Upwardly Mobile


man-using-iphone.jpgOne of the most read articles on BankDirector.com this month (Where Will The Revenue Come From) notes the number of dividing lines in banking today.  Up to now, credit quality and capital levels had been the chief variables separating the haves from the have-nots.  However, as those metrics stabilize, we turn our attention to another key point of differentiation: the ability to generate top-line revenue growth.  Now, I’ve been hard pressed to find anyone who believes revenues for the banking industry can return to their pre-crisis levels; nevertheless, individual banks can find success. Case-in-point, new technologies — most notably mobile banking — are opening doors to entirely new sources of revenue.  

This past summer, I wrote about mobile banking as a catalyst for growth.  Where many had focused their initial mobile efforts with an eye towards longer-term cost reductions, quite a few banks are growing their businesses using mobile products and services as complementary assets to what they currently offer.  Since writing that series, I’ve found myself talking with a number of bank executives and product vendors about how quickly a bank can “make mobile” happen.  Recently, I caught up with First Data’s Chris Cox, vice president, product development, in the company’s Mobile Solutions group, and asked for his take on using mobile as a way to acquire new customers.  He made the point that banks going mobile as simply an extension of their Internet banking experience miss the bigger picture.  Mobile is not necessarily risky, it’s almost a must-have. 

If mobile banking hasn’t become a part of your growth plans, you need to understand how providing such access to personal accounts and your institution as a whole supports your overall business strategy.  Cox talked about First Data’s experience with banks of various sizes.  Yes, economies of scale allow smaller bank similar opportunities to deliver a mobile experience as meaningful as the country’s largest banks.  However, a bank’s board would be well served to explore how the institution is currently meeting the needs of its consumers and consider how offering new mobile products and services can support its goals.  There is, after all, a need for a vision before strategy.

Solutions that level the playing field, such as turnkey, white-label, mobile-banking platforms can help even the smallest community bank offer choices, convenience and security that today’s financial institution’s customers need and expect.  Cox did warn that some banks offering a mere mobile version of their website instead of a mobile application may miss out on the mobile experience customers want.  He suggested the best banks look at attracting new customers and promoting new products and services.  Moreover, thinking mobile in terms of a new product delivery platform allows for the introduction of new products and services.  For example, you can help the customer base move from a “leather wallet” to a virtual or mobile one in order to make payments, deposits, or transfers or exchange value, anywhere.

Let us know, in the comments section below, how your bank is using mobile as a driver for overall customer growth.

Consumer Adoption and Usage of Banking Technology


FD-WhitePaper2.jpgToday’s consumers, especially those known as Millennials and Gen Y, are used to having technology integrated into most aspects of their work and personal lives. Banking is no exception. To respond to changing customer expectations, banks, credit unions and other financial institutions have incorporated online and mobile technology into consumers’ banking experiences. However, financial institutions still need to answer several questions pertaining to banking technology:

  • How well are financial institutions meeting the needs of consumers when it comes to offering high-tech products and services?
  • Whom do consumers view as the trusted provider of the mobile wallet?
  • How does adoption of banking technology vary for different consumer groups?

This white paper answers these and other questions that are critical to the ongoing success of financial institutions in a rapidly evolving marketplace. The paper is based upon the findings of a recent online research study of 2,000 U.S. consumers conducted jointly by First Data and Market Strategies International. The “New Consumer and Financial Behavior” study assessed consumers’ attitudes, behaviors, desires and technology adoption. This white paper is the third in a series of four based on results of the study and focuses on consumers’ attitudes and behaviors related to technology in banking.

Topics include:

  • Consumers’ attitudes about, and adoption of, banking-related technology.
  • Usage of mobile banking.
  • Perceptions of the mobile wallet by different consumer groups.
  • Usage of online banking and bill payment.
  • Steps that financial institutions can take to appeal to various types of consumers.

