Mobile Banking: Where will this journey lead us or does it see no end?

Convergence, Communication, Connectivity – they have changed it all! We are at the advent of a new era in the making. What we have dreamt about is to become real; infact is becoming real. Thanks to advanced telecom, mobile and the internet technologies. They all came to existence with a specific purpose and never has mankind thought it would serve the purpose what we wish to accomplish today. Every walk of life, every industry is seeing change; we are at the crossroads of a mobile age!

Mobility isn’t a new phenomenon. The retail banks had been using it for quite a few years now like alerting the customer on an ATM withdrawal or a POS payment or for communicating banks offers. Ever since and with the proliferation of smartphones, Mobility is having a steep adoption trajectory in banks. Innovation is still on the way. Each one is learning from the other what innovativeness could they offer to their customers. Mobility in banking shouldn't be a delivery channel alone for branch based banking but a contextual experience, with a clean design, simple interface and an engaging platform to manage money. Today, unfortunately many mobile banking sites just happen to be miniaturized replica of their online banking websites. Little innovation is to be seen. Banks shouldn't be reactive to changing customer behaviors but be innovative in growing the mobility platform for both customers and employees. Mobile should be looked into as the creation of a new delivery platform for banks where user experience is the key plus the security and fraud constraints should be addressed.

Questions that one should ask oneself as a business leader or technology change leader could be-

Why do users choose to go mobile?

What do users do on their mobile devices?

What do I expect from an application as a mobile user?

It will be a wise move to give some thought on the above questions to arrive at answers from which you select the best few to plan strategically for your mobile banking initiatives. Banks can also think of creating an ‘Ideabank’ on channels such as their websites and social media interfaces where customers can post their ideas, problems, challenges that could be added to an attractive rewards scheme to encourage participation.

Bartering to cashless banking: Delving into the history of money

It’s interesting to trace the relationship we have with money. Mankind knowingly or unknowingly transacted in some form or other since the dawn of civilization. Money has created a unified world economy right from the milk and eggs that we buy at the marketplace to the stocks of PepsiCo on the NYSE. All that started with bartering has now transformed to a world of virtual money and mobile devices have become one such medium for the growth and rise of virtual cash.

Fig 1.1 Evolution of Money

Where could mobile banking create an impact?

Mobile applications that were created to meet a certain functionality is getting more complex as additional features get added up with innovation sprung out of increased customer expectations and along with it greater is the security vulnerabilities. Amongst the highly sought after financial function is the world of payments that has grown really complex over the years with financial institutions, retailers, wireless, device manufacturers all sneaking themselves in. An added dimension to this competition is the tug of war between smart start-ups and established players.

With external customers – customers are the life-blood for any business and so is it for banks. Banks today are equipping and moving towards to be along their customers to create an impact and add value to each of their customer’s life decisions. The growth of bank like institutions sprung from the initiatives of a few retailers, telcos and technology firms have forced banks to rethink and adopt a strategy that’s customer centric. Some of the mobile applications that banks could think of to be part of their mobile strategy could be:

§  Account Opening / Account Management

-          Almost all banks possess this mobile application, differentiation is the key. Say for instance, a good user experience; ease in use could help customers use it again and again.

§  Mobile Deposits

-          Check deposits

-          Deposit guidelines

§  Cards Processing / Management

-          New Credit Card Application / Processing

-          Spent Analytics (Daily/ Monthly)

-      User could set a monthly spent limit from the available limit to check overspending (incorporate alerts)

-          Receipts/ Statement Generation

-          Lock/ Disable your card ( say upon theft)

§  Loans Management

-          New loan Eligibility ( based on loan type & borrowing power)

-          New loan application ( auto form filling and documents uploading)

-          Loan approvals

-       Supports to help find approximate prices for home (at a particular suburb), education (particular region / university), and car (based on automobile type) loans based on loan type and borrowing power.

