The evolution of online banking has taken another big step forward with the advent of mobile banking, technology experts say.
The systems that just a short time ago offered basic statements, money transfers, and bill payments have quickly expanded into budgeting and account tracking tools across multiple platforms, says Steve Shaw, Fiserv’s vice president of strategic marketing for digital channels and electronic payments.
The driving factor, he says, is consumer demand. “The proliferation of mobile devices and the ease with which users can download apps have made consumers savvy at using their devices. They expect the same capabilities they use in online banking on these devices, and they want these services presented seamlessly.”
Not only has online banking use matured, with a much larger credit union member base, “we’re now beginning to see people going to a mobile-only adoption, where they leap-frog straight to mobile as their primary banking experience,” says Jose Resendiz, director of product management at Intuit Financial Services, a CUNA Strategic Services alliance provider.
“This trend has grown significantly as people’s adoption of tablets increases,” he continues, noting that tablet sales are predicted to exceed the sale of notebook computers—the devices traditionally used to access online banking. Add smartphones to the mix, he says, and the trend to mobile is becoming very big.
“But as the surge from online to mobile grows, mobile use still requires users to consciously decide to log on and physically go through the process of navigating what they want to do,” Resendiz says. “What you’re going to start seeing soon is ‘proactive banking,’ where your mobile device lets you know automatically that you need to make a payment or transfer funds, or what your balances are.”
Dr. Kathy Herziger-Snider, vice president of product development at CO-OP Financial Services, says that as online banking expands to mobile, this service “will become the means of online access. People are using those devices because they always have the means of transacting right at hand. Currently, 60% of 18- to 44-year-olds use mobile devices.”
She agrees that online offerings are expanding to include text alerts, user controls, and targeted offers to members. “The secret to successfully offer these is to not overwhelm members. Credit unions have to know who their members are, and what’s relevant and resonates with them. They must time the release of their offers so they don’t irritate members.”
Herziger-Snider cites the blowback generated by Facebook’s recent attempt to monetize its users. “It’s a huge lesson: Let members control the kinds of alerts they receive, such as when a college student uses a family credit card or when a checking account is credited or debited.”
Credit unions also need to start thinking about their channels holistically, she adds. “How do you tie mobile into all of your services and channels? How they appear and how people experience them must be seamless and consistent. The new buzzword you’re going to hear a lot during the next year is ‘channel strategy.’ ”
Credit unions must balance pragmatic services with a “wow factor” for engaging and surprising their members, adds Carl Tsukahara, chief marketing officer for Monitise. “Mobile offers an opportunity for runaway success in delighting members. We’ve seen this occur with remote deposit capture. This is a pure mobile service that’s ideal for smartphones because of the camera control and always-on Web connectivity.”
P2P continues evolution
The next big step in the evolution of delivery channels involves person-to person (P2P) payments, also known as “social payments,” Shaw says. “With P2P payments, we’re in the early stages of general consumer awareness. Some financial institutions are beginning to push it, but the real push hasn’t really started.”
At first, experts believed P2P would be used mostly for things like splitting dinner checks, Shaw says. “But now we see the No. 1 use is rent-check payments, followed by household expenses such as child care and utilities, and family payments such as deposits into a college student’s account.
“Because those payments are recurring and involve hundreds of dollars at a time, they are becoming a significant part of mobile banking,” he adds. “And because these payments are replacing checks or cash, they’re closing the final loop” in making all payments electronic.
Resendiz says that while pushing mobile banking is easy because it’s now a consumer expectation, P2P is different. “There’s limited adoption right now, but there’s great certainty it will be one of several next big things in mobile banking.”
The question, then, is how to get people to take the next step in digital banking. One answer, says Resendiz, is to make it easy for them to move from online to mobile and vice-versa with no signups or extra steps.
“Consumers are looking for seamless, convenient ways to bank, including the ability to switch devices at will,” he says. “This will increase ‘discoverability’ of P2P as consumers become more aware of the things they can do with mobile. As users enjoy the convenience of the mobile and P2P experience, the networks of people using them will increase, creating new business models— especially for smaller businesses that depend so much on cash flow.”
“You won’t see P2P take off in lieu of cash until it’s easier for people to receive money,” says Grace Manuele, CO-OP Financial Services’ senior product manager. “Unless they’re already enrolled in PayPal or some other personal payment service, recipients just don’t want to jump through hoops to get their money.
So they’ll continue to ask for cash or checks. The need now is for a unifying technology.”
Still, new features are adding to P2P’s allure. Herziger-Snider believes money-movement options that rely on real-time, good-funds models such as CO-OP Sprig will offer reduced fraud and improved member experiences when it comes to P2P services.
Shaw describes an app that allows users to take a picture of a paper bill and use its image to enroll automatically in an electronic bill-pay service. “This is one of the most attractive, engaging introductions in recent P2P history. The next advance in P2P will be asking for money as well as sending it. For example, a small business might send an invoice for services and the person being billed can pay it via P2P.”
While still in its early days, mobile P2P provides a great opportunity for credit unions to delight their members, Tsukahara says. “The real-time nature of P2P transactions makes it ideal for mobile versus other interactive channels. Credit unions should consider these and other purely mobile services to truly differentiate themselves. As credit union P2P offerings mature to support functionality such as international remittances, there will be even more potential to delight members.”
Mobile, P2P challenges
Despite the growing consumer demand for mobile banking, there are pitfalls to avoid.
“Online banking isn’t a check-the-box thing, where you install it and forget it,” Shaw says. “Don’t assume consumers will just show up to use it. You have to create an interface that engages their interest and makes them want to come back again and again.”
Front-line staff can help with this, he adds, by advocating for mobile banking and educating members about its benefits. Plus, staff should have their own digital banking accounts so they know how to use and demonstrate the service.
Finding the revenue opportunities from P2P is another challenge. “Some credit unions don’t charge at all for the service, some charge only when a member chooses an expedited transaction, and others may charge a small transaction fee even for normal delivery,” says Manuele.
In the broader picture, says Herziger-Snider, there are big unknowns ahead.
“Our industry is in the midst of transformation unlike any we have seen for quite some time. How credit unions address mobile technology will become make-or-break for them in terms of keeping their members and increasing the reach of services directly into the consumer’s hands.”