The Rise of the Camera in Mobile Banking

2-27-15-Malauzai.pngWhen was the last time you took a picture with your phone or tablet? Probably pretty recently, right? Now, when was the last time you took a photo with a digital camera? You might have to think a little harder about that one. Smartphone and tablet cameras are in fact becoming so advanced that some experts speculate they will surpass the physically larger and now ubiquitous Digital SLR (DSLR) cameras in a few years. No doubt, mobile devices have become our go-to picture-clicking tools.

As the photo-taking abilities of these devices have improved, mobile banking has seen significant benefits. We are all very aware of how successful mobile check deposit has become. In many ways, mobile check deposit is the killer-feature of mobile banking. Based on Malauzai usage data, we know that 25 percent of active mobile banking users make deposits at least once a month. The mobile camera enables this success, supported by image recognition technology that can easily read a document and convert it into data. Now, the camera is driving new innovations for the mobile channel, including using the camera to simplify the onboarding process and to revolutionize how consumers pay bills.

Imagine opening a new bank account by simply taking a picture of your driver’s license. The typical onboarding process that can take up to 45 minutes at a branch can now take only five to 10 minutes inside the branch. Employees are provided with iPads enabled with advanced cameras, making quick onboarding a reality. Employees can even open accounts outside of the branch and pursue new clients in public places, such as a shopping center or company office. The technology is also being used by virtual mobile-only banks to allow direct customers to open accounts in self-service mode. Prospective customers can download an app, take a picture of their licenses and deposit a check in 15 minutes. This process is enabled by advanced mobile cameras.

Lastly, there is bill pay. When the industry set out to provide bill pay, the initial focus was being able to present bills electronically. This proved to be a challenge, and today paper bills are still in circulation based on some consumer preference, as well as billers that still do not make their bills available electronically. Enter the camera. With mobile photo bill pay, a consumer can take a picture of a bill and immediately make a payment. There is no data manipulation involved in the payment process; just point, click and pay. In a single effort, this solves the biggest problem that exists within bill pay. On average, 15 percent of active mobile banking users utilize mobile photo bill pay to pay bills every month when it is integrated in to their mobile banking app. That is four times higher than traditional bill pay when it is offered as a feature in mobile banking.

People enjoy taking pictures. From opening an account to depositing a check and paying bills, the advanced mobile camera is a driver in establishing mobile banking as the channel of choice for both banks and their customers. As the technology continues to mature, it will only improve. Mobile banking is poised to become the channel of choice for bank customers. As Internet banking stagnates in terms of generating additional revenue, clever usage of the camera is making mobile banking not only good for banks, but fun for consumers. Who said banking wasn’t fun?

The Rise of the Smartphone: Why Some Regional Banks are Outpacing the Big Banks

7-11-13_Deloitte.pngThe current arms race by banks to win market share appears to have largely been aimed at offering customers the most technologically advanced and convenient branches in the industry. While the return on these more recent investments may not yet be fully measured, the industry should consider the new channel that is changing banking and exciting many—mobile banking. 

Today’s threat—and one that will be a game-changer—is banking by smartphone.

It eliminates the need to make the journey to a branch or ATM for the one remaining fiduciary function that you couldn’t handle remotely until now, depositing a check. With new smartphone applications offered by a growing number of institutions, consumers can cross off an essential and frequent reason for going in the doors of a bank.

Customers appear to be adapting more rapidly to the mobile banking channel than previous changes, like Internet banking. Many large banks have not embraced the level of functionality or remote deposit that their regional competitors have in their mobile channel, according to our research. They do so at their own expense. The cost of a teller transaction in a branch is $1.34, while the same transaction on a smartphone is estimated to cost about one tenth of that, according to CEB TowerGroup.

Setting the pace today are a number of regional banks which adapted to mobile banking earlier, offering higher limits for deposit transactions from the mobile platform. They have recognized that mobile banking is more than a fad as demonstrated by the speed that they are rolling out new mobile services.

The institutions that have jumped on board have likely concluded that acceptance of mobile banking is not limited to younger demographics. Once people use a phone’s camera to shoot a check and deposit it, they are likely to be hooked. And with half of all Americans already possessing and utilizing a smartphone, many feel the growth of mobile banking is limited only by the rate of smartphone ownership.

The banks with the most built-in advantage to drive mobile uptake could be those that are already operating on a purely online and mobile platform with no physical branch footprint, including such organizations as USAA. Not being encumbered by an expensive legacy branch operation allows virtual banks to be able to focus their capital on faster time to market enhancements when compared to traditional big branch organizations.

But given the current fluidity in the market, banks that are early adopters should consider continuing to expand their mobile banking capabilities. This could come in many ways, such as:

  1. Banks could use mobile banking to offer more products to customers where they are physically located. Utilizing the customer information made available through mobile banking, banks could use the smartphone as a cross-selling platform, bundling or highlighting products that cater well to a specific customer. With the decreasing frequency of branch interactions, providing the perfect suite of products via mobile phones may reinforce bank loyalty and increase share of wallet.
  2. Institutions could partner with merchants to enhance the Point of Sale process for increased interchange revenue. For example, some mobile applications such as Uber store a customer’s banking information on a smartphone and then use the information to automatically debit the customer’s account once the service, in this case a taxi ride, has been performed. Not only can this enhance a customer’s experience, it may also decrease transaction costs for both the bank and the merchant.
  3. Banks could use their mobile capabilities to increase customer connectivity and touch points. While select functionality already exists in the form of balance text messages as one example, the new possibilities could be virtually limitless. These include customer communications such as checking loan application status, spending trends or location based financing products. Imagine a future where a bank can give credit approval for a specific item in any store where a customer’s phone is.

The standard physical branch model appears to be becoming more obsolete with each passing year. The shift in consumer preferences and cost pressures that traditional bricks-and-mortar banks face in order to remain competitive makes it an imperative to develop and steadily upgrade mobile and online banking capabilities.

The opportunity is there for banks to truly change their operating model, but it will require an upfront investment, consistent monitoring of customer requirements and usage, and an organization with a clear direction to quickly adapt to changing consumer behaviors.