Tech Talk


Advancements Around the Corner

By Don Sadler

Mobile banking has been provided commonly to consumers only for about three years, but savvy community banks already are starting to plan for the next generation of their mobile banking services. Technology consultants, vendors and researchers say the next generation of mobile banking services will go beyond the relatively simple portable versions of online banking that constitute the bulk of today’s mobile banking functions to include mobile payments and mobile commerce as well.

These next-generation mobile banking activities will start leveraging mobile’s unique attributes to support bank operational activities beyond merely accessing account information, says Peter Wannemacher, a senior analyst with Forrester Research. These mobile activities will likely include direct marketing to customers, account opening, loan application processing and customer onboarding tasks, he says.

Tremendous potential opportunity lies in mobile delivery for community banks. Payments made worldwide on mobile devices are forecast by Juniper Research to surge nearly fourfold over the next five years to more than $1.3 trillion, and Forrester Research projects that global mobile commerce—an expansive use of mobile technology to undertake a variety of commercial activities, including online marketing and content purchases—versus payments on mobile devices revenue will reach $119 billion by 2015.

The challenge for community banks that want to capitalize on the tremendous potential of mobile technology is to navigate the transition from today’s relatively simple mobile banking platform to true “mobile money,” says Lisa Stanton, president of the U.S. division of Monitise PLC, a New York company that provides mobile banking, payments and commerce systems.

According to Forrester Research, mobile banking services are in the middle of a four-stage evolution. The first stage incorporated basics like checking account balances, transferring money between accounts and basic bill pay. The second stage added some intelligence, like whether the mobile customer is located in a branch and what financial activities the customer has performed. The third and fourth stages involve breaking away from the PC environment to offer banking services that are “born mobile.”

Future engagement

According to Stanton, customers who use mobile banking engage with their bank via a mobile channel between 25 to 35 times per month, or virtually every day, while online banking customers engage about once per week, on average. “This is a license to offer more products and services to your customers via the mobile channel.”

Younger customers are especially eager to use mobile banking, she adds, noting that 39 percent say that a bank’s mobile offering played a key role in their choice of a primary bank. “Many young customers will never even bother with online banking, instead moving straight to mobile banking. If your mobile [platform] is tied to online banking, you need to find a way to untie it.”

“A mobile phone’s GPS can be used to tell the bank that a customer is located on a car lot. Why not send the customer a text message inviting him or her to check out the bank’s mobile automobile loan calculator and then apply for an auto loan?”
—David Eads, Mobile Technology Analyst

Community banks should be trying to identify new banking opportunities for customers that are unique to mobile, Wannemacher recommends. “This requires thinking beyond the PC,” he adds. Mobile banking experiences should eventually take advantage of unique mobile technologies like motion detection, voice-based navigation, address book integration, biometric authentication and, most importantly, geolocation.

One example Wannemacher cites is mobile photo bill pay. With this service, customers simply take a picture of a paper bill, add the biller (like their cable company, for example) to their mobile pay app and make a payment. “This can all be done in under 150 seconds, without setting up any bill pay options in advance or entering any information manually—the app reads relevant data and auto-populates all the information.”

Wannemacher says that just one major North American bank is offering a photo bill pay service, but he thinks it will be adopted by banks almost as fast as mobile remote capture has been over the past year or so.

David Eads, the CEO of Mobile Strategy Partners LLC, a mobile software developer in Alpharetta, Ga., offers an example of a possible future mobile banking app: “Think about a car loan. A mobile phone’s GPS can be used to tell the bank that a customer is located on a car lot. Why not send the customer a text message inviting him or her to check out the bank’s mobile automobile loan calculator and then apply for an auto loan?”

Leveraging functions

By using detailed location, time-of-day and past behavior information about customers that’s available via mobile devices, community banks can create unique mobile experiences that are tailored for them. “A mobile device is always on and always carried, which presents an opportunity to improve processes like application status and onboarding,” Wannemacher says.

For example, he says, mobile services can help decrease loan application abandonment rates online, cut costs and shorten application processes by sending time-sensitive status updates to a mobile device. From a customer service standpoint, Wannemacher suggests that next-generation mobile will offer a much wider range of options, including mobile chat, video chat and secure messaging. Several technology vendors are building natural language and predictive capabilities to help provide contextual help in mobile banking, he adds.

Mobile access also offers tremendous potential for increasing account and payment security, especially in light of recent high-profile security breaches at several major national retailers. “The security capabilities of a mobile device are inherently better than those on a laptop or ATM card, so this is a no-brainer,” says Stanton.

Raj Patel, a partner in the technology and solutions division of Plante & Moran PLLC, a community bank technology consulting firm in Auburn Hills, Mich., suggests a way that mobile phones can be used to enhance the security of credit and debit card transactions at the point of sale. “The bank can validate the customer’s location at a retailer using the device’s GPS and then provide a one-time PIN via the device to be used for that transaction only,” he says. “This technology is still in the works, but it offers the potential to strengthen the payment authentication process.”

The next generation of mobile services also will enable community banks to make relevant merchant-specific offers, like discounts, coupons and loyalty rewards bonuses, to customers via their mobile devices. Stanton believes that community banks are in a unique position to capitalize on the potential of mobile by leveraging enterprise data (like transaction behavior and demographics) to provide highly targeted mobile offers to customers.

“Historically this valuable data has been used primarily for fraud detection. By tying it together with mobile, community banks can deliver a superior commerce and payments experience that’s relevant to their customers based on what they are doing and where they are located at any given moment.”