mobilepaymentstoday.com
Financial institutions face a dilemma these days when it comes to their mobile banking customers.
A recent data point from Digital Insight, an NCR company that provides digital banking products to some 1,000 financial institutions in the U.S., revealed that 31 percent of consumers surveyed log into their bank's remote services exclusively through a smartphone or tablet. This figure is up from just 7 percent three years ago.
Banks do love the level of engagement from mobile banking users. These consumers average 18 account logins per month compared with 10 logins for online banking users. But because financial institutions have trouble enticing mobile-only customers with additional products and services due to limited real estate on a smaller screen, executives remain cautious about how to view this trend.
"Banks don't quite know if that's a good thing or a bad thing. The jury is still out," Jason Weinick, manager of analytics at Digital Insight, told Mobile Payments Today in a recent interview. "When you're logging into your mobile device, you don't see the promotions for a low interest credit card or auto loan.
"That's where the banks are saying they don’t have the tremendous opportunity to cross-sell profitable products."
And that opportunity will only continue to shrink in the future as some recent studies show mobile banking continues to grow.
An American Bankers Association survey revealed that mobile banking is now preferred by 12 percent of consumers, up from just 3 percent five years ago. The annual survey of 1,000 U.S. adults was conducted for the ABA by Ipsos Public Affairs, an independent market research firm, between July 8 and 13.
Online banking topped the ABA survey as 32 percent still prefered that method compared with 17 percent who prefered a branch visit.
KPMG recently said that the number of mobile banking users worldwide is expected to double to 1.8 billion by 2020. This figure represents more than 25 percent of the earth's population.
The question now becomes how banks adjust to an increasingly mobile world and declining branch visits.
Mobile focus
Ed O'Brien, director of Mercator Advisory Group’s banking channels service, believes that despite banks' trepidation about missed selling opportunities on mobile, the industry is very much invested in the channel.
"No one is actively dragging their feet," he said. "In fact, they're trying to do more. We’re seeing a lot of interest in how best to provide a personal experience even though you're remote."
Still, banks are playing catch-up in some ways.
O'Brien and Weinick both said that mobile remote deposit check capture marked the beginning of the current mobile banking uprising. What started as a niche feature when USAA first introduced it in 2009 became a must-have for consumers who wanted to save time and skip a visit to their local branch.
O'Brien believes many large banks hesitated to add mobile remote deposit capture for a couple of reasons.
A few years ago, much of a bank's discretionary funding was spent on compliance issues. "Even though technology was important, and still is important, relatively fewer dollars were able to go into [product development] for some firms," said O'Brien, who is moderating a panel at next month's ATM & Mobile Innovation Summit in Washington, D.C.
He believes this has changed and financial institutions now have technology near or at the top of their priority list.
O'Brien also believes that banks miscalculated the impact mobile remote deposit capture would have — and the role it would play in creating the quandary financial institutions now face with mobile banking customers: How do you upsell a customer on additional products when they never set foot in the branch?
"I think most banks are trying to use responsive design to be able to [add offers] within a mobile banking app," O'Brien said.
Some large institutions such as Bank of America enable mobile banking users to apply for a credit card or auto loan within the app. Some also enable their customer to schedule an appointment through the app to meet with a specialist at a local branch.
Whether these attempts hit a nerve with customers is debatable, but some banks are doing everything they can to make a connection.
O'Brien and Weineck both expect more mobile banking features in the future.
Weineck believes that banks will start to employ geolocation services to help drive younger demographics into branches. O'Brien thinks banks could add personal financial management tools within the app.
"Banks are having discussions about these additions," O'Brien said. "A lot of it depends on the banking appetite of consumers."
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