Mobile Banking: Enigma, Mystery and Conundrum
It’s so simple. Need some kind of transaction with your bank? Just take out your mobile device—smartphone, tablet, whatever, on just about any operating system—and you’ll have a wealth of apps to get it done. You’ll get reminders when you need to do it again, or set it up to do it automatically. It’s very simple, really.
Now let’s pull back and try to analyze the mobile banking market overall. That, it turns out, is not simple at all. In fact, it can be an exercise in frustration and futility.
Here’s an example. As documented in this forum recently, mobile banking is drastically changing the industry landscape. According to a report from Javelin Strategy and Research, no less than “88.5 million Americans attempted to open an account online or with a mobile device” between June of last year and this one. A new report from the same firm, meanwhile, identifies the huge potential opportunity in this market—financial institutions can save almost $50 per customer per year just by getting them to switch to mobile deposits. That’s an industrywide boost of $1.5 billion.
But do those savings by themselves constitute a clear ROI? At a recent industry summit, many of the discussions hovered around the idea of fees, since providing mobile services can be seen as a value-add (and it takes resources to develop and market those apps). As a result, some institutions such as U.S. Bank and Regions Bank have built monetization models into their mobile offerings.
This may be one reason (but only one reason) why not everyone is using the mobile option as much as they can. For example, both the Javelin study and another from MoneyRates note that while there’s a general level of satisfaction with the notion and practice of mobile banking, mobile deposits have been slow to catch on. Javelin reports that while the percentage of customers who opt for mobile banking rose from 15% to 25% between 2010 and 2013, only 6% of that demographic—in other words, those who bank via their mobile devices—go that way for check deposits. It’s as if the act of having a paper document in hand mandates a visit to the branch. As a result, banks have to do more to change user behavior.
Fair enough—but again, that’s not how everyone sees it. “Think about it. Do you know anyone who writes checks anymore?” begins a new article that hammers home the security risks inherent in mobile banking. The author certainly has a point: While banks have developed and released many new apps to help customers turn to mobile banking (though apparently they still have more to do—see paragraph above), security seems to have taken a back seat in that many technologies and procedures are adapted from the old world of online on even traditional branch banking. Innovation in this area has clearly lagged behind, and fraudsters have noticed.
Meanwhile, the market may be about to get even more messy. As we’ve noted here before, industry professionals need to understand that tablets and smartphones might not be the only mobile options—there will inevitably be other form factors disrupting the market. One we speculated about was Google Glass, which didn’t have a clear financial purpose but represented another potential platform with which to conduct financial transactions. Of course, very few people even have the device, so who’s going to develop apps for it?
Try Fidelity Investments. That fund giant’s development unit is launching a Market Monitor app that delivers quotes for major U.S. stock indexes over computerized frames. Pretty basic—just like the early incarnations of online apps and mobile apps.
The truth is that because of the rate of technology innovation and the speed of market adoption, any industry snapshot is old by the time it’s taken. Best practices can become similarly obsolete virtually overnight. None of this negates the fact that as an industry, we have to be prepared for technologies as they emerge and paradigms as they shift.
With mobile banking in particular, let’s assume that we seldom know what’s coming next. But even if we don’t know what the change is, we know there’s one coming soon, and one right after that. We’re not always going to be ahead of the market, but we shouldn’t always be scrambling just to catch up. Let’s try to keep pace.