With 58% of the U.S. adult population owning a smartphone and 44% using tablets on a regular basis, consumers clearly appreciate the ubiquity and convenience of mobile devices. In just a few years, they’ve quickly incorporated technological leaps enabling consumers to complete everyday tasks from anywhere – be it a couch, restaurant or a seat on the commuter train.
Mobile technology has so transformed consumer behavior that it now endangers the financial institutions that don’t have a mobile roadmap or strategy. According to a recent report, 60% of smartphone and tablet users who switched primary banking services cited mobile banking as “important” or “extremely important” in their decision.
FIs are looking for innovative ways to build relationships with a customer base that is constantly adapting to new technology trends and capabilities. Creating a mobile presence allows them to stay ahead of the curve, differentiate product offerings and inject convenience and immediacy into the consumer-institution relationship. It also provides an opportunity to improve customer retention through better loyalty and rewards engagement, reduce operational costs and produce a seamless banking experience that’s universally accessible.
Today’s consumer requires definitive command of their assets through this channel, yet craves a simple mobile experience that instills confidence in their financial institution.
For FIs, the technology is critical – but still new. The challenge is how to create a mobile strategy with a suite of capabilities so compelling the app embeds itself into consumers’ daily lives, yet ensures reliability and security throughout the process?
Financial Institutions versus Mobile: The Challenge
As central as it has become to the modern business landscape, implementing a mobile strategy for financial institutions comes with its own set of challenges.
While mobile commerce is growing, it still comprises a relatively small market share. An app may reduce operational costs, but the incremental revenue produced by each mobile transaction and split among various involved banks and mobile network operators may make it difficult to justify the investment necessary to create the platform.
Banks and other financial institutions also need to consider whether the potential security risk is worth the financial reward. Providing mobile services, such as financial planning or the remote depositing of checks, risks the exposure of the extensive private account and customer data FIs keep. Theft mitigation could require limits on mobile deposits or a means of authentication, such as fingerprint recognition, password protection or voice activation. Further, FIs must provide proactive solutions to malware attacks, service interruptions and other potential security breaches.
From a technical perspective, the legacy systems still in use by financial institutions may not be equipped to integrate with today’s mobile software. If they do, FIs may still be challenged to create apps for every mobile operating system (such as Android, Apple, Windows and Blackberry). In addition, successful mobile apps could cannibalize retail traffic – requiring financial institutions to find creative mobile solutions for the cross-sell and upsell of products and services.
The Perfect Mobile Roadmap
Given technology’s impact on purchasing decisions, an effective mobile roadmap is key to keeping FIs in line with current consumer trends. These guidelines will help ensure FIs get the most out of their mobile platform:
- Implement a ground-up strategy. Mobile is the newest and most advanced channel in today’s business landscape. To capitalize on it, FIs should take care not to model their strategies on older access methods, such as desktops. Apps must also be scalable – able to adapt to consumers’ rapidly evolving needs – but capable of meeting immediate demands, such as mobile payments.
- Make it simple and intuitive. Credit and debit cards are today’s preferred forms of payment, and that won’t change unless another method with extensive advantages appears. When it comes to how they pay, consumers are looking for three things: convenience, low cost and security. Mobile banking, commerce and payment services should be widely accessible, limit transaction surcharges and raise confidence by accepting liability for fraudulent charges.
- Focus on pre- and post-payment. Financial institutions should offer an all-inclusive experience that incorporates customer support, loyalty program access, relevant additional purchase opportunities and GPS services with local offers and locations of branches and relevant merchants. FIs can achieve this by establishing a mobile commerce payment platform that supports other merchants, brands and service providers relevant to banking customers.
- Build a network for distribution and customer acquisition. Aside from promoting new mobile offerings directly to their customer base, FIs should establish partnerships enabling them to reach even consumers who don’t use the app. The platform can then be used for payments and account services, and additionally serve as an acquisition tool for partner loyalty programs and promotions. These partnerships, and others with mobile network providers, can also facilitate long-term success by creating a larger alliance more capable than single FIs of taking on dominant players, such as Google. Institutions must be careful to deal only with companies that meet industry standards in technology and offer their own partnerships (with credit card leaders, innovative platforms, etc.) that FIs can leverage with limited integration points.
Designing Roadmaps for the Future
Mobile technology has created an impressive channel for growth by changing the day-to-day interaction between consumers and banks. However, this “gift” is also wrapped in limitations, such as security concerns and challenges in cross-platform and network compatibility. Financial institutions must at once be both agile and carefully strategic.
Those financial institutions who get mobile right – offering innovation, simplicity and convenience — can enjoy new heights of loyalty and acquisition in an era when customer-centricity and relationship building have never been more important.
