Is Mobile Banking here to stay?

Tia Lee, Chief Operating Officer at TRG Mobilearth Inc. looks at the growth of mobile banking.

“If you cannot compete with the mobile offerings of other [financial] institutions, you will soon find your institution losing market share to competitors who have already embraced mobile technology”
-Richard Crone

When Mobilearth first examined the concept of mobile banking, it was an obvious choice based on current market trends. In some parts of Asia, the mobile phone ratio was 1.2 phones per capita. Europe was not far behind. Surely North America was ready for the next wave of banking technology?

It was 2004; WAP 2.0 technology with end-to-end encryption made the mobile phone as secure as the computer. Surfing and texting were commonplace amongst Generation Y and, slowly but surely, Generation X was also catching on.

2007 was heralded the year of the mobile. But while some saw the future in the open architecture of mobile browser, others saw it in telephone company partnerships and downloadable applications.

In the end, it was the consumer that made the decision for most banks, and it was not exactly what everyone had planned.

The Caribbean islands are some of the best sites for mobile penetration and usage. Landlines are difficult to come by on many of the islands but mobiles are prolific.

But while mobile surfing is getting cheaper and cheaper in North America, the same cannot be said for the Caribbean. Which means text (SMS) is king and if we wanted to expand our market in this region, we had to come up with new products that would make mobile banking simple, efficient and easy.

When we first started discussions on mobile banking with some of the banks in the region, they liked the concept but were concerned about customer use of the mobile browser. Surfing the net was expensive in the Caribbean and most customers had a very simple phone plan that allowed talk and text. The banks liked the idea of the single URL (website); we would perform device recognition and present the most appropriate view to fit the screen size, no matter what type of phone or computer was used. But the banks were concerned that most people would end up using only online banking instead of mobile banking and again, the banks would not see the uptake and customer stickiness they were hoping for. So we adapted to fit.

We increased the use of text not only for the standard account balance and history retrieval, but also to give them the ability to perform bill payments through text. Using nicknames and pre-designated accounts, the customer could safely text in a bill payment and get confirmation the payment was made any time, anywhere.

Then we expanded on that idea and added the ability to perform internal transfers by text. Without having to send in an account number and with an option to pre-define the amount to transfer, this was a secure way to perform internal transfers by text.

But even better was when we added the option to make payments to friends and family through text. Kids need their allowance?  Text it to them. Friends sharing a restaurant bill?  Everyone texts their share. No account numbers. No PINs. No loss of security for their customers.

By adapting to the mobile market, the Caribbean Banks paved the way for their customers to experience the first wave of mobile payments. All because they wanted the flexibility for customers to do their banking the best way it suited them.

Now mobile phone plans in the Caribbean are starting to come down in price and there is word that WI-MAX will soon make an entrance on some of the islands. But are the banks worried?  Not a chance. They have online banking through web browser and mobile browser already up and running. They have already trained their customers to use the current modules. When merchants start issuing bills that can be paid in real time or they start using NFC devices to scan bar codes attached to mobile devices for payments, their customers will be ready.

So where does that leave financial institutions in North America?  And why is it taking them so long to go mobile? 

The recent recession has obviously played a part in the delay of mobile offerings to their customers. Perhaps others were waiting to see what the top 10 banks were going to do before they made a decision.

Richard Crone, CEO and Founder of Crone Consulting in San Carlos, CA, has been touting the benefits of the mobile for years. A frequent speaker at conferences throughout North America, he has often said that for financial institutions to be a viable presence in the future, they need to embrace what the mobile phone can offer now.

"Financial institutions need to move quickly to establish their mobile banking identity. Customer loyalty is not what it once was. If you cannot compete with the mobile offerings of other institutions, you will soon find your institution losing market share to competitors who have already embraced mobile technology."

What we're seeing is the credit unions are the ones to step up and make their mark in the mobile space. EPL, Inc., a core banking provider based in Birmingham, Alabama with hundreds of credit union clients has already introduced mobile banking to their credit unions and the interest has been high.

Todd Proulx, VP of Business Solutions for EPL says: "Credit union members are getting older and credit unions must focus on strategies that embrace the younger member. Mobile banking offers credit unions a huge advantage as it removes the competitive advantage that banks have had for years- location, location, location. When mobile (the device) becomes the location, coupled with studies that show credit unions get the nod when it comes to trust in dealing with financial institutions then our credit unions now have the mobile advantage. But they must act on it. And we're doing our best to make that happen for them by working with Mobilearth."

These days, technology waits for no one. And neither do the customers.

www.mobilearth.com