We love cash—literally. We love it so much that we’re willing to eschew the alternatives afforded by modern society. All these millennia into human evolution, and those crinkly, dirty pieces of paper that have passed through countless hands still have a place in our hearts and wallets, and bring a gleam to a mugger’s eye. By contrast, the credit card is so modern, an ultra-fast option that’s both convenient and safe, and helps build a financial history. But it’s not to new either. In fact, the idea goes back to at least 1887, when it gets 11 mentions in the Edward Bellamy novel “Looking Backward.” And today, 127 years later, it’s the only real alternative to the coin of the realm.
Let’s put it another way: Why haven’t mobile payments taken off?
It should be a no-brainer, since we use mobile apps for just about everything else. Apple passed the 1 million figure for the iPhone App store back in October 2013, and devices and apps exist to help us in every facet of our busy lives: shop, communicate, get healthy, get richer, get away on vacation, do our jobs, slack off, play games, and just plain kill time. Mobile banking in multiple forms has revolutionized our industry.
Yet the most fundamental form of human transaction—paying for goods and services in person—still relies on cash and credit cards. We can punch a button on the phone and get it done, more conveniently and a lot more safely. But we don’t.
It’s not as if there hasn’t been any progress. Consumers spent $235.4 billion through mobile payments in 2013. That, according to research from Gartner, represents a hefty jump over the $163.1 billion spent this way the year before. The numbers for 2014 will surely be higher still. However, the numbers are considerably lower for the United States: about $37 billion in 2013, up from $24 billion. And if even that seems big, consider this: The U.S. GDP for 2013 approached $17 trillion.
In other words, the potential for mobile payments is gigantic, and the reality is minuscule. Could it be that the technologies to support such a transformation aren’t here yet? No quite the contrary. In fact, we have a wealth of options available—and that might be the problem.
Remember, we first got to see Google Wallet exactly three years ago this month, and the expectation was that it would revolutionize basic transactions. It didn’t. More recently, we’ve had a steady stream of alternatives, from Square and Clinkle to Belly. Tech vendors and financial services have teamed up to offer joint options, such as Visa’s payWave on coming pre-loaded on Samsung Galaxy phones. Apple will presumably come up with a mobile wallet of its own at some point. Yet so far, the many ripples have not turned into a splash.
The chicken-or-the-egg question is particularly valid here. As recent reports have noted, merchants are wary of making the necessary deals and installing the technology in their stores until there’s enough of a critical mass in the public. But by the same token, most consumers can’t be bothered to download the relevant apps—even when they’re free—and go to the trouble of finding which store accepts which option.
Many other fields face similar compatibility issues, from games to stock trading, yet there’s typically more growth—a slow evolution followed by a spike. In mobile payments, despite the tremendous potential, widespread adoption has been stymied by competitive offerings.
So what’s the answer here? Should we still be waiting for a killer app from a particular vendor? Should the current technology entrants try to get together and create a common platform that enables compatibility but potentially hurts innovation? Should financial services vendors form an agreement of their own and force tech companies to go along? Should the government get involved?
We likely won’t have an answer for a while. But it’s worth noting that the time for the mobile wallet has come, and perhaps will soon be gone.
You don’t need us to underscore its importance. Nevertheless, this infographic from Surge Digital is a good roundup of usage statistics to share with your teams.
What do you think of the insights below?
*Disclosure: Banking.com is powered by Digital Insight
The mobile channel is no longer optional for banks and credit unions. But for those financial institutions already deploying mobile solutions, how do they optimize profit and benefit to the customer?
On Wednesday, April 23rd, Digital Insight will host a free webinar, “Monetizing the Mobile Channel,” as part of their 2014 Momentum Webinar Series.
The webinar will include insights on optimizing the benefit of your mobile channel and help you:
- Learn about key trends driving mobile innovation and their potential to solve real problems for your users while driving revenue.
- Rethink potential disruptors to your business with a new collaborative approach.
- Understand how traditional channel profitability analysis may limit your perspective and therefore your outcomes.
Does your mobile spending embrace change with a laser focus on ROI? Join Digital Insight as we kickoff our and take a dive into the future of the mobile channel as a profit engine.
We’ll be attending, following along and sharing insights via Twitter with the hashtag #DIMobile.
You can register for the webinar by clicking the image above. See you there!
