Function Over Flash


Deciding which mobile features and functions to offer

By Katie Kuehner-Hebert

Certain mobile functions and features are essential to the success of a community bank’s mobile banking offerings. But which ones?

Newfangled mobile capabilities could help community banks stand apart from their competitors. Other functions may sound spiffy but might not generate enough value or use to justify their additional cost, at least for now. What’s necessary or optional with technology is always changing. It’s always a moving target.

In a Federal Reserve Bank of Boston survey of mobile banking and payment services released in August, roughly three-fourths of about 600 community banks and credit unions in five Federal Reserve districts that were polled were offering some kind of mobile service. And most of the remaining one-quarter of community banks that the Boston Fed surveyed that didn’t yet offer a mobile banking service had planned to offer these baseline features and functionalities by 2016.

Routine mobile functions those institutions were offering included looking up account balances, paying bills, transferring funds between accounts, and viewing statements and transaction history. An ATM or branch locator is another standard mobile function. Many of the community banks the Boston Fed surveyed that were currently providing mobile services were either offering or planning to offer mobile functions for remote deposit capture, bill presentment, stop payment requests, and transferring funds person-to-person or between an owner’s accounts at different institutions.

Then, of course, some mobile features and functionalities may seem technologically nifty and knowing (or possibly too infrequently used on any platform), but a majority of community banks the Boston Fed had surveyed had no plans to offer them in the near future. Perhaps to no surprise to community bankers, those include personal financial management (account aggregation), viewing credit card information, check reordering, account address changes, checking prepaid account balances and transaction history, international remittances and access to a brokerage account.

Wheat and Chaff

Share of community banks and credit unions offering the following mobile banking features and functions:

Check balances

Funds transfer (within same bank)

View transaction/statement history

ATM or branch locator

Bill payment

Mobile remote deposit capture

Bill presentment

Mobile person-to-person funds transfer

Transfer funds to accounts at another institution

View credit card balances, transaction history

Stop payment requests

Check ordering

Personal financial management (account aggregation)

International remittances

Source: Federal Reserve Bank of Boston survey, “Mobile Banking and Mobile Payment Practices of U.S. Financial Institutions,” August 2015

Polling the ‘experts’

Opinions about what mobile function is important—or about to become important—can vary depending, usually by degree, on whom a community banker talks to. But what you hear may or may not confirm what you already know by experience or common sense.

Most prominently, delivering timely security alerts is where mobile banking still provides the most distinct value to consumers, points out Ed O’Brien, director of banking channels for the Mercator Advisory Group in Maynard, Mass. But such mobile alerts and notices should be restricted in a disciplined way to such notices as suspicious activity and low balances, he says. Other communications should be funneled through other channels.

Previously, certain banking functions—such as delivering disclosures, statements, and check images or authorizing wire transfers—were considered too risky to perform on a mobile platform, says Wade Arnold, managing director at Jack Henry & Associates Inc., a technology and core software firm in Cedar Falls, Iowa. “Now any feature and functionality that has been included in online banking is expected to also be on mobile,” he says.

Cary Whaley, ICBA’s vice president, payments and technology policy, says mobile remote deposit is very close to becoming a standard feature. “To consumers, it’s a litmus test. If their bank can’t do this, what else can’t they do?” he says.

Whaley expects more community banks to offer bill presentment and eventually person-to- person payments, once infrastructure challenges are overcome, to enable banks to reach other consumers regardless of where they have their funds. As for mobile personal financial management, banks should consider overcoming their wariness to share account information with competitors.

“If banks don’t offer that type of functionality, their customers can always go to a Web innovation that will do the same thing—at great risk for the bank that their customers will take their funds from the bank,” he says.

Selecting mobile functions should depend on a community bank’s particular market and its particular base of customers, says Terry Dooley, executive vice president and chief information officer at Shazam Network-ITS Inc., the payments network in Johnston, Iowa. “The hot topic is [person-to-person payment] capability, especially between accounts at the same bank and then between anyone’s account, but the big challenge is to make P2P ubiquitous,” he says.

Loss-leader functions

Still, some community banks decide to offer a particular mobile functionality, such as personal financial management, because some consumers are requesting it, even if ultimately the function becomes as a loss leader prized by the most profitable customers, Dooley says.

Jim Van Dyke, CEO of Javelin Strategy & Research in Pleasanton, Calif., recommends that community banks consider whether to provide mobile features that will bring in the “money hawks,” consumers who carefully and frequently track their income and spending. According to Javelin research, these money hawks can be the key to financial institution profitability. He says the most important features to attract those customers are personal financial management, mobile account opening and the ability to initiate or undertake certain deposit and loan functions.

Arnold says some tech-loving customers want at least to start account openings on mobile, for both deposit and loan products, even if they have to visit a branch office to complete the authentication and transaction process. All of the large core providers and many regionals are now offering such capabilities, he says.

Community banks should at least consider implementing some of the emerging apps to truly distinguish themselves and attract new customers, says David Eads, chief executive at Gro Solutions Inc. in Alpharetta, Ga., a  company specializing in account-opening software. He says some potentially valuable mobile capabilities that could set a community bank apart could include the ability to apply for auto loans and credit cards, notify the bank when traveling out of market and access account switch kits.

As community bank executives evaluate the cost benefits of various mobile banking features and functions, Whaley advises them to keep in mind as a general guideline that mobile banking is best developed as an extension of branch-based, “hometown” services for customers who seldom, if ever, step foot in a branch.

Katie Kuehner-Hebert is a freelance financial writer in California. Phil Britt, a financial freelance writer in Illinois, contributed to this story.