It’s obviously inevitable that the dawn of a new year will produce a rash of predictions for the months ahead. It’s also obvious that many of these prognostications focus on mobile banking—after all, that’s where the action is right now (if we can skip the messy government settlement stuff). Still, that doesn’t mean we have any real idea what’s going to happen.
There’s certainly no question that this is the new battleground: Banks able to build on mobile innovation will reap the rewards of more engaged customers, higher market share and, ultimately, greater profits. And more than just competing against traditional rivals, they will be able to hold off online-only banking startups. That said, as with any advance, there might be a price to pay.
For example, increased mobile adoption in 2014 will take its toll on branch networks. There’s a new generation of consumers that has no real memory of traditional banking, which means the idea of actually stepping into a brick-and-mortar outlet seems quaint. For their part, financial institutions will market their services directly (and perhaps exclusively) to mobile-only customers.
Here’s one recent example of the effects of this trend: More than 140,000 customers of First Niagara, a community-oriented bank with some 420 branches in New York, Pennsylvania, Connecticut and Massachusetts—downloaded its mobile app in just the first year. Early in 2014, the bank announced an organizational restructuring that cuts 170 positions. Expect to see many more such stories in the next few months.
While things are busy on the consumer front, we could see even greater transformation on the business side. ‘The ath Power Small Business Banking Study,’ a new research initiative from ath Power Consulting, highlights a potentially worrisome divide between what the market appears to want, and what it’s actually getting. Fully two-thirds of the small business owners surveyed for the study say that they’re likely to switch banks in favor of better mobile options. However, some 37% of the bankers surveyed for the same research omitted to even mention their mobile offerings.
Isn’t it a little late in the day for mobile banking to not be on the forefront? In fact, one prediction for 2014 is that this is the year in which mobile banking will actually eclipse online banking, at least in users (within certain parameters, the number of transactions is already higher). That’s a remarkable advance for a capability that essentially didn’t exist just a few years ago. But with affordable smartphones now ubiquitous and 4G networks more widely available, the infrastructure certainly exists to speed the change.
The critical element here is that mobile isn’t really one thing anymore. For example, what we know as the camera dates back to 500 B.C., but putting one inside the phone now enables everything from Remote Deposit Capture to Picture Pay. This has had the effect of turning our business on its head, and it’s likely that we’re still in the nascent stages of this change—there are many more apps and capabilities still to come. Or consider digital wallets, particularly with aggressive marketing from institutions that see greater opportunities with this capability. Surely there will be discounts and other customer goodies, which in turn will affect the bottom line.
The more sobering reality is that these larger trends will only affect us as financial services institutions and professionals only to the extent that we are able to shape them. It’s not as if we’re just entering this brave new mobile world; we’ve been here for some time, and doing our part to develop new apps, adapt traditional offerings and empower customers. As always, we can identify emerging market needs and provide solutions to meet them.
However, the most successful companies are those than function ahead of the curve. They create technology and service solutions to problems that don’t exist, and in the process provide transformative capabilities to their customers. We can look ahead to 2014 and see what trends are coming down the pike. But we can also help drive those trends ourselves.
*Image courtesy of twobee - FreeDigitalPhotos.net