Mobile Banking and the Underbanked

As we’ve discussed in many recent posts, mobile banking continues to grow in popularity as more consumers utilize smartphone devices. The Intuit Financial Services 4th Annual Financial Management Survey found nearly one quarter (23 percent) of consumers are using a mobile device for banking needs and an additional 17 percent plan to try mobile banking in 2012.

Earlier this month, James Van Dyke of Javelin Strategy and Research delved into an interesting topic: low-income consumers and mobile banking. As Van Dyke writes in his article, the correlation between the low-income demographic and mobile banking shows an interesting connection.

Van Dyke looked a number of expert analyses, including a Javelin study of more than 3,000 U.S. consumers and presented the following data:

U.S. consumers who lack a depository bank or credit union account are:

  • Less likely to have a landline phone connection, by 10 percentage points
  • More likely to have a mobile phone, by six percentage points
  • Slightly more likely to own a smartphone (perhaps surprisingly)

Through his research, Van Dyke also found that the under-banked tend to tap into their finances more frequently and are more likely to be hyperactive users. For retailers this holiday season, this means the under-banked will be checking balances and finances on the spot to determine if they have the means to buy goods, but are also very likely to make purchases directly from their mobile devices.

Van Dyke wrapped up by offering his advice on the correlation between the under-banked and low-income consumers, “Strategist and technologists take heed: while it’s easy to think of new technology as having primary appeal to higher income individuals, mobile defies this truism because it is more likely to be the sole way for lower-income people to manage accounts and purchase goods.”

What are your thoughts on this research? Have you noticed a demographic split at your FI among mobile banking users? Tweet @bankingdotcom or leave us a comment below.

“Show Me The (Mobile) Money”– A Case Study in Monetization

*This blog was originally posted on The Intuit Network

In this week’s Predictions Webcast, IDC’s Chief Analyst Frank Gens declared 2012 the year “Mobile Wins,” meaning we’ll see tablets and smartphones handily outpace their PC predecessors. While this isn’t necessarily a shock– mobile has been barreling toward us all for some time now– the concept of effectively capatalizing on mobile reamins a hot topic.

In the following presentaiton from SIAA’s “All About Mobile Conference,” Intuit’s own John Flora shares how Intuit Financial Services is helping mid-sized banks and credit unions serve their customers at their point of need in the cloud, on a tablet or even a smartphone. It all starts with focusing on “real customer problems” and designing for seamless experiences.

Google Buys Motorola Mobility…And So Begins The Dark Ages

By Gene Marks, originally posted on Forbes.com.

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses. The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services.

Last week I finally, finally purchased a Motorola D3 smartphone. I’m loving it! And I’m loving Google!  So you’d think that I’d be loving the news that Google is purchasing Motorola’s cell phone business, right?

I’m not. This is like the beginning of the end of the Roman Empire. And the beginning of technology’s dark ages. At least for many small businesses like mine.

Lots of reasons are given for the acquisition. Most experts believe that it’s motivated by certain patents that Motorola owns which will help Google defend itself against infringement lawsuits brought on by Apple.

ZDNet’s Jason Hiner agrees, but also offers this reason: “…it’s pretty clear that Google also wants to have the option of producing its own hardware devices so that it can build prototypes, concept hardware, and leading edge devices to demonstrate its vision and point its ecosystem partners in the right direction.  With Apple’s continued success in mobile, BlackBerry’s large (albeit fading) market share, HP’s new hardware/software unification with WebOS, and now the Google-Motorola deal, it’s becoming clear that vertical integration is winning in mobile. Going forward, look for the latest, greatest, high-end devices to all be vertically integrated, while many of the low-cost, copy-cat devices will come to the market later and be made by mass market manufacturers like Samsung.”

This is all great for Google. But will this news help my small business? Unfortunately, no. The empire is breaking up. Chaos is approaching. Life, particularly for my business, is about to become more complicated.

Chart 1 (here)

Chart 2 (here)

No one can argue with the above two charts. PC shipments over the past few years have been consistently below the peak levels from the 1990’s. And other devices, like tablets and mobile phones, have taken off. This is the main reason why HP decided last week to get out of the PC business and focus instead on software to power all these gadgets. Workstations and servers are on their way to becoming generic boxes, waiting for the customer to install their operating system and applications of choice.

