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March 30, 2011updated 04 Apr 2017 1:08pm

Mobile banking nirvana: myth to reality

The growth in the sales of smartphones around the world has expanded consumers horizons of what they can do with their handsets Andrew Steadman, director of product management, bank solutions, Fiserv, argues that putting mobile banking at the top of the agenda needs to be a priority for every retail bank.

By Andrew Steadman

The growth in the sales of smartphones around the world has expanded consumers’ horizons of what they can do with their handsets. Andrew Steadman, director of product management, bank solutions, Fiserv, argues that putting mobile banking at the top of the agenda needs to be a priority for every retail bank.

 

Photograph of Andrew Steadman, FiservNo one can reasonably argue the past two years have been anything but challenging for banks. Budgetary constraints and jaded views have meant they have had to think smarter and work harder to retain customers.

While spend and development on new channels has been kept to a minimum, this is all now set to change. Juniper Research predicts mobile banking is set to exceed 150m users globally this year.

Smartphones and iPhones are gaining mass market appeal and as a result customers are demanding, and expecting, access to mobile banking services.

Mobile banking is approaching the tipping point as consumers increasingly regard mobile phones as multifunction mobile communication and computing devices; as a result, banks around the world need to prioritise putting in place a successful m-banking strategy.

Mobile banking is not simply online banking on a mobile device. This year, new ways of transferring money and peer-to-peer payments are gaining acceptance.

Mobile offers the opportunity to reach new customers without access to, or who have shunned, traditional banking channels. It offers innovation and simplicity in interacting with the financial institution anytime -be it paying bills or current account balances.

The bank can also reach the customer through alerts on low balances or potentially fraudulent activity. Mobile also offers the ability to provide location-based services or use of the camera for banking – such as QR codes or deposit capture – distinct services not found through any other channel.

 

All talk but no action

Bar chart showing mobile banking researchMobile adoption in banks has been slow despite being available for a number of years. At the same time, customer expectation is that mobile access should be offered by all banks.

At the mobile keynote session at the 2010 Sibos conference in Amsterdam, it was estimated only 3% to 5% of smartphone owners actually used their phone for banking. This is not because these users do not have the right device or functionality but rather because their banks do not provide this service.

Customers are fickle when they feel like they do not have control over their banking experience or the services provided to them. Compound this with the lack of availability and it means banks are missing an opportunity to not only grow but also maintain their client base.

Banks have taken a traditional approach of viewing customer interactions as financial transactions. The customer, however, is no longer traditional. Gen Y consumers want access to all their banking services across traditional and non-traditional channels.

To target the Gen Y customer, it is crucial for banks to interact in a way that fits in with their lifestyle.

Banks should engage them by providing them with a range of channel options that fit unique needs and 24/7 availability and which allow consumers to begin a transaction or service in one and then resume it seamlessly in the next.

 

Preference management

In order to reach the Gen Y customers, banks need to adjust, understand and manage their activity in an innovative way. Unfortunately many banks are falling foul by not having a single view of their customer.

Paramount to this is ensuring preference management is in place for banks to store and recognise the customer each time they have an interaction. Banks must also provide comprehensive reporting across all the other engagement channels to help with diagnosing customer interactions, monitoring security, and delivering an appropriate level of customer support.

One well-known Tier 1 bank found more than 50% of its customers enrolled in mobile banking as a result of preference management. Eighty-five% of these customers became active users of mobile banking. When customers enrolled without preference management this figure dropped to 30 per cent.

At the same institution, mobile banking decreased branch visits by 48%, which ultimately reduced operational costs. This highlights how important the single view is.

Gen Y consumers are on the move – using mobile services relevant and personalised depending on the customer’s location is a big opportunity to capture their business.

Once a comprehensive mobile banking channel is in place it will encourage customers to use other banking services. Why?

Because mobile reduces the complexity of banking. Those banks that innovate early will be well placed to grow customer loyalty.

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