Mobile services have become a "must have" feature for the modern bank. While the industry's major players do a good job serving clients via smartphones, there's still plenty of room for improvement as new devices and technologies proliferate and customer expectations rise. Corporate Insight has identified four key areas in which banks' mobile strategies are evolving.
1. Banks Don't Support All Devices, Yet
A new Corporate Insight study on mobile found that the nation's top banks have embraced the mobile channel to a greater degree than the big brokerages or asset management firms. Ninety-three percent of the banks we track offer either a website optimized for a mobile browser or a downloadable app for the iPhone or other smartphone.
Between 2008 and 2009, the big banks focused development efforts primarily on the iPhone, the device that helped revive interest in mobile financial services. But beginning in 2010, Android apps became a necessity, as Google's operating system began to overtake the iPhone in popularity. Today, 67 percent of the banks Corporate Insight monitors offer an Android app, and most of the firms that don't offer such apps are developing them.
Most recently, though, Apple's iPad, which launched in April 2010, has begun to catch on in the banking space. In May Bank of America and Chase became the first major banks to introduce iPad apps. According to a survey we recently conducted of more than 100 financial executives with direct ties to their firms' mobile efforts, most of the big national and superregional banks plan to follow suit in the next 12 months.
2. Mobile Transfer and Bill Pay Capabilities Are Limited Compared to Online Capabilities
One key finding from our research is that most banks, but not all, offer hassle-free mobile banking to any client enrolled for online access. But mobile capabilities tend to be limited compared to what's available from the full website, particularly in cash management. Most banks treat funds transfers as a key mobile capability, a move that Corporate Insight wholeheartedly supports. However, features such as recurring transaction setup and ACH transfers to and from external accounts -- features that are available from almost every major bank's website -- are among the first to go as firms simplify mobile offerings.
Bill pay is another important transactional capability that's available from almost every major bank's mobile platform, but in a limited form. It's rare that a bank lets clients add new payees via a mobile platform. Apart from Chase, none of the big banks allow clients to make wire transfers from a mobile device.
3. P2P, RDC and Mobile Payments Present Unique Value Propositions
While core transactional features aren't always accessible from a mobile device, some institutions have experimented with transactional features specifically suited to the mobile device. ING Direct, which was acquired by Capital One in June, recently launched its Bump peer-to-peer (P2P) payments service, allowing checking clients to send money between their iPhones with a quick tap.
Remote deposit capture (RDC) is another innovative service developed specifically for mobile devices. RDC lets customers deposit checks into their accounts by taking and uploading pictures with their mobile devices. Since USAA unveiled the service in 2009, the technology has been adopted by Chase, PNC Bank and U.S. Bank, as well as Charles Schwab and Fidelity. More major financial institutions are sure to follow.
If you believe the financial media, mobile payments could prove to be a disruptive force in the industry. However, the pioneers looking to replace cash and credit cards with a "virtual wallet" -- for example, Google and Visa -- are mainly coming from outside the retail banking sector. As of yet, it's unclear whether U.S. consumers want this service, or what role banks will play.
4. SMS Banking Won't Disappear Any Time Soon
Not every consumer owns a smartphone, so many of the big banks (Bank of America, Chase, Citibank, KeyBank, PNC and Wells Fargo) continue to support SMS banking, or the ability to request account information via text message. In fact, Chase aggressively touts its Instant Action Alerts, which stand out by offering rudimentary transfers via SMS. Bank of America is poised to add its own basic transactional capabilities via SMS, and, given the nature of the industry, others will likely follow.
Significant challenges remain as banks update their mobile platforms with new tools and expand to new devices. According to our survey, though, low adoption by customers is far from a top concern. We fully expect to see banks continue to respond to consumer demand. We look forward to seeing new mobile features designed to help firms catch up to industry leaders and set the pace with new innovations.
About the Author: Dan Wiegand is a senior analyst with the consulting services department at Corporate Insight. He joined the firm in 2006. Wiegand's project work with the consulting department in the past few years includes account opening, online security and mobile applications.