Mobile Banking: A Roadmap To Your Future Member

Mobile Return on Investment
This week I attended the 5^th Annual Mobile Banking & Emerging Applications Summit in New Orleans and learned that almost everyone in the room both Big Bank, small banks and credit union were all running towards this new “golden” channel and were not really sure of what it is supposed to look like when they get there.  The prevailing question for many of the attendees was what do I have to roll out and what is the ROI. Most expert players in the mobile arena could not provide a hard and fast ROI on the channel.  Then magically a slide appeared in one presentation in which Forrester research stated there was a 15 percent ROI for the mobile channel.  Twitter lit up as everyone suddenly tweeted that the magic formula had been found! However, before you go and change that PowerPoint presentation you were going to give to your senior executive team on why you need mobile you first need to understand the math behind the hype.

The 15 percent return on investment is based on the assumption that you are going to be able to change consumer behavior from channel to channel.  So that member who goes into the branch or calls your call center is suddenly going to just use this new channel. Does that sound like your member? Not mine either. 

The 15 percent assumes that low value transactions of moving money or checking a balance will now take place over the phone and not involve the call center.  When many of the panel experts were asked about their own experiences at their financial institutions after they launched mobile the opposite seemed to be the trend. Your members simply used you more. They took that large check to their local branch and then called the next day to the call center to see when the hold would be lifted after checking their balance on their Smartphone. 

Another challenge in calculating the ROI is getting to the behavior and seeing if there was a change. It seems to hold true across the board that it is more exciting to buy the technology than it is to track member usage patterns. To compound the issue further even if you do show some subtle shifts it becomes very difficult to isolate the different factors that could have influenced that shift in your member’s behavior. So imagine a market that has sizable cost to deliver that does not have a measurable ROI…yep…that’s mobile.

So where does that leave mobile? Consider that 18 of the top 40 financial institutions have already implemented mobile banking. You can see that for many of our competitors the prevailing concept is that mobile is now table stakes in keeping consumers satisfied.  This is with good reason as according to recent research over 58 percent of all Americans use a mobile device for non voice data communication on a typical day.

The challenge for credit unions looking to enter this channel is that Big Banks are moving into this channel aggressively just look at the buzz over a Big Bank launching a tablet app to see the hype it generates. This hype influences our members as having a mobile device is now normal. So you not offering a solution is seen as more of a problem as mobile usage becomes more of a part of how people interact with their financial institution.

Where to Start
You need to think about what product you are going to launch that gets you the most bang for your buck.  When you consider the cost of building an Iphone app and the 250 different versions of Android (don’t even think about the BlackBerry which is dead in this market space) the easiest entry product is a mobile web browser designed by a reputable vender.  A mobile web browser should be a top priority on your mobile roadmap. The browser solution provides the most comprehensive and cost effective modality of all the solutions.  The majority of your smart phone users will be able to be served with this solution. Don’t get caught up in the app craze. Have the discipline to launch in phases and learn from each phase. It is your staff that will have to support it.

When asked what is the most popular method to conduct mobile banking the most popular method for smart phone owners was mobile internet browser at (77 %), then SMS test messaging (28 %),  and then (26 %) for a downloadable mobile application.

So step one on the roadmap is the mobile browser. In looking down the road on your roadmap you have to at some point consider a triple play solution (App, Web Browser, SMS texting) as this allows your members the chance to choose the delivery mode that best suits their needs or preference.  This also allows you to reach all of your member segments with a mobile solution as you cover regular feature phones and smart phones. 

Now many are quick to dismiss the text banking solution but I think that is a mistake. Instead you need to think about how to broaden this product beyond just weekly push alerts. Look and see how you can utilize real time balance alerts. Add fraud alerts to the mix. When your card processer notices a transaction that is outside the member’s normal spending patterns send them a text telling them to confirm the transaction.  You really want to create ROI? Add cross sell tags on the end of low balance alerts for lines of credit and overdraft.  Think about quick hit messages that create calls to action.

Last Thoughts on the Mobile Channel to Consider

Retention- How are you going to be your members PFI helping them to pay, manage, and save – anyway, anytime, and anywhere? This is exactly what Big Banks are trying to solve.

Cost Savings- Can you shift low value interactions from your branches and call center to the mobile channel. This frees up staff to engage in longer and deeper conversations with your members without altering your staffing model.  Can you reduce fraud by using real time alerts to engage your members faster? Please don’t tell me you are calling your member at the number on the system when you see a spending pattern shift. Just between us but that doesn’t work as often your member isn’t home. The good news is they do have their mobile phone on them.

Driving Member Acquisition – members will see this the same way as ATM networks. The Big Banks have an ATM everywhere. Even if I never use an ATM I want my financial institution to have them.  Today 1/3 of 11 year olds in the United States have mobile phones.  For them mobile is part of the world they have grown up in.  You need to understand that mobile is now here and is not going away. 

Big Banks are growing mobile users 25-30 percent annually lowering their cost per transaction. We all know this is a margins game. If Big Banks continue to gain efficiencies and credit unions continue to stand still then the end result is we are priced out of business in the rates we offer our members.

Share your thoughts where are you on the mobile roadmap ?