|MAKING SENSE OF IT ALL: Mobile banking: a channel in its own right|
December 1, 2011
By John Ginovsky
It’s becoming clear that mobile banking, if not already commoditized, soon will be. The question for banks is how to differentiate their mobile channel enough so that it not only prevents current customers from leaving, but actually attracts new customers and business.
A number of analysts have weighed in on this recently.
“It is clear that retail bank strategies have become more sophisticated in the past few years as mobile banking leaders have gained experience of what works and what doesn’t. This research shows that the strategic opportunity created by smart phones is far greater than just developing a mobile banking app that lets customers check their account balance on their phone. They must take a broader view of the potential for mobile banking and treat it as a channel in its own right that can integrate within a bank’s overall multichannel strategy. This is the future of banking,” says Forrester Consulting on behalf of Clairmail.
“Banks that want to get ahead of the competition as an early adopter of mobile banking solutions for their clients are in for some sobering news: The financial services industry is running in full-on adoption mode, with mobile banking on the verge of becoming, if not already, a mainstream channel,” says FIS in a recent white paper.
What’s also sobering is how the potential market for mobile banking is building at warp speed. A Nielson survey estimates that by this Christmas—December 2011—one out of every two Americans will own a smart phone.
“With mobile banking moving quickly from early adopters to early majority, the impetus for banks to carve out their share of the market grows with every passing day. Future adopters—adolescents who are entering early adulthood and are seeking their independence—are going to be aligned with the mobile channel as no other generation ever has. Generation Y and X users, the primary current adopters of mobile, will find the platform indispensible as they move into the nesting life stage. Mobile applications will be the price of entry for attracting and holding on to these market segments,” FIS says.
It’s not as if current banks, especially the larger ones, haven’t seen the need to build second- or third-generation mobile banking models. Also, regional and community banks are establishing mobile channels. Aite Group estimates that by the end of 2012, about 7,000 U.S. financial institutions will have live mobile offerings. What remains to be seen is how innovative in generating revenue those particular offerings may be.
“In order to succeed, financial institutions of all sizes must view mobile as a unique channel whose value proposition differs from that of online banking. The value of real-time, actionable information is paramount to mobile consumers, who are likely to view and react to their financial information immediately upon receipt,” Aite says.
FIS lists these as “best-of-breed” features of a mobile banking channel:
• Anytime/anywhere account access.
• Any device, any carrier.
• SMS text, mobile web, downloadable application support.
• Account balances.
• Transaction history.
• Fund transfers.
• Bill pay.
• ATM/branch locator.
• Remote deposit capture.
Other potential functions also are being considered. Forrester found banks looking to their mobile channel as vehicles for outbound marketing; mobile money management; and account, security, and fraud alerts.
Peter Poon, executive director at the ATM Industry Association, says mobile phones could be used to interact directly with ATMs to order cash withdrawals while being protected against card skimming and PIN surfing, not to mention the hygienic aspect of not having to touch the ATM. As voice authentication technology improves, smart phones with NFC support could also facilitate transactions.
Mobile banking on tablets is promising, says Javelin Strategy & Research. “In addition to offering the basic triple play (mobile banking through downloadable applications, mobile browsers, and SMS text), which 65% of financial institutions currently do, financial institutions need to step up and provide mobile banking services specifically designed for tablets, because that’s where mobile banking is heading,” Javelin says.
ATMIA’s Poon puts this into perspective: “The real value proposition of mobile banking is not just to replicate online banking through a clumsy interface on the web browser on the phone. While mobile banking duplicates many of the features offered by online banking, the fact that a mobile phone is an always-with-you device sets the stage for a host of previously unheard-of-services. It opens up this idea of real-time contact, of real-time alerting.”
The technology is there. The demand is there. The revenue potential is there. The mobile channel is different from other channels, though. It will take new thinking and bold implementation to make full use of it.
FIS—A Systematic Perspective: Maximizing Your Investment in Mobile Banking
Aite Group—Mainstreaming Mobile: A Review of Mobile Banking Vendors
ATMIA—Mobile Banking for Generation Y—Revenue Generator in the App Economy
Forrester Consulting/Clairmail—Banks Looking for the Money in Mobile Banking
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