SMS holds the key to success for mobile banking

By Andrew Bud, mBlox

Global demand for mobile banking is rising. In the United Kingdom, an early adopter of mobile banking, one in four consumers would be likely to switch their banks for a competitor offering free mobile banking, according to Forrester Research. With mobile phone reliance continuing to increase, SMS is the natural vehicle for mobile banking transactions. Historically, banking customers have been receptive to new technology and mobile phones offer the advantage of familiarity and ease of use as well as convenience.

Mobile banking: the next wave of customer interaction
According to ForeSee Results, online banking has strengthened the bond between banks and their customers. The online customer engages with their bank more frequently, is happier and as a result more willing to spend on value-added services. Mobile banking is a natural next step offering that potent combination of superior service at lower cost. Today’s customers are mobile; offering them the convenience of mobile phone transactions would result in greater customer satisfaction while at the same time reducing call center costs. A recent online banking review found that the mobile banking service most desired by sophisticated US consumers is balance enquiry. A balance alert via text messaging would provide a solution as effective as it is simple.

In Europe where there is greater familiarity with mobile banking, mBlox delivers a solution together with Mastercard’s Aristion application for Garanti Bank, one of Europe’s largest consumer banks.

Amongst Garanti’s most successful SMS-enabled application is a fraud alert system that identifies suspicious transactions and then alerts customers by SMS, inviting them to contact the bank and confirm validity. Much faster, less intrusive and far lower cost than traditional methods based on outbound calling, it allows many more transactions to be tested and catches many more incidences of fraud. In its first year, the system prevented $400,000 worth of fraudulent transactions.

So, why haven’t US banks yet embraced mobile banking as enthusiastically as their European brethren? It has all happened so fast: SMS reached US consumers in 2003, four years after usage exploded in Europe. Already, in the US, consumers are sending each other nearly half a billion messages a day, and familiarity with the medium is spreading like wildfire. As in Europe a universal behaviour is taking root and a new channel has been created. The very first US bankers are recognizing the potential of SMS as tool for improving customer satisfaction, for lowering cost, and for marketing new services.

The fifth channel
SMS is a crucial ‘fifth channel’ that banks can no longer afford to ignore. No other medium can reach 80 percent of customers anytime and anywhere. Customer appetite for mobile banking services will increase, as convenience becomes the critical factor in their lives. To wait is to cede the market advantage to the pioneers who are moving quickly to satisfy the desires of existing customers and lure new ones. Mobile phones are ubiquitous; text messaging is a proven and powerful means of communication. The channel is now real and success has always rewarded those who embrace technology rather than ignore it.