This article contains the notes from my interview with Adam Clark (CEO - MCOM) and is very timely with the announcement this morning that Key Bank has selected Fiserv and MCOM as their mobile banking provider. To learn more about Adam Clark
click here to visit the MCOM website.
Q: What’s your differentiator? What sets your mobile banking solution apart from the competition?A: Completeness and Certainty are the differentiators that set MCOM apart. Certainty comes in the form for history. MCOM has strong execution and years of experience at providing mobile banking solutions. Completeness in providing all access modes and experience in mobile payments through international deployments. Plus, a strong relationship with a large organization such as Fiserv.
MCOM also has the greatest market reach by providing solutions for non-online banking customers. This allows the institution to obtain higher adoption, more usage, and facilitates the migration of clients away from high-cost channels. In the end, it’s all about the FI knowing that they’re working with a partner that has driven adoption and ROI. The days of being first or doing something just because it’s sexy are over. Today it’s all about real returns.
Q: Who are your key clients?A: Our key clients include:
• Key Bank
• Washington Mutual/Chase
• Delta Community Credit Union
• Bangkok Bank Ltd. (#1 in Southeast Asia)
• Australia
ANZ, Westpac, National Bank, GE Money, Western Union
Q: Who are you key partners?A: Our key partners are:
• Fiserv
• Tata Consultancy Services (TCS) (India)
• Mesiniaga (Malaysia)
• First Data (Australia)
• Fawry (Egypt)
• Microsoft
• Western Union
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 expense of a mobile banking solution is across the spectrum from a few dollars per user a year up to several dollars per user a month. Yet, you don’t want to work with a cheap vendor that’s still testing and trying to figure out the bugs in their system.
The key is to look for a vendor that will help you achieve a positive ROI by the second year. You want reasonable pricing and a vendor that’s so confident in their solution that they’re willing to take a risk on your adoption.
Q: What components of your ROI model have begun to materialize?A: Our data reveals that 70% of mobile transactions are “Net New” which means that we’re cannibalizing 30% of transactions that would have gone to the IVR, CSC, or ATM. In fact, one of our customers did a retention study on Gen Y consumers (18-24 year olds) and found that retention went from 85% (15% churn) to 93%. If you consider the average cost of customer acquisition and consumer profitability, that is a massive bottom line impact.
>> Read Full White PaperQ: How many active users do you have across all FI’s? A: We can’t disclose the total number of active mobile banking users, but here’s some information we can provide. It’s essentially a given that you’ll hit 2-3% adoption without any effort and 5% adoption will require very little effort. In contrast, an institution with strong resources and sustained effort can reasonably achieve 7-9% in just the first year.
A good adoption estimate is 5% a year for 5 years totaling 25%. But remember it’s not how much money you spend on marketing. It’s about the effort put behind the solution. The strong performers focus on usage behaviors and data to boost growth.
Q: What’s your highest client adoption % A: One client has achieved 25% adoption of active online banking users in just 3 months.
Q: What’s your lowest client adoption % A: One client that considered the project complete at launch has only achieved 2-3%.
Q: What do the demographics of your users look like?A: It’s really based on demographics, devices and many other factors. The best way to begin is to figure out what you want to achieve, and then to put in a solution that appeals to that segment. For instance:
• Notoriety – iPhone and Android
• Youth Focus - iPhone and SMS
• Small Business – Browser or Application
Ideally, you need a mobile banking solution that appeals to a broad set of your customer base. You should deploy an enterprise solution that allows customers to use any phone and any method they prefer. The MCOM platform allows you to customize the solution for the device, because you don’t want to give a Blackberry experience to an iPhone User or vice versa.
Q: What do the usage patterns look like? Balance, History, Transfers, BP, Locator?A: We see the usual patterns of most value from balance and transaction information, followed by threshold and scheduled alerts. What is interesting in terms of the latest data is that transfers (about 20% of users), bill payments (about 20% of users) and P2P payments (just under 10% of users) are all growing disproportionately to adoption. To me this means that consumers are getting comfortable with the mobile channel and starting to adopt ‘riskier’ transactions. We saw this with online banking, so it is no surprise.
Q: What security elements are incorporated into your application?A: MCOM believes that security is incredibly important and focuses on authentication, encryption, and educating the clients. And it’s important to note that perception is just as important. You need a product that gives the client the feeling of comfort and security, and that’s why MCOM is moving to a system where customers will be provided with a choice of security.
There will be global rules that the banks set, and then consumer based rules within those constraints. For example Bank XYZ will set a threshold of $500/day yet the client could specify that anything over $200 requires a second factor of authentication.
It’s a constant trade off between usability and security, and we believe that consumers need to be involved with that decision. An institution can’t force everyone to use voice or finger id, because some clients will just take their business elsewhere.
Q: How likely are biometrics to become a component?A: Today MCOM is working on biometrics security for an international deployment. One benefit of working with MCOM is that you’ll receive mobile banking enhancements before other FIs because MCOM is building them for other countries that are further along.
Q: How has the iPhone changed your approach to the business?A: In the mobile payments space the iPhone has changed the balance of power in the industry. The carriers used to be very assertive, but the iPhone and the App store were able to rapidly erode that control.
In the mobile banking space the iPhone improved the maturity in the U.S. market. The mainstream mobile user has evolved from being primarily a voice user to voice, text, web, applications and much more. The iPhone has grown adoption.
Q: What has been your biggest surprise/lesson-learned over the last couple of years?A: There haven’t been many surprises. MCOM came from overseas and the market has moved relatively slowly.
Q: What big industry development should we expect within the next 12 months? A: The next 12 months in the U.S. will be about ”Getting it Right.” The large, mid and small tier banks will move beyond trial/testing into sustainable and profitable execution. We will see an increase in adoption and will see some dabbling in P2P and stickers, but not much in NFC except some closed loop launches.
In the international space the focus will be around banking the unbanked. Plus, significant volumes of payments and advancement of P2P, Prepaid, and TopUp. These markets will also witness earlier strides toward NFC.
Q: What can banks do a better job of to facilitate adoption? A: It’s fundamental that someone at the FI wakes up caring that they have more users today than they did yesterday. Institutions need someone that takes ownership and is paid and incented to drive adoption and growth.
Next, the product owner needs the resources to put the strategy in effect. This effort should focus on profitable segments and should be executed in a targeted and cost effective manner. This does not require spending millions of dollars.
Focus on mining the data. Make offers based on successful scenarios
1) Try to move people that frequent ATMs for a balance to mobile banking
2) Someone calls into the CSC for a balance. The agent should be able to suggest and enroll the client for mobile banking on the spot.