In recent years, the proliferation of smart phones, tablets and web-enabled mobile devices has spurred nearly every financial institution to scramble and put together a mobile banking option for their consumers. It’s not just the growth of these technologies that is driving demand, it’s the users themselves. Mobile users have been found to access their financial information 64 percent more frequently than non-mobile users. As these consumers become increasingly more dependent on these devices, financial institutions are realizing that the first-generation mobile banking offerings are not sufficiently supporting the demand for anytime, anywhere banking needs, or giving financial institutions the ability to integrate all product and service offerings. At what point did the existing mobile banking experience become obsolete?
It is time to start thinking bigger. Financial institutions of all sizes must evolve their mobile strategy from a simple transaction only application – to a platform that allows your financial institution to offer all products and services via the mobile channel. In fact, it is projected that mobile banking will reach nearly 46 percent of all U.S. bank account holders by 2017. To stay competitive, financial institutions must embrace mobile technologies to deliver a consumer experience that is both competitive and world class. This will help mitigate the risk of losing customers in the coming years by supporting the consumer’s needs while simultaneously promoting products and services. It is time to think in terms of a strategic channel that serves a virtual presence for a growing percentage of financial consumers.
Throughout our years of experience in the industry we’ve witnessed some of the nation’s largest financial institutions miss significant growth opportunities by not expanding their mobile strategies. To help, we’ve compiled a list of the top five missed opportunities that are costing financial institutions growth and profit:
Top 5 Mobile Missed Opportunities:
- A mobile strategy is not just an app: A good mobile strategy includes all the services consumers want and need – not just transactional banking. The strategy needs to consider how the app can be used to boost revenue, provide best-in-class customer service, as well as attract new consumers while maintaining and engaging existing users.
- Like a traditional branch – the user experience matters: Focus on this experience. Users find it frustrating to continually enter log-in information for every mobile application an institution offers tarnishing the experience. A positive user experience will quickly drive product adoption and usage, saving the institution tremendous amounts of time and money. For example, a typical institution should experience an average savings of $4.15 in processing costs for every check that is deposited through their mobile platform versus a brick and mortar branch. The app must also be fully customized and branded to align with strategic marketing guidelines. It should provide the highest level of consumer self-service and provide answers to questions 24/7 to enhance the value of the mobile platform.
- One’s enough!: One app creates a unified mobile presence. Multiple apps lower adoption and confuse consumers. The results are poor ROI and consumer adoption. Give your consumers access to all product and service offerings in one downloadable app.
- Make the data work for you: Tracking app downloads just isn’t enough these days. Your organization is missing out on valuable intelligence about how your consumers are interacting with your app. Take advantage of analytic tools tied to your platform to learn about user preferences, engagement stats and true ROI data.
- Not monetizing the mobile presence: Beyond simple banking transactions, the mobile app needs to provide opportunities to engage and serve the consumer. The mobile app should promote products and enhance revenue opportunities through a great user experience, while also maximizing channel efficiency and lowering operating expenses for the institution. ROI is created by offering products and services like loan applications, knowledge base answers to questions with strong calls to action, and new account openings to name a few.
For a growing number of consumers, the mobile experience is the only interaction they have with your financial institution. By avoiding these 5 missed opportunities you will develop a mobile strategy that encompasses all aspects of your business – from attracting new revenue and promoting products, to providing superior self-service. Done right, your mobile strategy and presentation should both increase productivity, revenue and profitability.
Amber Robinson is the Director of Marketing at SilverCloud, Inc.
Dan Chaney is the CEO of FI-Mobile.
Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.
- UMB Emulates Apple in Push to Encourage Mobile, Online Use
UMB Bank is channeling its inner Apple to encourage more of its customers to use online and mobile banking. The Kansas City, Mo., bank has begun designating tech support specialists in its branches whose job is to help customers understand and use digital services like mobile deposits and online bill pay.
- Omnichannel Banking: More Than a Buzzword
Banks are in an unequalled position to understand their customers. They already can see product use, transaction patterns and demographic profiles. By leveraging channel usage insight, they can develop an even more detailed customer profile. Understanding not only what the customer looks like, but also how they conduct their banking can allow for improved product offers using their preferred channel.