-          Payday loans disbursal ( against your employment, fixed deposits, credit cards)

-         Payment Tracking and history ( archived and retrieved through email when necessary using secure password)

§  Investment Portfolio Management

-   Mobile app to manage a portfolio of shares, insurance, mutual funds and other investment instruments (individual / firm)

-          Investment Analytics

-          Investments Tracking

§  Mobile Payments

-          loans, insurance premiums, mutual funds, utility bills etc.

-          Transfer funds

-          Mobile Contactless

-          Cardless Cash withdrawals

-          Money remittances

-          Mobile Wallet

§  Customer loyalty/ Rewards Management

-          Innovative loyalty programs could be weaved into existing customer outreach efforts.

§  Mobile Security Management

-          Anti-virus, app security, data security, anti-theft, Remote data wipe

§  Mobile Document Management

-          Digital Lockbox for secure and easy storage of statements and payment acknowledgements.

§  Mobile Analytics

-          Smart analytics for customer risk profiling, investments, and product comparisons.

§  Mobile Video Banking

-    Video communication channel that helps connecting mobile and desktop based customers to a bank’s

   staff (Relationship Manager / Branch Manager) for face to face interactions. Here the customer is able

  to interact in real time, virtually through their smartphones to the banks’ customer advisers for any

  support. Let me cite the example of an Indian bank that took this innovation path, IndusInd Bank.

§  Mobile Marketing / Cross-Sell

§  Digital Marketing

§  Mobile Text Banking

§  Cross Industry Convergence

-  Integrating both banking and property market for offering support to new/ existing customers who are

 on the lookout for owning a home on loan.

        

The differentiation lies in how each bank would position their application to draw their customer’s attention.

Within the Enterprise – Much has been done towards mobile enablement from a customer perspective, but still many banks lag behind in mobile adoption within their enterprise for faster decision making.

§  Mobile Analytics

    – helps marketing, cross-selling, fraud and risk (ex, transaction monitoring and anomaly detection using behavioral analytics), customer spent, customer experience, segment based analytics and profitability.

§  Mobile CRM

– achieve internal employee, inter-departmental coordination and collaboration.

§  Sales Automation

-   Email marketing, Lead nurturing, Lead Scoring, CRM integration, Sales Alerts, Set meetings, reporting

§  Mobile Treasury Management

-     Managing liquidity and streamlining working capital cycles

-     Approval of financial transactions directly e.g. foreign exchange trading or wires that may require

  multiple signatories.

-     Controlled Disbursement Reporting

-     External market monitoring such as currency fluctuations, credit ratings etc…

§  Mobile Branch banking

       -    Cost effective. Convenient. Enables the bank staff to interact with their clients over mobile / handheld devices while on the go.

§   Workforce Management 

The increased usage of mobile devices have led a few financial services providers or new aspirants to think of a mobile only banking platform, an extension and consolidation to the myriad of mobile apps available for carrying various banking functions; a mobile only bank that would offer services similar to a traditional brick and mortar or online banking channel. The big question is - Would you trust your money to a mobile only banking service? Financial Analysts worldwide believe that more and more people will move money using their smartphones in the future and the idea towards a mobile only bank is worth investing.

Some of the early innovators in this field are MovenBank, Simple, GoBank, FidorBank and Jibun Bank. Jibun Bank founded by Bank of Tokyo-Mitsubishi in 2008, already has 1.5 million customers. Its mobile only banking app is designed specifically for the small screens of mobile phones. MovenBank, mobile only banking platform founded by Brett King, noted banking technology enthusiast and author; Simple and GoBank differentiates itself from traditional banks in offering low fee banking and sophisticated money management. Waves of innovation have been felt from across the globe in the mobile only banking concept. For instance, UK based start-up Osper (https://osper.com/ ) is a mobile only branchless banking service that’s creating a banking service to be used by children. 

Tackling User Adoption and Loyalty in Mobility Apps

The idea of going mobile is basically for faster, easy access to information while on the go and in fulfilling the goal of attaining high mobile user adoption and engagement is still really a challenge. Mobile apps today sprout like weeds and many don’t survive after the first use. According to SAP, 78 percent of the mobile apps are abandoned after first use. Three things in apps would define mobile user adoption at a faster pace – being simple, highly responsive and secure.