None of this is good news for small business. Like the people of ancient Rome we complain about our conditions and our leaders. We say we want better choices. But really we just want things that make life easier. And things that work. Inexpensively. Which is the way it used to be.

Because once upon a time there was just one evil empire and it was named Microsoft. Every computer shipped was shipped with Windows. And people complained about them all the time. The company faced anti-monopoly lawsuits from both individuals and governments. We frequently grumbled about Windows: its bugs, the blue screens of death, the bloatedness of it all. Its software was targeted by endless armies of hackers. Of course, these being more civilized times, no on attempted to assassinate its CEO. But pies were thrown. Competing operating systems, like Linux, were more like harassing barbaric tribes.

These were the days of Pax Microsoft. And during those days, technology flourished. Software developers developed software. Lots of it. And primarily for businesses. And business owners like me were more productive. Microsoft’s biggest selling product became Office. And other software vendors created applications for accounting, order entry, inventory management, communications and customer relationship management.

Of course, the Caesars weren’t perfect. And neither was Microsoft. Why? Their Windows software was flawed, annoying, frustrating and an oftentimes faulty platform for which to write software. But, like the bureaucracy of Rome, the system worked. It was stable (for the most part). It was consistent. And, like the Roman Denarius, it was accepted in just about every business in the country.  Microsoft partnered with hardware companies but never owned them. They just wrote software for them. And we could buy software knowing that it was Windows compatible.

But now that’s all changing. Microsoft has slipped, and the Pax Microsoft era is coming apart. The Gauls and the Goths are invading. The world has gone mobile. And the empire is losing the mobile market to Apple and Google.

So now we no longer just have Microsoft Windows. We have Apple’s iOS and Google’s Android operating systems. More choice is good, yes? No. There is no one company writing software that’s runs all of our computers and devices. We now have three companies who have created three different and separate operating systems.

And now we have Google buying Motorola, so that (like Apple) the software and the hardware become as one. Before we know it, if we want an Android we’ll be “encouraged” to purchase a phone or other device manufactured by Google, just like we are now forced to buy iPads and iPhones for Apple software.  How much time until Microsoft admits it can no longer be just a software company and purchases a big PC manufacturer like Dell so that their software can become as one with hardware too?

And then what?  The empire breaks up. The technology world divides itself into three camps. And small business owners, many who do not have the resources to support all these different platforms, will need to make some choices. And live with them. So what will it be: Latin, French or German?

Software vendors will have to develop their products not for just one platform but for three. Most can’t afford to do this. These are not little “apps” for a smartphone. These are business programs which I need to manage my operations. Which means that if I choose, for whatever reason, to standardize my business on Google/Motorola/Android, then I will only be able to choose those applications written for that platform. I would need to replace the software that I already have for software that may be inferior, or lack features that I need to run my company.

And I’ll be limited as to what hardware I can purchase. For now, I can purchase PCs from a variety of different sources because I know they all run Windows and my business applications will be compatible. But in the future will I be forced to only purchase hardware manufactured by Apple because I run Apple applications? And will this hardware have all the features that I need? Will I have a broad choice of local support? Will it be compatible with other devices, like bar-code readers and document scanners that my business may require? Or will I be stuck? Stuck because I was forced to pledge my allegiance to one and only one King.

And what if I want to leave the camp?  The Emperors of Rome didn’t much like those that switched sides. And neither will Apple, Google or Microsoft. Suppose, after a few years, I don’t like the software I’m using to manage my orders process. In today’s world, migration from one software application isn’t easy, but it’s do-able. Most major business software applications are Windows-based and run on similar databases like SQL. So data can be mapped and moved. Will this be the case if I want to move from an Android based order entry system to an Apple or Microsoft based system? Or will, by that time, vendors be so territorial that they will encircle their kingdoms with walls and moats, making data too proprietary to move somewhere else?

And then there’s integration. Because instead of solving the biggest problem that business owners have had since the dawn of technology, the end of Pax Microsoft makes it worse. Even in the world of Windows, most of us have suffered trying to make our accounting systems talk to our service systems and our service and accounting systems talk to our websites. And that’s not to mention our never realized dream of being able to quickly and inexpensively communicate financial information with our customers and vendors too.  Most of us endure with entering the same data two or three times into disparate systems and hoping for the best. But at least these were all Windows-based systems. And as technology matured there was some hope that software developers would create applications that can one day make this integration a reality.

