What We’re Reading: Customer Surveys, Cloud, Big Data

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.


  • What’s new is what’s happening

ABA Banking Journal

It’s big deal when your company is named in a list of the “world’s top 100” anything, and it’s a really big deal when your company is listed on Forbes’ “World’s 100 Most Innovative Companies.” So the people at FIS—or more specifically, Fidelity National Information Services—should rightly feel pretty good about their recent placement on this very list, at the 98th spot. It’s the only U.S. financial technology provider there, which includes such other companies as Apple, at a surprisingly distant No. 79, Pepsi, at No. 58, and Google, at No. 47.

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  • Bank Fees Rankle Otherwise Satisfied Customers: Survey

American Banker 

Checking account fees may help banks pad revenue, but a new survey suggests that ATM and overdraft charges can send customers running. Over a third of Americans said they would be very or extremely likely to switch banks to avoid paying fees on their checking accounts, according to TD Bank’s inaugural survey of more than 3,000 consumers. In fact, 14% of respondents have already moved their business for those reasons. Some types of charges aggravate customers more than others; 38% of respondents said that nonbank ATM fees were the most frustrating type of charge. Another 27% awarded that dubious honor to overdraft charges. Just 13% picked minimum balance fees as the most annoying type of charge.

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  • Microsoft and Nokia: What Kind of Marriage Will It Be?

Celent Banking Blog

Microsoft announced that it has purchased Nokia’s mobile phone business. According to the announcement, “Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash.” Both companies have been struggling to adapt to changes in mobile computing – Nokia has lost its leadership in handsets, and Microsoft was rather late in announcing its latest Windows mobile operating system, which remains a distant third to Apple and Android.

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  • ‘Stache & Save’ Helps Kinecta Connect On Facebook

Credit Union Journal

Kinecta FCU here boosted its Facebook engagement by using mustaches and an online slot machine. Kinecta launched it “Stache & Save” campaign as a way to increase engagement on its Facebook page and grow its number of likes. To do so, it created an online slot machine, and when users pulled the digital handle, it rotated through three different mustaches. Three matches made for an instant winner of a $50 gift certificate and was entered into a drawing for a $2,500 gift certificate.

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  • Big Data and Payments Drive Loyalty in Business Banking.


In the ‘consumer edition’ of the blog it was suggested that banks can reinvigorate their payments brand and influence customer loyalty by integrating incentives and offers to their payments solutions. The premise is that banks are missing out on an opportunity to become more influential in where people shop and what they buy, rather than just how they pay. Offers can be driven by analytics into a combination of historical payments information and big data analysis of demographics, location positioning and peer group analysis. Such a strategy requires more than an offers solution, or a mobile banking app.

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  • The Path to Innovation Goes Through the Cloud

Huffington Post

As cloud adoption reaches the tipping point, some sectors are seeing newer market entrants threatening to overtake legacy players mired in tradition. Gartner predicts that the worldwide cloud services market will grow 18.5 percent in 2013 to total $131 billion, up from $111 billion in 2012. Yet, many of the world’s oldest professions such as accounting, legal and banking have been slow to tap the cloud to make it rain. The flexibility of cloud computing – being able to try before you buy, scale easily and use the device that suits you – allow savvy businesses to respond quickly to market trends and demands.

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  • 6 Tips for Safer Smartphone Banking


More than half of American adults have a smartphone today, and more of us are using them to check balances, pay bills, deposit checks and conduct other banking business. Luckily, experts say there are steps that even non-technophiles can easily take to safeguard sensitive information. Password-protect your phone. Stay off public wi-fi networks. Use the bank’s app. Don’t save your log-in data. Keep up with updates. Log off when you’re done.

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Mobile Banking: Enigma, Mystery and Conundrum

It’s so simple. Need some kind of transaction with your bank? Just take out your mobile device—smartphone, tablet, whatever, on just about any operating system—and you’ll have a wealth of apps to get it done. You’ll get reminders when you need to do it again, or set it up to do it automatically. It’s very simple, really.

Now let’s pull back and try to analyze the mobile banking market overall. That, it turns out, is not simple at all. In fact, it can be an exercise in frustration and futility.

Here’s an example. As documented in this forum recently, mobile banking is drastically changing the industry landscape. According to a report from Javelin Strategy and Research, no less than “88.5 million Americans attempted to open an account online or with a mobile device” between June of last year and this one. A new report from the same firm, meanwhile, identifies the huge potential opportunity in this market—financial institutions can save almost $50 per customer per year just by getting them to switch to mobile deposits. That’s an industrywide boost of $1.5 billion.

