Moving Mobile Forward

It’s time to step up mobile execution, urges a Fiserv white paper.

December 20, 2011

Financial institutions face “an urgent call to action” according to a new white paper from Fiserv. Spurring the urgency is the proliferation of smartphones and the entrance of nontraditional competitors, according to “Mobile Moving Forward in 2012: Insights From Top-Tier Financial Institutions.”

The good news is consumers trust their banks and credit unions more than any other entities for mobile transactions, including PayPal and the major credit card companies, according to Fiserv.

“Because consumers trust their financial institutions to provide secure financial transactions, consumers will look first to their financial institutions for mobile payments,” notes the white paper. “Financial institutions are in a position now to put the advantages they have to good use and give consumers what they’re demanding—mobile banking services that enable transactions, particularly mobile payments.”

The white paper reports on a survey conducted for Fiserv by Forrester Consulting. It evaluates the plans of 10 banks and credit unions that collectively hold more than one-third of all U.S. deposit accounts.

The report covers nine specific areas relating to mobile banking developments during the next year:

1. Mobile banking is rapidly maturing. Nine out of 10 of the financial institutions surveyed have a mobile banking offering that provides basic account access, and almost all provide ATM/branch locators, transfers between accounts, and bill payment. While remote deposit capture is gaining ground, none of the respondents offer remote payments or mobile securities trading.

2. Mobile services now focus mainly on retail banking customers. While 90% of the respondents offer mobile banking to their retail customers and credit card account holders, only 70% offer mobile services to small businesses. Support for the Android operating system, iPhones, and tablets are top priorities.

3. Financial institutions plan to offer more robust functionality. Some of the planned additions to mobile banking offerings in the coming months include mobile deposit capture, person-to-person (P2P) payments, two-way text alerts (which allow users to respond in real-time), personal financial management, and picture bill payment.

4. Mobile payments take mobile banking beyond the basics. Most survey respondents plan to invest in mobile payments in the next 12 months. Respondents identify P2P mobile payments as the biggest mobile payments priority for 2012.

5. Point-of-sale (POS) payments are poised for mainstream adoption. While mobile POS payments have grabbed the headlines, respondents say merchant acceptance is now the primary roadblock to wide proliferation of the technology. They also say technology limitations are no longer a deterrent to financial institution investment in mobile POS payments.

Next: Meeting consumer needs

6. Meeting consumer needs is a powerful driver. Consumers are ready for the “mobile wallet,” suggest the survey respondents. But they say mobile payments must be faster and easier than current payment options, and more ubiquitously available.

7. Merchant acceptance is a stumbling block. But survey respondents believe merchants will accept mobile payments if implementation costs are affordable, costs to serve consumers decrease, and consumer demand is significant.

8. New entrants pose new threats. Nonbank entrants into the mobile payments market (Google, ISIS, and Square Up, for example) put more urgency on financial institutions. One financial institution executive described these entities as “smart people who understand that the evolution is at hand.”

“As third parties aggressively pursue the mobile payments space,” notes the white paper, “it may be time for financial institutions to become more proactive in pushing forward with their own mobile payment strategies.”

9. Choosing partners can be tricky. A multitude of players are jockeying for position in the mobile payments industry. Card associations, payments processors, mobile banking vendors, Internet companies, and telecommunications companies are available to partner with financial institutions in launching mobile strategies.

“When selecting a mobile payments partner, financial institutions should consider how well an organization is positioned to help in both the short term and the long term,” notes the white paper. “Given the mobile payments landscape is still developing, it’s important for banks and credit unions to choose a partner whose goals don’t conflict with those of the financial institution, and that can adapt and grow as business needs and objectives change.”    

While most top-tier financial institutions already offer basic mobile functions such as account access, ATM/branch locators, and bill payment, most also plan to enhance their offerings in 2012.

Mobile POS payments are lagging a bit, suggests the white paper. “Leading financial institutions have a solid understanding of what it will take to move these payments forward yet seem to be stuck in a ‘chicken or egg’ scenario—waiting on consumer demand and merchant acceptance before triggering their own investments.

“With competition continuing to mount, stepping up the execution of mobile banking and payments strategies will allow financial institutions to remain competitive in this rapidly evolving arena.”