Mobile Trend-Setting

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.

Hand on mobile phone

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

Infographic: How to Spot a Fake Check

The team over at TROY pulled together an infographic on how to spot a fraudulent check. With more consumers using remote deposit capture to upload and deposit checks through their smartphones, it’s important to take note of some of these tips.

How to Spot a Fake Check [Infographic]
© 2013 TROY Group, Inc.

The Mobile Revolution: Remote Deposit Capture

The tablet revolution. The post-PC era. The smartphone explosion. No matter what label resonates the most with you personally, the idea is the same: personal computing is changing. People are spending more time with smaller devices, such as tablets and smartphones, and less time on desktops and laptops.

Recent data from Forrester Research, Digital Insight and Bain & Company point to this mobile revolution:

  • Approximately 90 percent of adults own a mobile device, of which smartphones are rapidly approaching half of all mobile devices in the marketplace.
  • Approximately 96 percent of U.S. households have at least one wireless subscription.
  • Roughly over 1/3 of online bankers are actively using their mobile device to engage with their financial institution, and mobile bankers are accessing their financial information 59 percent more often than non-mobile online bankers.
  • Roughly three-quarters of branch interactions are routine (deposits, withdrawals and account balance inquiries), driving up costs and diverting resources from more important interactions.

The new online and mobile lifestyle requires digital banking as a new way of delivering a connected lifestyle.  Customers would like to bank anytime, anywhere and on any device. Giving your customers the ability to deposit checks anytime and anywhere using a mobile banking app is the next revolution in that connected state.

I recently had the opportunity to analyze the behavior of customers who utilized mobile remote deposit, which was offered by a financial institution who uses Digital Insight for their online and mobile banking platforms. The analysis solely focused on customers who had an open checking account and made at least one deposit into the financial institution in each month of the analyzed time period.

Although the financial institution was less than six months into the product lifecycle, the results were extremely encouraging:

  • Does mobile remote deposit cause customers to frequent the branch/ATM less for their deposit needs?

Digital Insight research indicates the answer is YES. Mobile remote deposit is changing consumer behavior and transferring more of those routine, costly “human” touch points to a less costly channel. Customers which ultimately used mobile remote deposit were using the branch for 29 percent of their deposits prior to using mobile remote deposit. Once the consumer starting using the service, their deposit behavior at the branch decreased to 19 percent – mobile remote deposit diverted 10 percent of all deposits away from the branch. Customers who never used mobile remote deposit did not experience a shift in their branch behavior. Usage of the ATM for deposits also declined for mobile remote deposit customers – 9.2 percent in the “before” period vs. 6.5 percent in the “after” period.

With the cost of gasoline over $3.50/gallon in most places, from the consumer perspective, think how much it costs (including time inefficiency) to drive to your local branch and make a deposit. Mobile remote deposit saves consumers money and is a more efficient alternative that savvy customers will demand.

What will this shift in behavior – from in-branch to mobile remote deposit – mean for the brick and mortar business model? In the short-term, it doesn’t appear financial institutions are in a hurry to reduce customer service headcount or slow the pace of new branch openings. The digital banking channel has created a more efficient operation; however, should not be viewed as an alternative channel. Rather, digital banking is moving towards more of an extension of the branch and with the reduction of “routine” transactions, in-branch representatives can invest more of their time cross-selling products rather than depositing a check.

  • Does mobile remote deposit cause customers to increase their deposit activity?

Study results from Digital Insight indicate the answer is YES. Customers who used mobile remote deposit increased their monthly number of deposits by two percent, while those customers who didn’t use the service actually experienced a decline in their number of monthly deposits by three percent. Did the customer using mobile remote deposit magically begin receiving more checks once they started using the service? Likely not, but rather, instead of depositing a check into another financial institution, (perhaps for a savings or retirement account) they now deposited these funds into the financial institution which offered mobile remote deposit, which means the financial institution has further positioned themselves as the customers’ preferred financial institution.

  • Does mobile remote deposit lead to higher consumer acquisition and/or lower consumer attrition?

To be determined. When I measured the results of mobile remote deposit, the financial institution was less than six months into the product offering with its customers The hypothesis is that mobile remote deposit will strengthen the consumer relationship and thus extend the consumer lifecycle. Additionally, now that the financial institution is offering this value-added service, the belief is that this product will attract new customers to the financial institution and win business from the competition. This could be especially true for the Gen Y and Gen X segments. The comment “attracting a younger demographic” is posed as a strategic initiative in my conversations with financial institutions. Over 75 percent of mobile bankers are Gen X and Gen Y, so these demographics will be the most likely to utilize mobile remote deposit.

The customers most likely to adopt the mobile remote deposit feature are cost‐effective bankers. They monitor their finances through the Web or their mobile phone at a higher propensity than all other customers, which lowers operational costs for the financial institution. In short, customers who desire mobile remote deposit utilize technology that is beneficial for the financial institution and the consumer.

About Jason Weinick: Jason is a Senior Analyst with Digital Insight and leads the initiative on client profitability analyses, providing banks and credit unions a valuable in-depth look into the value of the online channel. Jason’s background includes 15 years experience within the financial services sector, focusing on consumer behavior, risk modeling, reporting, and financial analysis. Jason holds a Bachelor of Science degree in Finance from Clemson University.

Sources: Forrester Research, May 2011; Digital Insight Profitability Study, April 2012; Bain & Company Customer Loyalty in Retail Banking Americas, 2011

 

Poll: Remote Deposit Capture: Would you prefer to deposit checks via a mobile phone, or desktop computer?

Thank you to Affinity Federal Credit Union for submitting this month’s question!

If you could only choose one, which would you prefer: depositing a check via a remote deposit capture application on a mobile phone or via a desktop computer with a scanner?

 

Interested in submitting a poll question on Banking.com? Email us at info@banking2020.com or DM @bankingdotcom on Twitter.

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.