But do those savings by themselves constitute a clear ROI? At a recent industry summit, many of the discussions hovered around the idea of fees, since providing mobile services can be seen as a value-add (and it takes resources to develop and market those apps). As a result, some institutions such as U.S. Bank and Regions Bank have built monetization models into their mobile offerings.

This may be one reason (but only one reason) why not everyone is using the mobile option as much as they can. For example, both the Javelin study and another from MoneyRates note that while there’s a general level of satisfaction with the notion and practice of mobile banking, mobile deposits have been slow to catch on. Javelin reports that while the percentage of customers who opt for mobile banking rose from 15% to 25% between 2010 and 2013, only 6% of that demographic—in other words, those who bank via their mobile devices—go that way for check deposits. It’s as if the act of having a paper document in hand mandates a visit to the branch. As a result, banks have to do more to change user behavior.

Fair enough—but again, that’s not how everyone sees it. “Think about it. Do you know anyone who writes checks anymore?” begins a new article that hammers home the security risks inherent in mobile banking. The author certainly has a point: While banks have developed and released many new apps to help customers turn to mobile banking (though apparently they still have more to do—see paragraph above), security seems to have taken a back seat in that many technologies and procedures are adapted from the old world of online on even traditional branch banking. Innovation in this area has clearly lagged behind, and fraudsters have noticed.

Meanwhile, the market may be about to get even more messy. As we’ve noted here before, industry professionals need to understand that tablets and smartphones might not be the only mobile options—there will inevitably be other form factors disrupting the market. One we speculated about was Google Glass, which didn’t have a clear financial purpose but represented another potential platform with which to conduct financial transactions. Of course, very few people even have the device, so who’s going to develop apps for it?

Try Fidelity Investments. That fund giant’s development unit is launching a Market Monitor app that delivers quotes for major U.S. stock indexes over computerized frames. Pretty basic—just like the early incarnations of online apps and mobile apps.

The truth is that because of the rate of technology innovation and the speed of market adoption, any industry snapshot is old by the time it’s taken. Best practices can become similarly obsolete virtually overnight. None of this negates the fact that as an industry, we have to be prepared for technologies as they emerge and paradigms as they shift.

With mobile banking in particular, let’s assume that we seldom know what’s coming next. But even if we don’t know what the change is, we know there’s one coming soon, and one right after that. We’re not always going to be ahead of the market, but we shouldn’t always be scrambling just to catch up. Let’s try to keep pace.

What We’re Reading: Big Data, Smartphones and Apple Patents

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.


  • Majority of Americans Own Smartphones, Pew Survey Finds

American Banker

Fifty-six percent of U.S. adults own a smartphone of some type — up from 35% of adults two years ago, the Pew Research Center said in a report released Wednesday. The report marks the first time in the two years that Pew has surveyed smartphone adoption that a majority of Americans say their mobile phone is a smartphone or that their phone operates on the iPhone, Android, Windows or BlackBerry platform. The adoption comes amid a surge of shopping, surfing, social media and other activity on mobile phones in recent years. Twenty-eight percent of all mobile phone owners banked with their device in the past 12 months, up from 21% a year earlier, according to a survey released in April by the Federal Reserve Board.

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  • Mobile Banking Is Mainstream – What About Security, ROI, Payments?

American Banker

Theodore Iacobuzio had a stern message for bankers: “The train is leaving the station,” said Iacobuzio, a MasterCard executive, referring to the emerging mobile payment economy. “You have to get on.” Earlier that Wednesday, Iacobuzio had spoken on a panel at the Mobile Banking and Commerce Summit in Miami about using data to drive relevant offers to cardholders. After being more than a theory for the past several years, financial services companies have been iterating and tweaking their mobile banking models — offering mobile deposit capture (depositing a check with the snap of a smartphone camera) — for at least the past three.

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  • Should A Bank Outsource Its Mobile Strategy?

Bank Systems and Technology

Now more than ever before, banks need to be able to offer their customers innovative digital services, and bank IT spending trends point to this conclusion. According to U.K. analyst group Ovum, mobile banking is the clear IT investment priority in 2013 among the digital channels, as retail banks attempt to capitalize on the features unique to mobile, such as location-based services. According to a report from the firm released earlier this year, spending on digital channels, which includes mobile, will grow 6.7% in North America in 2013 and rise at a compound annual growth rate of 8.2% between 2013 and 2017

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  • iWallet: What Apple left out of its WWDC presentation

CNN Money/Fortune

“Mobile payments remains a future opportunity,” wrote Morgan Stanley’s Katy Huberty in her note to clients about Monday’s WWDC keynote. On Tuesday morning the U.S. Patent Office granted Apple (AAPL) 37 patents that included, as Patently Apple reports, an “E-Wallet” patent for parental controls and a “simplified wireless data transfer” patent that would allow an iPhone to make mobile payments without relying on NFC (near field communication) technologies.

