Mobile Banking: Show Me the Money

Mobile Banking: Show Me the Money

Mobile banking services help CUs grow revenue, reduce costs, and retain members.

February 10, 2016

Is it possible to pinpoint the tangible returns—the return on investment (ROI)—generated by mobile banking?

A new Fiserv study links mobile banking to bottom-line results and revenue, and quantifies the value of increased adoption and use.

The aggregated analysis of select Fiserv clients of varying asset sizes—eight credit unions and nine banks—looked at the impact of mobile banking adoption on five key areas: product ownership, transaction frequency, interchange revenue, branch use, and retention.

The examination of consumer behavior in the three months before and three months after enrollment in mobile banking found mobile use had a positive impact on revenue.

Mobile banking users generate more revenue than nonusers in part because they own more products and conduct more transactions, generating revenue from interest and interchange.

When consumers have immediate mobile access to financial information, it likely influences additional transactions.

Mobile banking users also are less likely to visit a branch for simple transactions they can take care of on their mobile devices—and less likely to take their accounts elsewhere.

Compelling ROI projections

What would happen if financial institutions increased their mobile adoption rates? The financial institutions in the study reported mobile adoption rates of 10% to 14% of their total customer or member base.

To calculate incremental value, Fiserv compared current metrics to potential incremental returns from increased adoption of mobile banking based on an adoption rate of 30% of the total customer or member base.

Why 30%? Major financial institutions report mobile banking adoption rates of 30% or higher of their total customer or member base—a benchmark that is also realistic for smaller institutions that invest in the mobile channel.

Based on higher mobile banking adoption, Fiserv found compelling ROI projections for the credit unions in the study:

  • Up to $1.6 million in incremental annual revenue per credit union;
  • Up to $8 million annually in incremental point-of-sale purchases with proportional increase in interchange fees per credit union;
  • Up to 20% reduction in overall member attrition for credit unions; and
  • Potential cost savings from decreased branch traffic

How to increase mobile banking use

Credit unions that offer innovative solutions like mobile deposit capture, actionable alerts, and person-to-person payments are likely to see a corresponding lift in mobile banking adoption and use.

With every interaction or transaction made on a mobile device, digital engagement increases.

It’s no longer enough to simply offer mobile banking. Consumers expect a wide range of mobile banking features and the user experience they’ve grown accustomed to on other mobile apps—and they will switch financial institutions to find what they want.

Innovations that use the unique attributes of mobile devices, including the camera, GPS location-based services, and biometric authentication, will continue to drive greater mobile adoption and use.

Consumers are moving from physical cards to digital. And as they grow more comfortable with mobile point-of-sale payments, credit unions can keep pace by enabling mobile services that are fast, convenient and safe.

Services like mobile card management, which allows cardholders to monitor and control how, when and where their cards are used, will become increasingly important.

Proactively marketing the strong value of mobile banking products and features directly to members will help bolster adoption and use.

For example, credit unions can cross-sell mobile banking with promotions that display when members log in to online banking or bill payment. Smart-app banners can direct members who go to a credit union’s website with a mobile device to the more user-friendly mobile app.

Engaging front-line staff in the promotion of mobile banking is also key. When debit cards are issued, accounts opened, or questions about online bill pay are asked, it’s a good time to talk about mobile banking.

Social media channels also play an integral role in any mobile banking marketing campaign. Credit unions should use every means possible to tell how mobile banking is relevant to members’ needs, challenges, and lifestyle.

The value of mobile banking users is incrementally higher. However, if a member enrolls in mobile banking and never uses the channel, that value is lost.

Financial institutions that want to recognize the highest return on their mobile investment encourage mobile banking adoption at every turn. And once consumers are enrolled in mobile banking, they should focus on increasing their adoption and use to drive greater digital engagement and revenue.

To better understand the value of engaging consumers in the mobile channel, read the new Fiserv white paper, “Mobile Banking Adoption: Where Is the Revenue for Financial Institutions?”

SHIRRA FROST is director of mobile marketing and JOHN MOON is director of consumer adoption marketing for Fiserv.