But these same developers are now distracted. They’re writing new apps for the Droid or iPhone. And the dream of having seamlessly integrated systems now seems unlikelier as Apple and Google rise to challenge Microsoft and break up the hardware and software infrastructure into competing camps. Maybe one day my Android-based applications and hardware will all integrate effortlessly. But it feels like we’re starting from scratch.  And even if that does happen, what if I still want to keep that great Windows app for managing salesmen commissions but also want it to share data with my Windows based accounting system?

Some may say that these issues will all be resolved by The Cloud.  But if that’s the case then why does every cloud based provider today have separate applications for mobile devices? Won’t they be forced to ultimately choose sides as well? And what about all those companies who prefer not to have their data delivered through a cloud based application because it doesn’t suit their business model? More choices. More complications.

I’m not saying that life during the Roman Empire was all bliss. And I’m not saying the Microsoft Windows era has been a perfect one for small and medium sized companies. Apple and Google make great products. Did I mention that I love my new D3?  But I know my history. And when the Roman empire became fragmented the world entered a period of chaos and suffering. I’m concerned my company faces the same technology future.

 

Online and Mobile Solutions – If You Build It, Will They Come?

It’s true that online and mobile solutions are in high demand, but that alone doesn’t guarantee that your customers and members will rush to adopt. If only it were that easy. For many, it’s going to take education on what the service is and why it will be valuable to them. Some “fence-sitters” may simply need convincing that now is the time to change their behavior from the old way of doing things.

Targeted marketing campaigns that address the barriers to adoption have proven to be extremely effective in moving these fence-sitters into active users. Growth and Retention Services campaigns have been so successful because they reach customers and members through email, offline and online channels and communicate the value in using your services to better manage their money and achieve their financial goals.

To weigh in on the biggest adoption challenges you face or share some of your own marketing and adoption best practices, visit In:Volve.

Gen Y: The Digital Generation

The Intuit 2020 Report, The Future of Financial Services, predicts that in the next 10 years Gen Y will transition from young carefree spenders to an important part of the financial services customer segment. By 2020, a majority of this group will be in their early to mid-thirties and learning to manage money as adults, with families and mortgages.

Gen Y, also known as the digital generation, is a tech-savvy group of individuals who were brought up using mobile technologies, Facebook and email. Javelin Strategy & Research recently released a report, Gen Y: How to Engage and Service the New Mobile Generation, which outlines how to reach the mobile generation as financial members and customers.

Some of the key findings include:

  • 4 out of 5 Gen Y consumers already have a personal and/or joint checking account, and 38 percent of them are very satisfied with their current banking relationship.
  • A Gen Y consumer is nearly twice as likely as an everyday consumer to be a mobile banker, and 31 percent of Gen Y consumers review account balances more than eight times a month via mobile banking.
  • Gen Y has high expectations from PFM tools, and 23 percent want PFM to categorize their spending.
  • For mobile PFM users: 46 percent want to make comparisons when shopping, and 33 percent use it to track finances on a daily basis.

For more Gen Y statistics, Credit Union Times has a slideshow here.

Are your Gen Y customers and members using mobile solutions more frequently than Gen X and Baby Boomers? Do you see a high demand in PFM functionality from Gen Y’ers? Let us know in the comments section below.

Mobile is the New Web

As mobile banking technologies advance, banks should re-evaluate how they package mobile offerings to their customers. Mobile banking, an umbrella term consisting of mobile applications, mobile web browsing and text message banking, actually improves on the online experience and offers the additional benefit of traveling with your customer. As Net Banker’s Jim Bruene notes, “Equating mobile banking to online is selling it short. Really, it’s much better than online.”  With the added capabilities of near field communication, remote deposit capture and mobile wallets, the mobile banking experience can surpass online by providing resources to customers 24/7, at any location.

Because of these far-reaching and all encompassing attributes, online banking could soon be viewed merely as an extension of mobile. Companies are even beginning to develop mobile technologies first as the amount of time people spend on mobile apps has almost doubled in the past year.