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  • Small Banks Lead the Innovation Agenda


Today, we are witnessing numerous instances of smaller players spawning innovations across social media, self-service channels, mobile banking, pricing, payments etc. to deliver customer delight. So, what is making banking, an industry not often associated with innovation, look for new and innovative ideas? There are lessons on agility, drive for change and customer orientation that larger institutions can imbibe from the smaller banks and replicate them accordingly. With every new technology defining a new way of consuming, sharing and delivering information, the constant question when thinking in the context of money is “Why can’t I do that” and often, the answer is the inability of the bank.

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  • Big data to drive banks’ mobile wallet strategies – Finextra research


Research from Finextra finds that banks around the world are looking to discounted offers and big data analytics to beat off the competition from telcos and tech start-ups as they battle for control of the consumer mobile wallet. For the research – conducted on behalf of Clear2Pay and NGData – Finextra surveyed more than 183 bankers on the key issues around the monetisation of mobile payments. Respondents were primarily (76 percent) employed by large banks with more than 2500 employees and ranged from C-level executives to business development, IT and marketing strategy management – with a nearly even split between national and international banks.

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  • Consumers Don’t ‘Like’ Banks in Social Channels

The Financial Brand

The rapid growth of social media presents an array of ever-expanding opportunities to both consumers and marketers alike; But how does this apply to the relationships consumers want with their bank? To answer this question, The MSR Group examined the social media habits of consumers, asking which companies they follow on social networking sites such as Facebook, LinkedIn, Twitter and YouTube. However, consumer interest in following banks was much lower, with only only about one in every 30 indicating they had ever followed their primary financial institution. When gauging future interest, only 2% of online banking customers said they were very likely to start following their bank.

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  • Banks turn to tech to cut cost of new regulation


Swiss private banks are hoping to gain a competitive edge by investing in the latest technology for risk management and compliance to keep down the cost of new regulations brought in since the financial crisis. Among the myriad of new international rules, the United States, for example, has brought in the Foreign Account Tax Compliance Act to raise tax revenues from secret accounts held by their citizens. “The cost of risk and compliance has risen a good 30 percent in the last two to three years,” Alexander Classen, CEO of the international business of private bank Coutts, told the Reuters Global Wealth Management Summit in Geneva.

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  • Apple files ‘iMoney’ patent for virtual currency, digital wallet, and … free stuff


Apple has applied for a patent on a combined virtual currency and digital wallet technology that would allow you to store money in the cloud, make payments with your iPhone, and — just maybe — communicate with point-of-sale terminals via NFC.

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The Phab Factor

When it comes to technology, the banking industry spends a lot of time just trying to keep up. From the glut of function-specific applications arriving daily to new hardware like Google Glass, there’s always something new just around the corner, and every fresh entry has the potential to change everything.

But what if there was a new market already here that hasn’t been categorized as such? Would that offer some interesting possibilities?

Meet the phablet. Actually, you probably met it a while ago and carry it around all the time.

A bit of context here: The driving force behind Apple’s revolutionary iPad was to bridge the yawning chasm between the laptop and phone. The former—despite its designation as something we could carry around and perch on our knees—was entirely too big, while the later was just too small. (A few mini-notebooks attracted some attention but never really caught fire.) The tablet fit the bill perfectly and the touch-screen functionality, complete with keyboard, was the cherry on top.

But now, as avid consumers search for new modes of consumption, we want more (or less, depending on the device). That’s why we have the iPad mini, alongside smaller versions of non-Apple tablets. This is technically a new market, and users seem to grasp the concept—quite a few have bought one in addition to the regular-sized device they bought earlier. But what’s equally interesting, though perhaps less noticed, is that while tablets have gotten smaller, phones have gotten larger.

That brings us back to the phablet, which eliminates the apparent gap between phones and tablets. The category is loosely defined as devices with larger screens, but it’s not only about size. Some devices in this market feature software designed and/or customized for the phablet as a form factor. For example, the Samsung Galaxy Note touts a self-storing S Pen stylus for certain functions (which users with a memory might remember from earlier Palm devices).

