Part One: Mobile Banking and the Future of Loyalty, An interview with Michael Hemsey and The Credit Union Times

May 6, 2013

Just as other industries have come to embrace mobile as a powerful engagement and metrics-gathering tool, the banking and financial services industry is playing a game of rapid catch-up. In 2012, according to the Federal Reserve, nearly 21% of survey respondents said they’d used some form of mobile banking services during the previous 12 months. Younger respondents were even more likely to use such financial services tools, with nearly half of the 18-29 demographic “going mobile.”

But what does “going mobile” really mean?  It means that the future of many financial services programs will be centered on some form of mobile strategy. Those programs will also be heavily influenced by the latest loyalty program and technology developments. Kobie’s president, Michael Hemsey, recently shared his views on mobile banking and loyalty in an interview with Robert McGarvey of The Credit Union Times for his article, “Mobility Matters: Getting to Mobile Banking 2.0.”

The following is the first of a three part series with Michael Hemsey that explores how coupling loyalty and experience-driven engagement with mobile will help move tablet and smartphone usage to the next phase in financial services loyalty programs, among other things.

Mobile Banking and Loyalty ProgramsHow is mobile banking changing and what will the next generation of services look like? Banks generally tend to follow and not lead when it comes to creating mobile engagement. That way, they can see what others are already doing (successfully) and how they can improve mobile offerings.

Banks are also behind the curve when it comes to tablet apps – applications designed specifically for those devices. And that’s despite rapid adoption rates. Tablet engagement can be far more sophisticated and intuitive than that on smartphones, which consumers use in a wider variety of contexts. That’s why I think we’ll start to see an uptick in investment for both smartphone and tablet apps. To categorize the short-term and longer-term innovation goals, banks should do the following:  focus on the utility of those applications from a consumer perspective, discuss the enterprise from the bank’s perspective and dabble in social media.

What are the specifics of utility, enterprise and social as they relate to the innovation goals you mention above?
From a utility perspective, banks are adding capabilities such as mobile bill pay, mobile POS enablement and social check-in features much like those used by many restaurants. Doing so helps banks review customer transaction data and, in turn, tailor rewards or incentives for continued bank loyalty. Real time is key and I think banks and most apps are moving in that direction. Banks must also be more sophisticated in how their loyalty and incentive programs integrate the overall experience. Today they can be very disconnected. The third utility-related development uses mobile tools like receipt-scanning and voice-activated features.

Regarding enterprise, many banks can’t even tell consumers where the nearest ATM is relative to their location, nor can they list bank branch features or products. But, again, this is poised to change as second-generation mobile apps evolve, helping consumers make use of additional enterprise services like personal wealth management.

Banks’ usage of social media via mobile is also set for change, though I believe this is a longer-term development. Other industries have harnessed social media’s high effectiveness at incentivizing and promoting brand engagement. Its greatest potential, however, is not just in monitoring the online conversation, but in understanding and acting on what other people are saying about the brand. Twitter, Foursquare, Facebook, Intstagram, Snapchat and Pixnet are all good examples. Crowdsourcing is another way banks can better unite their customer base. But that, too, might be further down the road.

Banks know they have some catching up to do in terms of mobile innovation. But, as seen here, the industry is very aware of what’s possible and what other verticals are doing. It is only a matter of time (and investment) before banks and financial institutions – led by consumer demand – upgrade their mobile offerings.

The next conversation in this series will move beyond setting the mobile banking loyalty stage and discuss what industries are doing mobile loyalty well and how banks can model their “mobile 2.0” approach.

Read Part Two of Mobile Banking and the Future of Loyalty here.