The growth of mobile banking technology is increasingly hard to ignore. Analyst firm Javelin Strategy & Research reports that nearly 50 percent of all mobile users in the United States will be using mobile banking within four years and that nearly 50 percent of iPhone and other smartphone users already use mobile financial services today.
With 2010 being the year in which mobile banking broke into the mainstream, 2011 will be the year in which financial institutions will look to capitalize on the full potential of the mobile channel -- moving from basic user functionality to full mobile finance; or, "Your bank in your pocket."
Where We Are Now (Mobile Banking 1.0)
The majority of banks currently are in transition between their introductory mobile solutions and a second generation of offerings with greater capabilities. The introductory mobile offerings most banks deploy closely mirror users' online experiences. While this is a fraction of the full potential of the mobile channel, it is an essential stepping-stone to move users from the branch and online banking to their own handsets for financial interaction.
While the mobile channel still is far from being definitively proven, consumers demand it. Banks are moving from one-way alerts and simple notifications to proactive content in the form of real-time, "actionable alerts." These are personalized, two-way alerts that enable customers to quickly and easily take action directly on their mobile devices in response to previously set alert thresholds or financial events as defined by the consumer.
For instance, if a customer's account balance falls below a predefined threshold, an actionable alert is sent to the customer, who can then instantly transfer funds by responding to the alert. Many financial industry analysts, including Javelin, believe that the delivery of real-time, two-way, transaction-driven alerts is one of the keys for financial institutions to provide value to their customers and to drive adoption and usage of mobile banking.
Where We're Going
As mobile banking gives firms the ability to fully engage in conversations with customers through their mobile devices, coordination of a "business workflow" across different banking systems is required. In order to accomplish this, mobile banking providers must establish open ways to access these different sources of information. This "connectivity" is crucial to delivering fully mobile banking.
By opening up the mobile channel to multiple back-end and third-party systems or networks such as VisaNet, mobile payments hubs such as CashEdge or PayPal, remote check-deposit capture technologies such as those offered by Mitek, or contextual marketing systems capable of determining when to present offers, banks can capitalize on the full capabilities of the mobile phone as a consolidation point of all other existing bank channels -- e-mail, online, customer service, and mobile-specific SMS or push notification alerts.
In order to provide authoritative value to customers and produce strong adoption (and with it, definitive ROI), third-generation mobile banking solutions must empower institutions to use the mobile channel as an extension of and integrative point for existing technologies. This will instantly resolve consumer issues and complete tasks faster and more economically -- making alerts fully actionable.
Many financial institutions and mobile vendors today, however, still are tied to basic core functionality, either because they developed a non-scalable, non-adaptable elementary mobile solution, or because they signed binding contracts with core financial technology providers in order to rush a baseline mobile solution to market. The smart mobile banking solutions of tomorrow must anticipate the future expectations of consumers and recognize the potential that the mobile channel represents -- a technology set to increase customer loyalty and satisfaction via conversation creation.
Pete Daffern is CEO of mobile banking solutions provider ClairMail in San Rafael, Calif.