Questions to ask about mobile banking and marketing


google-wallet.jpgRecently, Google generated a fair amount of buzz with its Google Wallet app.  Have you seen it?  It allows a consumer to load debit or credit card information into their Android-powered mobile device and pay on the go with a simple tap at “at hundreds of thousands of MasterCard PayPass merchant locations.”  Clever, right?   It should be, considering it was “designed for an open commerce ecosystem.” So is this a competitor to your bank —or a simple reinforcement that for those of you not in the mobile field, it really is time to sit up and take notice?  How might your board start down this path?  Glad you asked…

When I got my start with Bank Director in 1999, I innocently asked when a decision made it to the board’s level.  The answer came in the form of a drawing: a three-legged stool to be exact. Twelve years ago, our CEO depicted each leg with a word: Strategic, expensive, and risky.

Well, that picture remains firmly planted in my mind.  For a while, the marriage of all three applied nicely to issues like mergers and acquisitions, directors and officers liability and executive compensation. Since coming back in September, I’ve started to hear the same standards applied in terms of mobile banking strategy. Let me explain.

In April, at our annual Chairman/CEO peer exchange conference, a handful of CEOs from public banks with more than $1 billion in assets talked with me about growing their business in a recovering economy.  With a beer in hand, I consider those conversations off-the-record.  Let me just say, given our growing love affairs with mobile devices of all shapes, sizes and underlying technologies, the fact we were talking about their desire to provide a mobile banking experience to help transform the way people manage their finances through their institutions was not surprising.  In fact, one CEO offered that, with PNC “just across the street,” a strategy that challenged the status quo would be of interest to him, his chairman and his board.

With these CEOs thoughts rattling around in my mind, I thought to reach out to a few folks in the business to get their take. While most shared the standard stuff (you can attract new market segments! Increase customer satisfaction and loyalty!! Generate new revenue!!!), let me pass along a few tidbits c/o Intuit Financial Services‘ John Flora. John is the Mobile Solutions Group Product Manager—and counts banks with tens of billions in assets as customers. While we talked about a few roll-out opportunities, I think he has it right in terms of the questions that a CEO needs to ask in terms of mobile banking (no particular order):

  • How can we best grow our business using mobile as a complementary (not restrictive) asset to what we offer now?
  • How quickly can we make this happen?
  • What does the initial integration cost look like?
  • How does mobile fit into our core banking strategy?

We laughed because 12 to 18 months ago, thoughts about going mobile centered on cost reductions, retention of customers, building impressions, and more regular engagement. He said while those are still on the table, the last six months have seen most institutions realize that they cannot afford NOT to have a mobile strategy.

John also made the very good point that mobile banking requires the bank to back it up with marketing awareness. (This is where some banks fall down). In his experience, adoption rates are very high in the first month; but to sustain that momentum, leadership needs its employees to promote mobile apps and opportunities to better connect with clients on-the-go. So while putting a consistent marketing strategy into play on day one isn’t the job of the board, setting the strategy and expectations certainly is consistent with what I’m hearing today.

In search of the next great customer experience


In the mid-to-late ‘90s, when companies like InteliData were promoting online bill payment and presentment technologies, I was introduced to a wave of industry optimism that such technologies would dramatically improve our overall banking experience. While the adoption cycle for online banking proved far longer than many forecast, history may be repeating itself. Indeed, we are in another period of technological exuberance, albeit mobile in nature.

Given our growing love affairs with mobile devices of all shapes, sizes and underlying technologies, it’s really no surprise that mobile banking continues to transform the way people manage their finances. Now, I realize I’m just one of many sharing this perspective; indeed, far more experienced voices, such as Fiserv’s CEO Jeff Yabuki, has been known to tweet out thoughts like this:

jeff-tweet.jpg (*April 30, 2011) 

Much like the pre-IT bubble days of online banking, I’m inundated with promotional materials from tech vendors promising to enhance the experience of a bank’s customers while reducing an institution’s costs.

