don’t forget telephone centers, ATMs, and of course, the branch on the corner. The truth is, it is everything. With the economy the way it is, the regulatory pressure the way it is, and public relations the way it is, the successful bank today is the ubiquitous bank.

Ubiquitous means you have to be everywhere. And quickly. Bob Hedges, of Alix Partners, presented a graph in September at the ABA Marketing Conference showing how long it’s taken various channels to reach 50% of customers. ATMs: 17 years. Online banking: 21 years. Mobile banking: Tough to say, but it’s projected to reach 50% of customers, starting in 2008, by 2014, just six years.

Hedges makes a case that mobile banking is very attractive, both to customers, who like its convenience and its adaptability to the new electronic gadgets that just keep getting more capable by the month, and to bankers for its ability to deliver profitable customers and save costs.

“Mobile is the key growth opportunity for banks,” Hedges told the bank marketers in Baltimore.

That sounds good, and it could be true, but what about everything else? A wise banker today can’t just scrap everything that’s already in hand. Hedge’s own numbers hardly support a tidal wave of adoption, at least so far. From 2008 to 2011, mobile adoption across all age segments went from 7% to 12%. That’s respectable, but hardly the bet to place all your chips on right now.

Just two months ago ABA, in connection with the pollster Ipsos Public Affairs, released a survey that showed online banking zooming to 62% of customers in 2011, up from 36% in 2010. ABA’s Nessa Feddis, senior counsel, commented: “Customers of all age groups prefer the speed and convenience of conducting their banking transactions on the internet.”

This follows a couple of similar studies done in 2010. Fiserv found that the number of households that use online banking increased more than six-fold between 2000 and 2010, or 80%, with online bill payment being the most popular function. Of course, the survey also found that the number of mobile phone users who conducted banking services increased from 23% to 30% from 2008 to 2010.

Intuit conducted a similar survey and found that, again, in 2010, more than a third of bank customers did so online, up from 27% a year before.

That, however, is kind of yesterday’s news. One of the surveys cited here comes from Javelin Strategy & Research, which leads with a headline: “Online Banking Adoption Slows.” Certainly, there is no question about the methodology of this research, and it bears reading seriously. However, just to show how volatile banking technology is today, in July Javelin had a similar research report, only that time the headline said: “Mobile Banking Adoption Stalls.”

Perhaps yet another Javelin study, reported in a previous edition of ABABJ Tech Topics, bears rereading. It’s titled: “Opening Online Bank Accounts: When it comes to Consumers, Failure is Not an Option.”

That is because online banking has become a commodity. It’s something a bank just has to do. It’s not news any more. It is essential. What’s different today is how well a bank presents its product, not that it presents it at all. Mobile banking, meanwhile, still is in the gee-whiz stage. That’s good. Eventually, though, it too will become a commodity and the question will arise, again: How well does the bank present it to the customer?

ABA’s Feddis said it pretty well: “Online banking may be the most preferred method of banking but banks are still committed to providing multiple choices to serve the needs of all customers. Bank customers will continue to have the choice to use branches, ATMs, telephone, mobile devices, or the internet to conduct their transactions—whichever they find most convenient for them.”

 

 

About the Author John Ginovsky is contributing editor of ABA Banking Journal and editor of the publication’s TechTopics e-newsletter. For more than two decades he has written about the commercial banking industry. In particular, he’s specialized in the technological side of banking and how it relates to the actual business of banking. He previously was senior editor for Community Banker magazine (which merged with ABA Banking Journal) and was a staff writer for ABA’s Bankers News.