The big jump

Mobile has the potential to revolutionise the customer experience in retail banking and banks across Europe are gearing up to respond to this growing opportunity. But, as Liz Morrell highlights, problems and issues remain

Across the business landscape mobile technology has revolutionised the way in which users run their lives - from shopping to social media - all run at the touch of a button from their mobile device. Yet in the world of banking it still seems a luxury to have a bank account where near limit text alerts are the norm, let alone more sophisticated mobile banking services.

It’s a frustrating state of affairs. It is now a decade on from the launch of the first mobile banking services in the UK and usage remains limited despite the ability of mobile banking to offer anytime, anywhere access. Gerard Burion, head of product marketing at Welcome Real-Time, argues that it took 10 years before electronic banking became regularly used but the jump between mobile and online is surely not so big.

It’s also an unusual state of affairs - as in a number of other less developed countries mobile banking has become the banking channel of norm, simply because a traditional banking infrastructure wasn’t in place. The financial crisis has, of course, played a part in banks’ hesitation to invest, meaning that for some it just isn’t an investment priority while others are still battling with the question of its validity in the first world market.

“Banks are sitting on the fence as to whether they go with the technology,” says James Richards, director of mobile at mobile software services company, Intelligent Environments. “They have been holding back to see if there would be a standardisation of handsets. In addition many banks like to build these things in house and resources are limited as it is.”

But that is a dangerous approach. “Many are still trying to understand what the commercial upside of mobile banking is and are not yet fully utilising the potential of mobile as a channel for marketing, sales and service,” says Jonathan Gray, senior executive in Accenture’s financial services practice. “These more self-directed customers adopt new technologies quickly and expect their banks to do so as well. To win these customers a mobile offering is fast becoming a necessity.”

According to a recent report from Javelin, mobile banking has moved from a nice to have to a must have channel and it’s widely predicted that within the next 18 months 80 per cent of banks will have some sort of a mobile banking offer. “Temenos has witnessed rapid growth amongst its customer base around the world and many of our client banks are now seeking to implement a mobile channel strategy,” says Phil Sorrell, business development director, mobile.

Jasmeet Singh, Infosys AVP and head of sales FS practices, says the high penetration of mobiles amongst youngsters will be its tipping point. “Twenty four per cent of 18 to 34 year olds in the UK are already doing mobile banking. We believe that younger people are the future of banking.”

But if the need is so great what is holding it back? Security and lack of education remain the two biggest inhibitors. Steve Brunswick, strategy manager at payment protection specialists Thales, says security will increase. “In the medium to long-term there are a number of people looking to make mobiles themselves more secure.” He says that a new standard, the Trusted Execution Engine, which is currently in development, would change the market. “That would mean banks could put their mobile apps on an app store and the user downloads it and once that’s done the bits that need to be secure, such as authenticating yourself, would be done on a trusted part of the phone and not be vulnerable to attack.”

To be resolved
Thomas Heldner, executive director and head of enabling solutions at SIX Card Solutions, says that although technology has matured processes haven’t. “For example if a customer loses their mobile phone their point of contact is still not clear: is it their network operator or their bank? Questions about who owns the customer also remains,” he says. However, once these processes are resolved he believes adoption will be widespread.

Education is also key. “If we don’t get to critical mass then it’s never going to get momentum so education needs to work,” says Hannes van Rensburg, CEO of mobile payments specialist Fundamo.

The banks need to do more marketing but the network operators are chasing hard and could steal a march. “Banks will need to move fast or they will lose the war in this lucrative mobile banking/payments industry,” says Sorrell.

Accenture says there has been a big jump in the number of customers using their mobile phones for banking services each month - with a near doubling to 18 per cent compared to 10 per cent last year.

Adam Kennedy, product director global transaction services at Vocalink, says traditional banks are being rivalled by their newer peers. “New entrants are showing the potential of what can be done,” he says. But there are banks moving forward. RBS became the first UK bank to launch a mobile banking app for android phones last month, adding to its suite of iPhone, iPad and Blackberry apps which allow users to check their balance and recent transactions, transfer funds between RBS accounts and find the nearest branch and cash machines.
“Since the beginning of this year we have had an aggressive plan in place which aimed to allow all our customers the option to bank through their mobile phone by the end of the year,” says Ben Green, head of mobile at Natwest and RBS. He notes the bank is close to a million downloads of its mobile banking apps and that its plans going forward are even bolder.

Barclays has a similar mobile banking service. “Mobile banking is currently growing at a faster rate than online banking did it when it first launched and is becoming an increasingly important part of our customers’ multi-channel experience. Our customers now complete more than 1.5 transactions each month using,” says Phil Sowter, head of mobile banking at Barclays.

However, Maria Nottingham, global marketing director cost management and payment specialist Compass Plus, believes mobile banking will remain a complementary rather than replacement channel. Part of the problem is the subtler differences between mobile and internet banking, compared to the leap between internet and branch banking where the advantages of the newer channel were obvious. “Online provides almost the same convenience as mobile so I think mobile is definitely going to take some share out but it will be from internet banking,” she says. “Mobile banking has to generate new needs - for example, giving customers the ability to access their bank everywhere when travelling.”

Kennedy believes the market will move through a three stage journey. “The first is informational (using it to check balances), the next is transactional (using it for payments) but the end result is transformational,” she says. “Mobile banking should be a cheaper channel that offers new services, such as when you are about to make a payment they should be able to offer you an overdraft straightaway.”

Experience is also vital. “The key thing is getting consumers to trial mobile banking functions on their phones. Experience shows that once they’ve used a form of technology there is no going back,” says Marco Casartelli, CEO and co-founder of Vipera.

The banks can only hope that they are ready in time.

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