- Regions, Credit Unions and USAA Sit Atop Customer Experience Rankings
The banking and credit card issuer industries both saw significant improvements over last year in the Temkin customer experience ratings. Regions and credit unions earned the highest customer experience scores among banks in the 2014 Temkin Experience Ratings, released earlier today. Regions and credit unions tied with scores of 81%, followed closely by USAA and TD with scores of 80%, and USAA also earned the highest score among credit card issuers with 77%. Overall both the banking and credit card issuing industries improved their scores over last year.
- BBVA creates digital banking unit
Spain’s Banco Bilbao Vizcaya Argentaria has established a digital banking unit in a bid to boost the development of its various technology-led businesses. The new business area is charged with leading the bank’s digital transformation around the world, running its multi-channel strategy and the design of operational and commercial processes. It will also work on developing new business lines, overseeing internal developments such as the Wizzo app as well as the bank’s startup investments made through its $100 million venture fund and Simple, the US firm it bought for $117 million last month.
- It’s Not Easy for Banks to Sell You on New Services
Banks spend tons of money figuring out how you like to spend and save money, especially when it comes to using credit cards and mobile banking, two huge profit center for financial institutions. The credit card industry will process about $4 trillion in card transactions this year, according to Business Insider, and Albany, N.Y.-based ResearchMoz reports that mobile banking is also flexing its muscles, growing from 480 million U.S. users at the end of 2012 to 1.08 billion by 2016.
- One in Three of Americans Hasn’t Been to the Bank in at Least 6 Months
More than a third of people in the U.S. haven’t been to the bank in at least a half of a year, according to a new survey. People with lower incomes and less education visit bank and credit union branches less often, the Bankrate.com survey found. For example, 35% of people with at least some college education visited a bank in the last week, compared with 21% of people with at most a high-school education.
Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.
- Tech-Savvy Bankers Make the Case for Branches
Bank branches may be falling out of favor, but even the most tech-savvy bankers aren’t prepared to renounce them entirely. Take Manolo Sanchez, the chief executive of BBVA Compass, whose bank is spending $117 million to buy the branch-less online startup Simple. You might expect him to declare brick-and-mortar bank locations passé — and yet his company just opened two new branches last week. That’s because customers still want to see branches — even if they don’t go in, and even if they do most of their banking on the computer, the tablet or the mobile phone. Just seeing a physical bank location actually increases a person’s interest in doing business with BBVA Compassonline, he says.
- Mobile is Now Mainstream: Report
Mobile banking features play an increasingly critical role in the consumer’s decision to switch primary banks, according to a survey from AlixPartners. Mobile now plays a crucial role in bank-switching decisions made by consumers, according to a new report from AlixPartners. According to the “AlixPartners Mobile Financial Services Tracking Study,” 60 percent of smartphone or tablet owners who switched primary banks reported mobile banking capabilities as “important” or “extremely important” in their decision to switch, up from 48 percent in a similar survey in the first half of 2013.
- Apples and Payments
What is becoming apparent is that the update is not without its flaws, to say the least. My iPhone, for example, lost half its charge in under an hour, doing nothing. Whilst battery life has never been the iPhones strong point, this was taking the biscuit! Twitter and internet forums have seen significant amounts of discussion on the issues, and it seems to be impacting a large number of people. What was noticeable is that most of the fixes transformed the iPhone to, well, just a phone. Suggestions included turning off apps, turning off search, deleting various elements – in short, many of the reasons why we bought iPhones originally.
- Banks buying more time for Windows XP-powered ATMs
Earlier this year, we told you about the impending problems that many banks might face as Microsoft Corp. (Nasdaq: MSFT) ends its support for Windows XP on April 8. Roughly 95 percent of the nation’s ATMs operate on the aging system, and many banks now are having to buy extended support contracts with Microsoft as they try to convert the machines to a new operating system. JPMorgan Chase (NYSE: JPM) , for example, has bought a one-year extended life support for its Windows XP machines, CNN/Monday reported. In January, Chase told the DBJ earlier that it was working to upgrade its machines as part of normal operations.
- Amazon Tests the Loyalty of Its Prime Members With a 25% Price Hike
After 9 years, Amazon has finally decided to increase the price of its Prime membership – and it’s not an insignificant amount. The cost of Amazon Prime will increase on April 17, 2014 by a hefty $20 (from $79 to $99), and the Prime membership will continue to include free two-day shipping, access to Prime Instant Video, and the Kindle Owner’s Lending Library. The Amazon Prime membership is undoubtedly one of the best online loyalty programs available today, and so this significant price change will likely be a true test of just how much consumers are willing to pay for the perks of free shipping and digital perks.
