While scores of major banks have not yet launched a payments enabled mobile banking app, the next generation of remote banking has emerged already: tablets. Duygu Tavan and Charles Davis speak to industry analysts and banks, including La Caixa and USAA, about the potential of tablet banking.
An immersive technology so sleek, so aesthetically pleasing – a hybrid of the best characteristics of a PC and a mobile phone – no wonder iPads and other tablet devices are the buzzword of the digital revolution right now.
A report released in March by Forrester estimated tablet sales will reach 44m by 2015, up from 10.3m in 2010. According to research company eMarketer, the iPad alone is expected to account for 88% of all tablet sales in the US, where tech-researcher Gartner expects 61% of global tablet sales to take place.
There seems to be little doubt that tablets will grow in popularity with consumers – but how relevant are tablets for banks’ in their quest to retain consumers and keep up with an increasingly tech-savvy client base?
Is tablet banking just a hype – or has Apple kicked off another digital revolution? Or, are tablets, in effect, just an evolution of existing banking services?
RBI spoke to analysts at KPMG, PricewaterhouseCoopers, Mobile Strategy Partners and Celent, as well as three of the first banks to offer iPad banking in the US – USAA, BB&T and BBVA Compass – plus La Caixa and Standard Chartered to examine the potential offered by tablet banking.
While banks see tremendous potential for transactional banking – and even more for acquiring new business – analysts emphasised the bigger potential for in-branch deployment.
Although analysts acknowledged tablets do offer a new platform for banking, there is a strong argument that the success of tablets as banking platforms will depend on the cultural and innovative dynamic of a bank.
According to Morgan Stanley’s latest Internet Trends study, smartphone shipments will overtake both laptop and desktop PC sales by 2012. These statistics, said Tudor Aw, partner and UK head of technology sector at KPMG, can be used as a proxy to determine the outcome of the tablet banking trend.
“When we asked people five years ago in our global survey whether they would use mobile banking, the response we got was virtually zero – by 2010, the user response jumped to 48%,” said Aw.
Phenomenal tablet sales
The combination of accelerating mobile content consumption with the phenomenal sales of tablets – with over onem devices sold in a 28-day period in the first quarter – suggests there certainly is a new major platform for banking.
This year, KPMG is going to include tablets in its annual survey for the first time.
What makes tablets unique is their social aspect and their ability to visualise money, Matthew Hobbs, partner at PricewaterhouseCoopers, told RBI.
“There is an engaging social element to tablets – a PC or laptop is very personal, business-like. Plus, the iPad visualises money and financial planning,” Hobbs said.
One such example is BBVA Compass’s iPad app which uses graphs to visualise finances, allows flipping through cheques and statements and transaction viewing.
At BBVA Compass, beauty is the driver for iPad banking.
“The word ‘beautiful’ appeared nine times in Apple’s technical manual for developers,” said Alex Carriles, director of mobile and online strategies at BBVA Compass.
“So beauty became the goal, creating a process in which we emphasised the app as an engagement tool and not just a delivery channel.”
Hobbs agreed that tablets could be more than a new platform – they can be revolutionary if banks seize the devices’ potential.
“If the client is using their iPad to access the bank’s website, then tablet banking is just evolutionary,” Hobbs said.
“But if the bank creates a more intimate and social brand, embracing the potential of the device, then tablets bring in a new dimension of interactive, social financial planning, visualisation of data into banking. This is much more engaging compared to what was available before.”
Patricia Kinney, mobile manager, and Sumit Deshpande, online channel group manager, of North Carolina-based BB&T, said their company wanted to exploit the iPad’s more immersive capabilities.
BB&T’s app lets prospective and existing customers open accounts, a rare feature among existing m-banking apps and an extension of the service available online.
Standard functions include account checks, bill payment and ATM locators.
“The iPad is a combination of mobile and online in a more flexible, visually appealing device,” Deshpande said.
“So we set out to provide features familiar to online banking users, but presented it in a way that took advantage of the iPad’s form.”
However, George Kelley, managing director at North America-focused strategy consulting firm Mobile Strategy Partners, said: “BB&T really just put a wrapper around their online banking site and called it an iPad app.”
For certain functions, the app starts a browser session inside it and pulls information from BB&T’s website.
Although BB&T’s iPad app gives the bank a footprint in the app store, the bank fails to exploit the tablet’s full potential, Kelley said.
“When you log on, you get presented with the same page as when you log on through a PC.”