It’s easy to make phun, sorry, fun, of the phablet. Even the word reeks of geekery run amok, a pointless portmanteau for an unnecessary category. (‘Superphone,’ a newer addition to the vocabulary, is even more groan-inducing.)  A recent piece on the subject in American Banker actually begins with the words, “They may look ridiculous, but. . .”

But that ‘but’ is important—despite the derision, this segment continues to spike at a staggering pace. The new report “Phablets and Superphones Market – Global Industry Analysis, Size, Share, Growth and Forecast, 2012 – 2018” predicts that the phablet (let’s just get used to saying it) market is growing at a compound annual growth rate (CAGR) of 44.1% from 2012 to 2018, reaching 825 million units and $116.4 billion.

This puts us in a strange place—here’s a market that’s already vast and will keep growing, yet there’s virtually no functionality customized specifically for it.

It’s easy to dismiss the notion of any real difference between smartphones and phablets, and this could be just another fad, of course. Still, there’s no question that a huge audience has emerged specifically for larger phones—a complete reversal of long-held beliefs that we like our phones to be as small and light as possible. And just to be practical, the phablet will fit into clothes in a way the tablet won’t.

So here’s how this will play out. The phablet will remain what it is, a phone with a larger screen that eases multimedia functions. Alternatively, it will become a specific hardware category, thanks in part to innovators who can thread the needle and develop apps and capabilities that dovetail perfectly with this form factor. Those individuals and the organizations that back them will reap the rewards. The rest of us will wonder why we didn’t think of that.

Mobile banking is literally in its infancy—it didn’t even exist just a few years ago. Today, facing frantic competition, every financial services institution is pouring resources into the field, with dazzling apps that can function on every kind of platform. Staying ahead of the curve for once might make for a healthy change.

Online Banking: Glory or Gloom?

TSB Bank just announced that less than a month from today, it will close its Frankleigh Park branch.

For readers who might be unfamiliar with those names, TSB is a locally owned full-service bank, and Frankleigh Park is a suburb of New Plymouth, in the western North Island of New Zealand. The most recent figures indicate a population of less than 4,000. The given reason for the branch’s closure is simple: It reflects the global shift to “self-service banking,” where people do more things online. In particular, consumers are using mobile devices in increasing numbers to conduct financial transactions.

Going to the other extreme, consider ICICI Bank, the second-largest private sector financial institution in the world’s second-most populous nation, India. “More than one third of our transactions take place through Internet, making it the second most used medium,” Chief Executive and Managing Director Chanda Kochhar, just announced. “With the increase in Internet usage, it may also grow to occupy the No. 1 position.”

She further noted that mobile phones and tablets are growing at over 100% every year, compared to only 20% in desktops, and that has prompted the company to launch an array of new services, including electronic ‘branches’ that conduct operations around the clock, ‘tablet-based’ banking offerings that ease account opening, and enhanced POS terminals that facilitate every transaction. In the spirit of ‘democratization’—helping consumers without personal access to technology still enjoy its benefits—the company already has 25 electronic branches in 18 locations around the country.

If those seem like extreme examples, take a look at KB Kookmin Bank of South Korea. It launched KB Star Bank, a service optimized for smartphones, in April 2010, and the results seem to have surpassed all expectations. The service had I million subscribers in barely a year, passed 3 million the next year, and was up to 4 million by June of this year.

So where is the United States in all this? The most recent survey by the American Bankers Association reported in September of 2011 that 62% of all bank customers preferred online banking, a rise from 36% the previous year. The real news back then was that, for the first time, a clear majority, 55%, of bank customers over the age of 55 professed a preference for online banking over any other method. That represented a very sharp spike over 2010, when only 20% had the same opinion.

Let’s acknowledge that pretty much any Internet report or survey is nothing more than a snapshot. Online adoption or activity is a fast-moving target, and today’s hot trend is tomorrow’s dinosaur. Obviously, online banking in general and mobile banking in particular are not some niche trends—they represent a massive change in customer behavior, and they’ve evolved faster than most trends that came before. But what does that actually mean?

The most fascinating perspective we can draw from all this is not what’s happening now, but what will happen next year, and the year after that. In that vein, here are some questions that need answers.

First, earlier this year, some banks announced that they were actually constructing new retail outlets. Looking ahead, how many bank branches will we see being closed down over the next few years? Could we see trends following certain patterns—for example, conglomerates shutting down local branches while community banks take their place?