The mobile app that was meant to carry out simple basic banking functions is witnessing complexity and security threats are looming around with added features and functionalities. Though users look for advanced functionalities yet they want their mobile apps to be simple and easy to use in a secured environment. Security is really a concern for mobile banking and financial services users especially when it comes to payments while having to disclose their credentials for the transaction. Privacy is another issue mobile user’s fear because many apps don’t disclose to their users what information they collect or monitor. Addressing these challenges would require a close coordination between the business and technology to create apps that are simple, secure, highly responsive, available and respect user privacy. The designers of apps should give users a highly personalized painless experience.

Crucial factors that would shape up increased adoption of mobile apps in banking can be summarized as below:

Fig 1.2 User Expectations from Mobile Applications

Creating a wining mobile strategy: Charting your approach

Banks and Credit Unions are faced with margin compression, high operating costs, regulations, new competitors and channel disruptions that threaten to put them out of business even for the most efficiently run organizations. Banks should look towards Omni channel banking that would maximize cross channel consistency and help in seamless user experience where and when customers desire. Mobile happens to be one such channel in the Omni channel banking strategy and it’s a highly disruptive channel considering the present user acceptance and adoption rate.

Banks should look at from four different perspectives – Company, Customer, Competitor and Channel while planning to embark on a mobility initiative. Failure to take a disciplined approach will divert attention from the pressing need to break through the conventional walls of banking. What has set the banks behind the new entrants in financial services? Lacking a clear strategic rationale, banks digital initiatives ended up producing marginal enhancements that further drive up IT spending than lending a competitive advantage for banks. Banks were slow in weaving new customer facing technologies into the core of their operations and failed to harness the full potential of the technologies around.

Company	§  Mobility adoption level §  Transformation feasibility and scalability on existing    frameworks §  Integration channels and complexity §  Risks Assessment and management. Includes     Financial, Regulatory, Operational and Technology    risks. §  Mapping priorities §  Results. How do we measure our progress?
Customer	§  Understanding customer expectations §  Understanding the User Experience customers seek §  The Security apparatus customer expect §  Advanced functionalities – Customers expect mobile  apps that help them with managing their financials, check  deposits, safe keeping of documents, real time analytics  etc.
Competitor	§  Competitor types (Banks, Telcos, Technology firms and    start-ups) §  Available Apps and the business purpose they serve §  User experience they provide §  Apps adoption level
Channel	§  Channel Adoption Statistics §  Channel Assessment. Is mobility the right channel for    this service / product delivery in this geography? §  Assessing customer’s channel convenience

Beyond mobile banking

Though mobile enablement and enhancements will continue to be a priority for banks, yet banks will try venture into newer horizons such as wearables, artificial intelligence, data analytics and non-core banking apps largely based on an Omni-channel engagement approach. Many banks and financial services providers have already started developing and deploying these applications. 

Fig 1:3 Features expected of from a future mobile app

Financial Services firms like Caixa Bank (Spain), Barclays (UK), Nationwide (UK), Banco Sabadell (Spain) and Westpac (Australia) have already developed and deployed wearable friendly products. Qualcomm is said to be experimenting on giving life to smartphones through artificial intelligence. Through their neuro inspired chips that mimic the neural structures and processing methods found in the brain, smartphones of the future should be able to recognize patterns of sounds, images and other data helping in assisting users.

In a nutshell, banks should do an initial assessment in having a clear blueprint for their mobile strategy. It’s important for banks to analyze consumer adoption behavior and barriers, study the competition and shortcomings and embark on a journey to build apps that are scalable, user friendly, highly responsive and secure that incorporate cutting edge features based on consumer’s real needs to survive in a growing world of mobile apps. This journey will see no end but a silent metamorphosis in the adoption of newer technologies said to bring improvements in people's lives and mobile as a platform for change will hold relevance!