Mobile Banking Updates - Feb 15

Banks Seek Sticky Relationships from Mobile Apps
"Mobile banking continues to dominate banks' application development initiatives, as it has for the past several years, a recently released American Banker survey shows.

The survey of the American Banker Executive Forum found that 42% of banks currently offer mobile banking or mobile payments. And among those that don't, 40% have firm plans to offer them within the next 12 months."

Mobile Banking App Usage Increases Dramatically in 2011
"In Q2 2011, 16 percent of the total U.S. mobile audience age 13+ reported using their mobile devices for accessing financial information or carrying out a financial transaction. While browser usage continues to be the dominant channel for banking services on a mobile device, app usage has seen a dramatic increase in the previous year – largely due to the popularity of smartphones and investment of financial institutions into their mobile channels. By Q2 2011, banking app usage had risen 74 percent from nearly a year go, followed by app usage among credit card users (up 58 percent)."

The Rise of Mobile Banking: Will Cash Become Obsolete?
"If you like carrying cash and sorting through a wad of bills to find the correct change, you're not only a merchant's nightmare, but you could soon be the one being asked to wait while a clerk runs off to make change.
And it's not just cash that's coming under fire, credit and debit cards are too. Industry research shows that the average "plastic" transaction takes close to one minute to process, whereas through mobile payments, you can pay and be on your way in less than 12 seconds."

Trends in mobile banking today
"Today's consumers are Internet-savvy and want the convenience of checking their bank balances on the fly and performing transactions as quickly and effectively as possible. In response to the ever-increasing demand for portability and convenience, many financial institutions have been ramping up their mobile banking efforts and coming up with ways to please today's consumers. Here are some mobile banking trends you can expect."

Oracle Introduces Oracle FLEXCUBE Multi-Channel Solution on Direct and Mobile Channels for the Financial Services Industry
"To help financial services organizations deliver more personalized services and offerings via direct and mobile channels, Oracle Financial Services today introduced Oracle FLEXCUBE solutions for multi-channel banking.

Oracle FLEXCUBE Multi-Channel Solution, with new versions of Oracle FLEXCUBE Direct Banking and Oracle FLEXCUBE Private Banking, enables banks to offer complete portfolio view-based products and services on multiple direct channels, including mobile devices. Banks can introduce highly personalized offerings while reducing customer acquisition costs by offering a comprehensive range of products through a one-stop portal."

mCommerce Services
"The mCommerce suite includes the mobile solutions—mBanking, mPayments and mRemittance. Based on the Sybase Mobiliser Platform, Sybase mCommerce 365 includes a number of value added services including our advanced Marketing module.

This highly adaptable mobile commerce solution enables the mobile economy by allowing anyone with a mobile phone to pay, buy, bank and remit money. With the mCommerce product suite, you can introduce a standard, convenient communication and transaction channel that supports anywhere, anytime mobile commerce services."

Drew Sievers - CEO of mFoundry on Mobile Banking

This evening I'm pleased to share the details of my interview with Drew Sievers (CEO - mFoundry). To read more about Drew visit mFoundry.com.

Q: What’s your differentiator? What sets your mobile banking solution apart from the competition?

A: mFoundry has the two components necessary to grow:
1) A 3 mode fully integrated mobile banking solution
2) Access to core banking providers

Q: Who are your key clients?

A: Citi, PNC, BB&T, IBC, Zions Bank

Q: Who are you key partners?

A: Fidelity (15 FIs), PSCU (6 CUs), NCR, FirstData, CoOp (8 CUs)

Q: Budget season is just around the corner, and the #1 question bankers want to ask is – What’s it going to cost me?

A: The price of a mobile banking solution depends upon the assets of the bank and their DDA base. The industry average is around $1/user/month - $3/user/month. There are vendors that allow for “all you can eat pricing,” but these are primarily solutions that utilize screen scrapping.

During your price discussions, be sure to confirm that the amount you’re quoted includes all 3 modes. Some vendors price the solutions separately. And, finally inquire about monthly minimums. These will again vary by the size of the institution.

Q: What components of your ROI model have begun to materialize?

A: Currently, the largest savings is due to call center deflection. Our solution has been proven to move customers that repeatedly call-in to the less expensive mobile banking channel. Mobile banking has also been proven to make the clients stickier and less likely to attrite. In the future, the new ROI model will be around expedited payments. This will be a great way to generate revenue.

Q: How many active users do you have across all FI’s?

A: Hundreds of Thousands

Q: What’s your highest client adoption %

A: One client achieved 8% in just 5 months.

Q: What’s your lowest client adoption %

A: We don’t really have any laggards. It has become pretty standard to achieve 10% by the end of year 2, but banks will need all 3 channels to be successful.

Q: What do the demographics of your users look like?

A: We have witnessed heavier usage among the “young” and “affluent.” Smartphone users gravitate toward the mobile web and applications, while clients with other handsets (non-smarthphones) use text banking.

Q: What do the usage patterns look like? Balance, History, Transfers, BP, Locator?

A: Account balance is the “killer app.” Customers with feature phones don’t use the mobile web – they use text banking. Mobile Web adoption tends to mimic application adoption with 90% of users coming from either the iPhone or a Blackberry device. However, application usage is 3-4 times larger:
o Mobile Web – 1/week
o Mobile App – Multiple/week

Q: What security elements are incorporated into your application?

A: The mobile device is already more secure than a laptop, but there are different levels of security within each of the channels:
o Text Banking - Is the most unsecure because it flows across unsecure channels.
o Mobile Web – Is more secure but there are concerns because of spoofing.
o Application – The application is the toughest and the most secure.

Also, be cautious of two-way interactions utilizing a combination of text and links to the mobile browser. This is scary because it trains the customer to expect unsolicited alerts that ask for permission to launch a link where credentials are input.

Q: How likely are biometrics to become a component?

A: Biometics won’t happen in the near future.

Q: How has the iPhone changed your approach to the business?

A: The iPhone has changed everything! It made the system less dependant upon the carriers and allowed bankers to have a direct interaction with the client. Carriers didn’t think they were blocking innovation, but the app store has shown the kind of innovation that can occur when you take away the barriers.

Q: What has been your biggest surprise/lesson-learned over the last couple of years?

A: First, all 3 modes of mobile banking are critical. Second, customers expect solutions from banks not mobile operators.

Q: What big industry development should we expect within the next 12 months?

A: I think the two biggest developments will be expedited bill payment via mobile devices and P2P bank to bank.

Q: What can banks do a better job of to facilitate adoption?

A: You must build it and promote it. The banks that do a good job with promotion online and through the branch do very well.