Banks have to offer some kind of mobile banking service these days to compete. But deciding what to offer, what to spend, and what will provide the biggest bang for the buck are difficult questions for the board. Bank Director magazine got on the phone with Sutherland Global Services’ Niket Patankar to discuss how the board can develop a mobile strategy, what banks are offering, and what revenue opportunities are available. The company provides customer care, IT, and back and front office services, including mortgage banking servicing and processing.
What are the most popular mobile services that banks provide?
Banks are still in the early stages of mobile banking. The most popular are balance information, interaccount transfers, transaction history and basic customer self-service. Some banks offer advanced transaction services. Some allow a customer to search for a bank location by branch or ATM, while some offer bill pay. With respect to innovation, some banks are offering mobile wallet (the ability to carry cash around on your mobile device, load your debit and credit card information, and use the phone to make payments) and person-to-person payments (pay other people instead of companies). Banks also have the ability to offer contextual offerings through a mobile device for more revenue opportunities. A simple example is a person on a biweekly payroll. This person goes to a store to buy something on a Saturday, and it costs $200 but he has a $100 balance. But the bank knows the payroll is coming and therefore, the bank can offer a short-term, two-day advance for a fee of $3 right there. People will pay for that convenience.
Should you charge customers to access their accounts via mobile?
No. You will lose your customers that way. A personal financial management tool might be something customers are willing to pay for, such as a simple note telling them, ‘you spent $200 in groceries, your average spending has been $150 on groceries,’ which helps that customer make a financial decision. You can always offer more functionality within the mobile app that is transaction-oriented, for which customers will pay (the equivalent of in-app purchases), just like people pay the convenience fee for withdrawing from other banks’ ATMs.
What factors should a bank consider when deciding on a mobile strategy?
Where is your bank headed? Who are your customers? How is your customer demographic changing? What services and functionality should your bank offer, what are the costs and expected benefits, tangible and intangible, and what is your bank’s ability to analyze usage? You can offer this great service, but if nobody is using it, you need to know that. You need to look at the different kinds of costs. What is the cost of implementing it and maintaining it and marketing it to let customers know about it? It’s a simple cost-benefit analysis that should be presented to the board. It needs to be based on analytics. Your mobile strategy cannot be based on your gut feeling. In terms of benefit analysis, what has moved the needle in terms of similar services at other banks? If that’s not available, your conclusion needs to be based on detailed analysis of your customer base.
How does rolling out a mobile strategy impact the branch network?
There are still some customers who like to walk to a branch, but that number is declining as we speak. Mostly, they are going to a branch if they have exhausted other options, if they have an issue or a complex problem that has not been resolved through self-service options, or if they are seeking advice. If you are staffing your branch with the normal skill set of a teller, you will not be able to offer that. Branch traffic is declining. It has been coming down over the last seven or eight years. The number of visits from the average customer per year is coming down from 12 to 2. Branch traffic reduction is not necessarily a bad thing. It’s an opportunity to engage with the customer at a level that is unique. You need the best customer relationship managers there who can sell innovative products at the branches.