There are those who are predicting mobile banking transactions will surpass every other financial services delivery channel, including branches, ATMs, online banking and good ”old-fashioned” automated voice response telephone banking. Are these the same “experts” who 10 years ago predicted the demise of the branch in favor of the Internet? Well, maybe. But while mobile banking may not replace the branch, it’s clear that it will be a delivery channel financial services customers will demand, and financial institutions will have to respond to remain competitive. And respond in the fairly near future.
According to TowerGroup research, mobile banking will have the fastest adoption rate of any product in the history of banking. That is because 85% of consumers are already using the application devices (cell phones and PDAs) and are extremely comfortable with the technology. Mobile banking is simply a logical extension of something that is already an integral part of day-to-day life.
Some bankers think that mobile banking is a big gamble because their customers will be too concerned about security to use it. While this may be true for some customers, it’s not as big of a concern as you would think. In fact, most mobile banking customers don’t care much about the security issues because they believe the bank will take care of that headache. They just want the convenience mobile banking provides and security they feel by being able to check their account balance any time, anywhere. This mindset is especially true of the consumers and business owners in the under 40 demographic. Promoted in the right way, mobile banking can help attract this highly desirable (and profitable) market segment.
The big banks are well down the road. According to a feature article in the
June 2009 edition of ABA Bank Marketing, 17 of the top 20 banks already have mobile banking services in place. Community banks, however, have either not given it much thought or haven’t done much about it – less than 10% are working on mobile banking delivery.
Based on industry trends and our experience in the community bank marketplace, we at Brintech believe that mobile banking can be a market share acquisition tool for those who lead the adoption curve. It can also reduce the cost of delivery by migrating more customers to electronic delivery mechanisms and away from paper statements. The fundamental issues banks should address while moving into this arena are these:
- Identify best of breed mobile banking providers and select the one that integrates best with your core provider.
- Carefully explore the security issues and implement a proven protocol for customer information security.
- Fully educate front line employees and integrate mobile banking into cross selling and referral programs.
- Design a targeted marketing plan to cross sell the service to current customers.
- Develop a targeted customer acquisition marketing plan.
And finally, financial institutions should think beyond the initial applications such as balance inquiry, bill payments, and transfers between accounts. One day in the not-too-distant future, ACH batches, wire transfers and cash management will also be mobile.
The future is here. Well, almost.
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