- Monitise launches Alerting+ for interactive m-banking
Mobile banking technology provider Monitise has launched Alerting+, an alerting solution which enables two-way interaction between financial institutions and their mobile banking customers.
- Mobile Banking: Critical Switching Trigger Today… Table Stakes Tomorrow
Mobile continues to play an increasing critical role in bank-switching decisions, with 60% of smartphone and tablet users citing mobile banking capabilities as “important” or “extremely important” in their decision to switch banks. According to the “Mobile Financial Services Tracking Study” from AlixPartners, 60% of smartphone or tablet owners who switched primary banks in the fourth quarter said that mobile banking capabilities were an “important” or “extremely important” component in their decision to switch. That’s up dramatically from 48% in a similar survey fielded in the first half of 2013.
Today, the value of the brick-and-mortar banking experience is fading quickly and mobile banking transactions are filling the void. But it seems that consumers are not so pleased with most mobile app experiences out in the marketplace, particularly with the big banks. The basic features of account balances, transfers and mobile check deposits are expected basic functionality, but it’s not enough. Users want value beyond just transactions; customers want enriched interactions to understand what their money can do for them. The key to winning in the mobile banking space is relevance – whoever can make the mobile banking experience the most relevant to a user will win the revolution
What is relevance?
Relevance creates a personalized user experience: know what I want, when I want it, before I ask for it and make me smarter. From smartphones to wearable technology (e.g. Google Glass, smart watches, activity trackers, etc.), personal finance is interwoven into our everyday activities. Between the quantifiable self, need-to-know, and constant connectivity, our desire to be engaged with our money is increasing, changing our behavior and evolving what is expected from banks.
The experience can’t be just ordinary, it has to be extraordinary. If you simply spout numbers and balances, you’re not replacing the personalization that is eliminated when a user chooses mobile banking over their local branch with tellers. Mobile banking needs to help explain what a user’s money and transactions mean and what they can do. Users want an experience that is contextual, not just based on location, but also based on previous transactions, current account balances, and what is being planned for the near and long-term future. Banking data can be used to drive key decision points for consumers. The user expects the experience to be not only visually appealing, seamless and pleasurable, but also to take advantage of the latest technologies. Why can’t I know my current balance from my smart watch or Google Glass? A critical aspect of relevance is interacting with consumers where they prefer to interact.
So the big question is, who is winning?
Right now, it’s the startups – apps like Simple, Moven and Level. The start-ups are more nimble and are taking more risk to stay relevant. They’ve pushed beyond just a transactional experience to a lifestyle utility. They aren’t just a source of information, but are tapping into what money can help with, in a very personalized way. No one wants to see only how much they owe on their credit card. For many users, looking at a bank account is more of a source of stress. It has remained a relationship that was strictly transactional with deposits and payments. But when you help the user manage their money and look ahead at what their money can do for them, you become a source of hope. Users want a relationship where someone is looking out for them, understanding their motivation and goals.
Big banks are not out of the game yet. The new start-ups are missing years of data, historical trends and key partnerships. In order to delve into a rich contextual experience means tapping into Big Data and banking trends. So, my advice for the big banks? Put your customer and his or her experience first. Continue to innovate, rapidly iterate and bring new solutions to market quickly instead of getting stuck in analysis paralysis and letting start-ups beat you to the best in mobile banking. Find ways that you can use disruptive technologies and a contextual experience to create more frequent and more relevant touch points for your user.
Last, but not least, the brick and mortar isn’t really dead. A true user-centered mobile experience can be a catalyst to drive a better experience across all of your channels, which is something the start-ups don’t have. The mobile banking ecosystem is still in its infancy. As it evolves, the ones to win the revolution will be those who innovate quickly and put a relevant, cross-channel user experience above all else.
Marisa Mann, Director of Solution Delivery at Solstice Mobile: Marisa brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.
The face of marketing is changing and adapting as society becomes more and more technology-dependent. Mobile is now the first screen of influence for many marketers while adults are spending more time on mobile media than newspapers and magazines. The infographic below (from Top Marketing Schools) shows how mobile marketing has evolved throughout the ages.