Next, it’s apparent that online banking doesn’t respect demographic or regional boundaries—the trend is being adopted everywhere from Iowa to India, and by Gen-Xers and senior citizens. In developing countries, Internet cafes are being replaced by boutique electronic banks that enable non-tech-savvy people to do everything they would with a PC or a smartphone. The easier the access, the thinking goes, the more the business. If that’s the case, will innovation-minded banks draw business away from institutions that have spent decades building trust?

And finally: If two years from now your bank hasn’t closed any branches and has the same mix of face-to-face and online banking it currently has, is it doing things right? Or is it facing eventual disaster?

Nearly One Quarter of Americans Utilize Mobile Banking

Mobile continues to grow in popularity as consumers embrace a lifestyle that allows them to be connected on-the-go. For consumers using a smartphone with Internet browsing capabilities and apps, the possibilities to connect are endless. You can now pay bills, shop, peruse apartment listings and apply for jobs from the palm of your hand.

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. Of the respondents who use mobile banking, 65 percent access their bank or credit union account through the Web/Internet, while a little more than one quarter (28 percent) use a mobile application.

Similar to findings reported earlier this week from comScore, it is clear mobile banking adoption is directly linked to Smartphone adoption. Analyst firm IDC mentioned they have been predicting that smart phone growth in 2012 would exceed the feature phone, noting “in addition to more people having smart phones, banks’ awareness campaigns have also helped drive mobile banking adoption.”

Do you use a smartphone to access mobile banking? If so, do you use the Web/Internet or an app provided by your bank or credit union? If you’re an FI, how have you been driving mobile banking adoption? 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.

Mobile Payments Round-Up

The mobile payments industry is evolving quickly, so our staff has gathered some of the interesting mobile payments stories we’ve enjoyed reading over the past week. Let us know what you’ve been reading in the comments section below.

More than a smartphone: The New York Times recently reported on the companies contending for a piece of the mobile wallet. With no clear leader in the space everyone from banks, credit card companies, payment networks and mobile phone carriers are trying to find where they can fit into the mobile wallet, and how they will get paid. According to the New York Times, the mobile wallet provides a big opportunity, “The stakes are enormous because small, hidden fees that are generated every time consumers swipe their cards add up to tens of billions of dollars annually in the United States alone.”

Google’s jump into NFC: This week, Google announced that they are teaming with MasterCard and CitiGroup to embed technology into Android devices, making a strong push into the NFC space. VeriFone Systems, who makes credit-card readers for cash registers, will play a large role in the announcement as the company plans to roll out more credit-card readers that enable consumers to pay by simply tapping their smartphones.  The Wall Street Journal, who broke this week’s news, wrote “The planned payment system would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile-device users near their stores, these people said. Google isn’t expected to get a cut of the transaction fees.”

AMEX and Visa, on your phone: American Express has followed in Visa’s footsteps and released a payment service that allows Android and iPhones to be utilized for person-to-person (P2P) online payments. The service, named Serve, is also available through Facebook and Serve.com. CIO Magazine reported, “Serve also allows users to create and manage sub-accounts for friends and family members to, for example, pay a child’s allowance or a dog walker fee.”

Mobile Banking: More Than Checking Your Account Balance

It’s no secret that mobile banking has become a part of consumers’ day-to-day life. Whether it is checking an account balance, or making a remote deposit from a smartphone, mobile banking is poised for significant growth in the next five years. Forrester Research Inc. approximates that 10 million Americans are currently using mobile-banking technology, and by 2015 that number could grow to 50 million.

In order to keep up with the speed of smartphone and tablet adoption, Gartner Inc. believes companies need to make mobile banking more versatile than ever. Analyst Stessa Cohen said, “While many of those consumers are comfortable using mobile apps to check their balances, companies need to work themselves more deeply into a mobile customer’s financial life or the work that goes into developing all of these mobile apps may wind up being  ‘another cost center.’”

So, how can financial institutions keep their customers engaged on mobile platforms? A recent Bloomberg article outlined a few tactics, including offering coupons and promotions to shoppers and the ability to have face-to-face teleconferencing.  As the adoption of smartphones and tablets continues to soar, Arah Erickson, head of Wells Fargo’s retail mobile banking division, summed up the importance of mobile banking by stating, “Mobile devices are changing consumers’ perceptions of how convenient financial transactions should be…today, convenience means the PC is across the room, and I don’t feel like booting it up.”

Does your FI offer mobile banking? What features do your members use most often? Let us know in the comments section below.