However, Jim indicates that despite the buzz about mobile, it will be banks’ business models that determine success. He says,  “Ultimately, banks will win or lose based on how well they execute on gathering deposits, making loans, facilitating transactions/payments, servicing customers effectively, and pricing it all correctly.”

Are you developing mobile first? Do you see your customers moving towards more mobile than online usage? Tweet @Bankingdotcom or let us know in the comments below.

Financial Management Capabilities and Remote Deposit Top Customers “Wish” List

Earlier this month, we hosted a poll and asked our readers, “What one technological feature do your customers ask for the most?” With the myriad of technological features available, we wanted to determine what customers and members are interested in, whether it is mobile banking, remote deposit capture, P2P payments or more.

The results: financial management capabilities, which include budgeting, goal-setting and the ability to see spending/payments all in one place, and remote deposit capture ranked the highest, each claiming 22 percent of the votes. Below is a full breakdown of the results:

To delve into the poll results, Webster Bank, which has more than 180 offices throughout Southern New England and Westchester County, New York, weighed in with additional input from their customers.

Greg Jacobi, Senior Vice President, eBanking, said their customers most often inquire about mobile banking and remote deposit capture for consumers. Webster Bank currently offers mobile Web capabilities, but with the surge of smartphones, users are eager for a mobile app. They have also seen an uptick in their remote deposit capture application for businesses. Greg noted that, “business customers that use remote deposit capture get a tremendous amount of value out of it.” Although it cuts down on bank branch visits, remote deposit capture lets consumers make a deposit on their terms.

Greg adds, “to be honest, we have noticed a trend that customers are not asking (as much) about the marquee features you have in your poll.  Across the industry, they want their existing online banking to be better.  The basics of online banking have not been reconsidered for quite a while.  One path people are taking to get there is PFM.  We love the innovation happening around PFM.  But, I do not think the average customer is asking for it as a separate offering.  They want the benefits of PFM; being able to categorize their transactions, set goals, search better and get useful visualizations of their data integrated into what they already have.”

Are your customers and members asking for the same technological features? Let us know in the comments section below or Tweet @bankingdotcom.

 

Mobile Apps Prevail over the Web

In 2009, Apple created a commercial for the iPhone 3 to highlight the versatility of apps, coining a term that has been widely used for the last couple years: “There’s an app for that.” With apps for everything from gaming to banking to social media, it’s no surprise that mobile adoption has soared in the past couple years.

Mobile analytics firm Flurry recently released a report which revealed people are spending more time on mobile applications than on the Web. In fact, the amount of time people spend on mobile apps has almost doubled in the last year. See below for the breakdown:

Are you using mobile apps more than the Web? What are you doing to engage customers on their mobile devices? Tweet @bankingdotcom or let us know in the comments section below.

SMS Prevails on Smartphones

A recent survey by Upstream highlighted consumers’ attitudes towards mobile marketing. The survey indicated that although there are a plethora of mobile marketing options available, 75 percent of smartphone users prefer to receive notifications via SMS.

Other interesting findings from the survey include:

  • 51 percent of smartphone owners prefer receiving offers concerning mobile products only (upgrade plan, top-up discounts, etc).
  • 83 percent of respondents indicated they are only open to receiving notifications up to twice a month
  • 72 percent would change providers if they received third party ads

For more details you can view the mobile marketing infographic.

Do you find these statistics in line with your own mobile preferences? Let us know in the comments section below.

The Mobile Wallet

Mobile technology is changing the way consumers and businesses process payments. From smartphone apps that allow you to process payments, to depositing checks via your mobile device, it’s increasingly easy to rely on a phone as your wallet.

CreditSesame.com posted an infographic posing the question, “Will Smartphones Replace Your Wallet?” The infographic outlined interesting stats about the future of mobile payments, including:

  • The value of purchases via mobile phones is expected to increase at a compound annual growth rate of 68% between 2010 and 2015.
  • Spending via Smartphones is expected to reach $214 billion by 2015.
  • Paper money is on the decline. Over the next five years, cash use will decrease by $200 billion in the U.S.

To view the full infographic, visit CreditSesame.com.

How do you see mobile payments changing the banking industry? Let us know in the comments section below.