by Alan Mandelbaum, Sr. Manager, Banking Practice
According to the Nielsen Company, mobile web banking in the United States has grown to more than 13 million mobile subscribers—up 129% in just 2 years. By 2015, more than 50% of consumers - and almost 80% of those below the age of 35 - will use financial services on their cell phones, according to a report by Mercatus LLC. The growth in mobile banking is due to several factors. First, over the past 18 months, the pace of mobile banking introductions among financial institutions has accelerated. Concurrently mobile network operators continue to upgrade networks and enhance capacity to deliver more data, more quickly. Lastly, consumers are acquiring advanced, Internet-ready phones at a rapid pace.
More financial institutions have come to realize the benefits that will accrue from introducing mobile banking in the form of reduced customer service costs, reduced attrition and fraud, increased security, and general customer satisfaction. Organizations both large and small continue to introduce basic banking while early entrants are now looking to enhance their mobile platforms. Most financial institutions initially deployed mobile banking via a single modality – either application download, browser-based or SMS. Now, many institutions look to provide service across all modalities so their customers can decide which to use based on their level of comfort with each and the purpose of the transaction.
Additionally, mobility has created new ways for banks to grow their businesses through self-promotion. They’re starting to leverage their real-time access to customers through loyalty programs and marketing campaigns that include partnering with other firms.
What Comes Next
The “second wave” of capabilities will focus on bill payment, mobile remote deposit capture, two-way SMS (text) alerts, P2P payments and personal financial management. These capabilities will serve to demonstrate the power of mobile banking, and are necessary to drive consumer interest, adoption, and usage.
The real ROI from mobile banking will come from engaging the 40% of US consumers who today do not bank online. Most financial institutions assume that only customers who are comfortable with online banking will show interest in mobile banking. This is not necessarily the case: recently several international banks found that by making mobile banking available to all customers - not just those already online banking clients - they can realize increased mobile usage penetration.
How To Get Started
While nearly all financial institutions acknowledge the value of an integrated mobile banking service, the inherent complexity of implementation means many either deploy very basic mobile banking capabilities or wait on the sidelines. Banks taking this approach risk losing ground as their competition gain insights and momentum from deploying mobile capabilities.
For those financial institutions who have yet to move forward with their mobile banking implementation, it is critical to thoroughly research the potential platform and application software. This process includes developing a comprehensive and integrated implementation plan. Adequate planning is required to ensure that existing business processes have either been adjusted to support new requirements or be developed where they do not exist. Vendor selection is critical – successful institutions find a vendor that demonstrates flexibility, stability and that can adapt quickly.
Well-planned marketing, with consistent messaging, execution and measurement against a well-structured feedback process is necessary to foster adoption. To communicate program features and benefits, institutions must aim to better understand customer behavior and preferences by effectively leveraging customer information from multiple sources. Mobile banking is based on the promise of “anytime” and “anywhere” service. If end users find that availability or reliability is not realized on a frequent basis, they will assume that the channel is unreliable and of substantially diminished value.
By developing a coordinated implementation strategy, financial institutions will minimize the cost and risks associated with mobile banking implementation and increasing the chances of greater end-use adoption and monetization opportunities. Developing a strategy now will position financial institutions to move quickly when the catalysts for greater investment in mobile payments are in place.