Ah, the promise of mobile banking.  All upside, right?  Well, the Boston-based Aite Group offers an interesting counterpoint.  Last month, the research and advisory firm published its analysis of the group’s mobile banking consumer behavior survey. Its big takeaway: Banks will have to make significant investments to improve or develop their mobile marketing capabilities based on:

  • The lack of retention benefits from the mobile banking channel;
  • Potential losses of overdraft fees from balance monitoring; and
  • Shift in consumer attention towards mobile banking capabilities.

Juxtapose Aite’s observation with a recent TowerGroup forecast. There will be 53 million mobile banking users by 2013, which represents an annual growth rate of more than 50 percent.  Clearly, this is a huge opportunity for financial institutions to use mobile banking as a growth strategy.  According to FIS, another leading technology firm in our industry, those institutions that are not waiting on the sidelines are benefitting in a number of ways:

  • Attracting new market segments;
  • Reducing operating costs;
  • Creating brand differentiation;
  • Deepening account relationships;
  • Increasing satisfaction and loyalty; and
  • Generating revenue.

Despite the promise of these benefits, far more financial institutions have yet to go mobile. For those who haven’t, what are you waiting for? And no, this is not a rhetorical question. We’d like to know as we prepare to roll out our new digital platform for the financial community next month, so we might better help you understand the benefits and drawbacks of products and services.

Bonus question:
How often does your board hear from your CIO, head of Transaction Services, Mobile Banking and/or Internet Banking?  I’ve posted this question on our LinkedIn group so feel free to chime in there or leave a message below.

Disruptive? Mobile? Regulated? Check, check, check


It’s funny the things that cross your mind in an airport. I snapped this picture of a classic American plane docked in Chicago pre-flight to China this morning. Patiently waiting by the gate must have been 200+ people, 95% of whom appeared glued to their iPad, iPhone or Android-powered mobile device. To say I was impressed is an understatement. Users of mobile technology are known for being many things: patient is not one of them. They want new tools, new applications and they want them today. Maybe I should have photo’d the departure lounge…

aa-flight.jpg

From the board room to a branch office, it’s no state secret that today’s mobile banking customers expect access whenever and wherever they are. With so many banks investing in new technologies that allow customers to complete transactions, manage accounts, and perform banking research via their mobile devices, one can see why. Mobile banking services — think remote deposit capture, two-way text banking, apps for locating branches and ATMs using GPS and bill payment — have become the norm. So how to differentiate your bank from your competitors?

In my next few posts, I’ll take a look at this question.  With banks (both big and small) riding the mobile wave to strengthen relationships and add to their bottom lines, I thought to set the table with insight gleaned from our friends at PwC.  Last month, the Banking & Capital Markets group published “How Retail Banks Can Thrive in a Disruptive, Mobile, Regulated World” to assess the implications and opportunities created by mobile phones and social media.  My cliff’s notes:

  • Social media continues to provide banks with new ways to improve brand recognition, expand customer reach, enhance a customer’s experience and introduce new products (for more, see these posts we ran in January about how to benefit from social media and social networking platforms);
  •  While most large national banks have slowed their pace of retail bank acquisitions because of regulatory limits, banks with access to capital continue to view acquisitions as a growth opportunity. Such acquisitions benefit banks by enabling them to (a) reduce combined operational costs by eliminating redundant back-office functions, (b) spread technology investments and regulatory compliance costs across a larger base, (c) gain access to new markets and customers for cross-selling, (d) increase the ability to invest in state-of-the-art technologies; and
  • Leading institutions are adopting a new customer-centric model to replace outdated product- centric models.

A few big takeaways for me? Bank execs need to quickly and decisively adopt new approaches or risk being left behind. Moreover, by tailoring channels to a specific customer segment or purpose, banks are capitalizing on the distinct and complementary roles of distribution channel, all while managing costs. Yes, this is the land of opportunity, and the applications of new mobile technologies and strategies bears close watching. More to come next week.