This is a trap that banks have to make sure they do not to fall into. If, for example, a bank simply resized its iPhone app for the iPad and tablets it would work, but it would not offer a value proposition.
A high percentage of iPad users are iPhone users – so it is a fair question to ask: what would be the point?
Many banks’ first attempt to offer mobile banking was simply to resize their website so it could launch on a smartphone browser. User experience was clunky, there was a high level of latency – but at least banks could say they had an app.
In contrast, USAA exploited the full capability of the iPad – in particular the touch screen – and created a ‘native’ iPad app that is more functional than both online and mobile banking.
“I can actually find my information easier on the iPad than I can on their online platform,” Kelley said.
According to USAA emerging channels associate vice-president Neff Hudson, the goal was to create an ATM for the pocket.
“We took advantage of the large screen, and the portrait and landscape capability, refactoring bills to look like index cards and insurance documents that look like portfolios and sit on a digital shelf,” Hudson said.
USAA iPad’s unique proposition is free financial advice in the form of stories and videos. The video capability, in particular, adds an immense value to the tablet banking service, according to the analysts surveyed.
Celent senior banking analyst Bob Meara said: “Banks could invest in relevant content they didn’t do on the internet – because browsers don’t render video that well – and they haven’t done that on the iPhone because that was primarily a transaction-based mechanism.
“Tablets add in a whole new collection of content that will be valuable to customers,” said Meara.
Hudson called the app a consumption device.
“It is a service channel for customers and an acquisition tool for non-customers,” he said.
“We didn’t have a lot of competitive intelligence on what to expect, so when we went live at the end of January and had 60,000 downloads in a fortnight, we were amazed. That’s twice as fast as our iPhone adoption, and we’ve hit 80,000 thus far.”
Tablets have also become an integral part of Standard Chartered’s innovation drive.
“We are looking at the tablet banking potential very aggressively,” said Aman Nairan, Standard Chartered group head, remote banking. “Mobility as a category has expanded now. We consider tablets as an extension of mobile platforms.”
Standard Chartered launched its iPhone app in April 2010 in Singapore and in September 2010 in Malaysia. In October, the bank released its iPad app in Singapore.
As of 14 March, the bank had recorded over 360,000 unique customer logins into its iPhone Breeze app.
New portal interface
By the end of 2010, Breeze iPhone banking customers made up 17% of the active online banking customer base in Singapore; and about 10% of monthly transactions take place via an iPhone or iPad.
In Europe, Spanish bank La Caixa developed a framework for different tablets.
“It allows us to determine the tablet’s capabilities, brand and model, so we can automatically adapt all the contents to fit in the screen,” said David Urbano, director of mobile.
But as the iPad is the industry-leader, the bank launched a native app as soon as the device was launched.
“We are now developing a new portal interface for tablets to make it more useful. A good consumer experience will retain customers,” Urbano added.
La Caixa is the most successful Spanish banks in respect of the mobile channel with about 650,000 mobile customers, of which 50,000 use iPads.
Being an early mover is both risky – there is no competitive intelligence – and rewarding – it creates brand glow effect.
“Tablet banking apps go beyond simply a different way of banking,” said Hobbs.
“It is an opportunity for first-mover advantage, so banks can position themselves as that forward-thinking bank of the future.”
But the significant majority of financial institutions do not even offer mobile banking yet, even though solutions are available from vendors as full turnkey options.
The success of tablets will depend on three factors, according to Meara: systems integration, development effort and, in some cases, resistance.
“Banks ask: ‘We’ve got a long list of things already to do – are we confident enough tablet banking is really going to produce compelling business?” Meara said.
“The answer is ‘No’ in the short term.”
While banks debate the self-service side of the tablet proposition, analysts argue branch-deployment would be a better investment to improve customer service, retain customers and promote themselves as a modern bank.
Branch deployment would also provide a good pilot project for tablet popularity, according to the analyst community.
A recent Celent survey found branches were the number one priority at virtually all financial institutions. The internet channel was a close number two and everything else was a very distant lesser priority.
Kelley said: “If banks are going to spend their money on investments, they would be better off, in the near term, deploying the tablets in branch and help employees improve customer service.”
Meara agreed and concluded: “Tablets have proven to be popular with customers – but the question is: to what extend will they enhance the branch experience?”
Which ever route banks choose to go, while m-payments will be more innovative, tablets are nonetheless part of the digital evolution: they marry the best of both worlds.