January 18, 2012

At the start of last year, Forrester Research predicted that mobile banking adoption would stall if financial institutions didn't begin implementing differentiated capabilities unique to the mobile channel. Mobile payments are one such capability and are steadily becoming a focal point in the race for mainstream adoption of mobile banking. Forward-thinking FIs are implementing bill pay, person-to-person and remote deposit capture abilities to differentiate their mobile offerings and add convenience for their users. User experience, more than any other piece of the mobile banking and payments puzzle, is what will define the success of mobile for FIs.

Where We Are Now

Mobile payments, as they stand now, remain a largely Wild West territory -- carriers, credit card issuers, FIs and startups are all trying to navigate the channels needed to deliver compelling mobile products to their customers. The result is a mobile payments and banking ecosystem fractured in the eyes of consumers, with dozens of apps available promising to do the same things.

It has been proven that a unified user experience is key in delivering mass appeal with new technologies. Apple revolutionized the mobile phone by combining multiple tech products (digital cameras, iPods, PDAs) into one device with the iPhone. Netflix married instant content distribution to instant content consumption and has eclipsed an entire world of staid competition. Even other mobile application industries have done this -- smart apps like Foursquare, Yelp or Instagram tie their respective product with social integrations to keep users inside the application for as long as possible.

Mobile banking and payments need a similar intersection and streamlining of functionality in order to capture user attention and offer convenience to FI customers. Banks need to provide these services to their customers to stay in the loop on revenue streams, maintain top-of-wallet status and retain customers. Thankfully, although there may end up being multiple types of models delivered to the market, no player in this quickly evolving space is better suited to deliver on the promise of mobile finance than banks.

Why Banks Will Win

FIs have a powerful trifecta needed to succeed in tomorrow's payment landscape:

1. User Experience

Today's users expect consumer services that are seamless: Facebook's pervasive "Like" button around the Web, Apple iCloud's sync of files and preferences across devices, etc. So, too, do financial customers expect a seamless service across their mobile banking and payments tools -- a complete workflow of personal finance which requires the integration of payments, offers and other services with existing mobile banking services.

This elevates a "mobile" payment from the existing payments of today by integrating with offers and rewards systems, and unifying point of sale (POS) or person-to-person (P2P) payments, instant ID verification and auto-tagging. It's what happens around the payment through the bank and its partners that will truly set the technology apart.