The increased use of smartphones is transforming customer interaction in a wide range of industries, especially financial services. However, across Europe and the US only 14% of financial services institutions are making mobile part of their core offerings. Most institutions are treating mobile as just a basic extension of existing products and services.
Banks that have not yet created a mobile banking strategy are missing a significant opportunity to create new revenue streams, build loyalty among connected consumers and risk losing market share.
New money, new customers and new competitors
Mobile devices are already facilitating customer self-service, building brand awareness, driving innovation and new business models. This is only the start.
A variety of e-wallet solutions are emerging, in particular NFC, in Western Europe and North America. In developing countries, where mobile devices have leapfrogged traditional internet and phone interactions, even text messaging-based peer-to-peer payments and cross-border remittances are proving very popular. These relatively simple and lower-value offerings have brought previously untapped segments of the market into financial services. It is clear they will become increasingly widespread, driving the next wave of mobile services.
With this increasing use of mobile devices for payments, banks should ensure their mobile strategy takes advantage of the new money that is flowing through these channels - attracting a wealthy audience that is enthusiastic about mobile services. Additionally the mobile strategy needs to tackle the new competition from network operators, handset manufacturers and application providers that are now entering the previously, closed world of financial services. In particular, banks need to recognise that these new entrants are helping consumers use their mobile devices to meet virtually all their financial needs without visiting a branch or even using the web. If financial institutions are slow to react, non-traditional players can position themselves as the ‘new bank’, and are already gaining market share. Aggregators in the US such as Mint, Thrive and Pageonce have accommodated the mobile user with a compelling mobile experience that moves banks to the background.
A new level of customer interaction through social networks
Social networking services have become a key form of interaction among younger consumers and are quickly spilling over to the wider population. Financial services organisations need to understand social networking and how it differs from web-based interactions if they are to capture the attention of existing and future customers. Younger generations in particular have shown their openness to discussing aspects of their lives, including financial affairs, on social networking platforms, in the process bonding with others sharing their affinities. Banks with services that have become impersonal in customer eyes have an opportunity to re-build customer relationships by tapping into the more-intimate community found in social networking that has become synonymous with access through the mobile device.
A new approach
Banks must, like aggregators, understand consumer desire for omnipresent services, recognising that mobile can help them develop deeper relationships, and provide more personalised services.
Given the relatively low implementation costs of these services, the return on investment is often very straightforward. Consumers in economies with advanced mobile services increasingly cite the availability of good mobile financial services as a key factor for selecting a banking relationship. Mobile will soon reach the tipping point of becoming the financial services channel of choice. So it is clear that those companies that do embrace the power of mobile will remain relevant, innovative and profitable and those that do not risk being left behind.
To learn how your organisation can achieve new revenue streams through mobile banking, or to speak to one of our consultants about our work in banking, please contact us now.