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MOBILE MONEY New revenue streams emerging through mobile banking |
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By John Ginovsky
As the mobile banking channel
rapidly matures, the logical question bankers ask is, how can it generate new
fee income?
It turns out there are many
potential revenue sources, and they do not necessarily include mobile payments,
says Drew Sievers, CEO and cofounder of mFoundry.
"Mobile banking is a significantly
used app," Sievers says. "It's not just used once a week or twice a month like
online banking. We see it used three or four times a week. It's a big deal.
This real estate on the handset puts banks in a great position."
Particularly in conjunction with a
number of other factors unique to financial institutions, he says, including:
Security-"Financial institutions know identity
and they know authentication. They can authenticate with significant security
and credibility."
Funds transfer-"Banks have an ability to move
money in a way that very few can, and have licenses to move money in ways that
very few can."
Trust-"People do trust their financial
institution, particularly with credentials and money movement, in a way they
are not going to trust anyone else."
Sievers, who spoke at the recent
Retail Delivery Conference, provided a list of services that fit particularly
well with mobile banking and commented on them. Subsequently, Matt Wilcox,
director of ebusiness at Zions Bank, provided estimates of annual revenue per
user for some of these services (denoted here in parentheses).
Expedited bill pay-"Mobile expedited bill
payment makes way more sense than online. It's something you have to do right
then, right there." ($20).
Mobile deposit-"Some financial institutions
offer it for free, but some are charging for it and are not seeing a huge
impact [on customer attrition]...As an interim, some banks allow five or so
deposits a month for free and then start charging."
Business banking-"This is a few years behind
where retail mobile banking is, but there is money to be made in charging small
businesses for mobile access."
Personal financial management-"This involves
things like budgeting tools. Some are giving it away, some are not."
Account opening-"There's a lot of interest to
put this in the platform and to make it simple for a customer to get a card
application." ($15).
Send money, or P2P-"There are a lot of players
in this space. It's slowly gaining traction. The ability to send money from
your phone to another person is happening...We believe it is going to be big but
that it will take time, maybe in 2013." ($6).
Offer delivery-"Delivering merchant-funded
offers is a good way for financial institutions to make money. It makes more
sense in mobile than it does in the online channel. It can be acted on in
mobile much easier than online." ($15)
Cross-sell, or up-sell-"This takes the form of
digital questionnaires sent to the customer [about products and services.]"
($7).
Credit scoring-"We see people willing to pay to
see their credit reports real fast. In mobile, it's an impulse buy." ($8).
Gift card issuance-"You can immediately send it
to a friend or relative, and they can do whatever they want. The bank takes a
bounty on that." ($12).
• Insurance quotes-"Working with an insurance
aggregator, it only takes two or three pieces of information to get basic
quotes, and that generates revenue for the bank." ($15).
"These are things that are starting
to happen. Some are advanced, some are literally still on the white board. But
most of them are generating revenue for financial institutions," Sievers says.
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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. You can email him at
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[This article was posted on October 16, 2012, on the website of ABA
Banking Journal, www.ababj.com.]
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