Infrastructure

09:45 AM
Bob Graham, Virtusa
Bob Graham, Virtusa
Commentary
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Mobile Banking Trends For 2014

Mobile banking will continue to evolve as more nuanced offerings come to the marketplace.

2013 was a big year for mobile banking, driven by trends such as increased smart phone adoption and the popularity of mobile check deposit. Looking into 2014, we see several areas that will drive mobile banking adoption even higher.

Bob Graham, Virtusa
Bob Graham, Virtusa

We have only begun to tap into the possibilities of mobiles devices with camera, geo location and social awareness capabilities. The first mobile banking features were simply a port of online capabilities like check balances, transfer balances and bill payment. Mobile check deposit was the first truly device unique capability, or so called ‘image banking’. 2014 will be the year of photo bill pay. While very few banks have made this capability available, there are many that predict adoption will be faster than mobile check deposit. Another area that will see progress is in personal finance management, particularly on the tablet. Various firms are working on leveraging device-specific characteristics around voice, video and touchscreen capabilities that will create new service opportunities for the advisor/client relationship.

Cross Selling will accelerate

Mobile devices provide a new opportunity to cross-sell and promote other banking products and services. Chase My New Home launched at the end of 2012 and is one of the first applications that provide capabilities to search for houses for sales, take and record photos and videos, calculate monthly mortgage payments and yes, connect to a mortgage banker. This is a great example of a bank using the unique elements of mobile devices to provide an end to end experience, driving more upstream from the transaction element to engage prospects and customers.

Some banks have begun to roll out merchant-funded rewards program, which allows customers to receive coupons from retailers by clicking on offers sent directly to their online banking accounts. We will also start to see applications using geo-location technology to alert customers of coupons while they are in the vicinity of retailers.

Gamification continues to be a hot topic

Gamification continues to be a hot topic among financial institutions as they look for new ways to both win new customers and increase loyalty. Banks are recognizing that the Millennial Generation represents the largest demographic in the U.S. today and will comprise more than 50% of the workforce by 2017. Millennials have grown up in a digital and always connected environment, heavily influenced by social media and instant results.

Banks are looking at how they can advance from promotional marketing to employing gamification techniques to ingrain desired behaviors that make their products and services stickier. Points, badges, rewards and leaderboards used in product engagement strategies are positive experiences for the consumer and ensure profits for the bank. Several banks have rolled out initial attempts here but most are still largely at the reward level (think points or credits).

Mobile Payments

Various studies have shown that mobile P2P is being used by less than 10% of mobile banking customers. As mobile users become more comfortable with the technology, expect more growth as users adjust to using an app instead of writing a check for situations such as sending your share of the rent and utilities or cash gifts.

Forrester predicts an explosion in the mobile payments market, growing from $12.8 billion in 2012 to $90 billion in 2017. The recent data hacking at retailers like Target and the reported credit card breach by hotel management firm White Lodging has created increased recognition that magnetic strip debit and credit cards are insecure. This is sparking a shift towards both EMV card technology where cards contain a microchip that encrypt each transaction and to secure mobile payments technology. Visa, MasterCard and American Express and separately, The Clearing House (TCH) and its 22 member banks, have announced initiatives that look to leverage dynamic tokens for mobile payments instead of storing card numbers and personal information.

Mobile Wallets will get a lot of attention and make some strides

Mobile wallet usage has struggled in the mainstream primarily due to concerns around security, technologies (barcode/NFC) and confusion over what is a mobile wallet exactly. Yet the stakes are high as estimates have the U.S. market of over $4 trillion up for grabs. No single company has been able to step to the forefront as there are offerings from non-banks like Apple, Google, Amazon, Facebook and PayPal, major payment networks, large financial institutions and top mobile network operators like Verizon. According to a study done by Parks Associates, by 2017 mobile wallet use will grow 183% to over 43% of smartphone owners. The key to mobile wallet growth will be adding value to both consumers and merchants while addressing concerns around fraud and security. Convenience features such as making it easier to organize consumer loyalty programs, location based offers, the ability to skip long checkout lines and rewards for using mobile will begin to spur user adoption. Of course, broad consumer adoption will only come when users feel the digital wallet is more secure than conventional credit cards and ease of use is comparable. The continued fraud events like Target and Neiman Marcus could provide an opening.

Bob Graham is Senior Vice President - Banking and Financial Services for Virtusa Corp.

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Kelly22
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Kelly22,
User Rank: Author
2/25/2014 | 5:39:53 PM
re: Mobile Banking Trends For 2014
Same here. I'm sure as it continues to evolve I'll be more likely to consider it, but right now I still prefer traditional over mobile payments.
Byurcan
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Byurcan,
User Rank: Author
2/25/2014 | 3:55:26 PM
re: Mobile Banking Trends For 2014
Yes, with digital wallets still in their nascent stage, many industry analysts have pointed out that consumers still don't have a compelling reason to switch from plastic. Once digital wallets to reach that point of convenience, many people will likely switch over.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
2/25/2014 | 2:36:59 PM
re: Mobile Banking Trends For 2014
I have made a few mobile payments, but I'm hoping the so called 'digital wallet' will make things easier in the future. Right now, it takes a few steps to set up a mobile payment with my bank. Cash or cards are still easier.
bob_graham
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bob_graham,
User Rank: Apprentice
2/25/2014 | 1:12:19 PM
re: Mobile Banking Trends For 2014
Yes Mastercard highlighted this with their announcement about MasterPass in-app payments capability for its MasterPass digital payments platform. This will allow third-party app developers the ability to create applicaitons accept payments for goods within their mobile apps, without requiring consumers to store their credit card information inside of the app and settle of course, to your mastercard. This is their latest and best foray into the digital wallet space as their Mastercard PayPass had not really taken off. Two newer features available are that Masterpass will support multiple technologies: NFC, QR codes, tags and mobile devices at the point of sale and will also provide a connected wallet supporting other cards.

Will see if this newest venture of allowing app developers to develop more shopping apps that allow you to pay before checkout serves to create more acceptance among consumers and merchants for mobile payments.
bob_graham
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bob_graham,
User Rank: Apprentice
2/25/2014 | 1:12:19 PM
re: Mobile Banking Trends For 2014
Yes Mastercard highlighted this with their announcement about MasterPass in-app payments capability for its MasterPass digital payments platform. This will allow third-party app developers the ability to create applicaitons accept payments for goods within their mobile apps, without requiring consumers to store their credit card information inside of the app and settle of course, to your mastercard. This is their latest and best foray into the digital wallet space as their Mastercard PayPass had not really taken off. Two newer features available are that Masterpass will support multiple technologies: NFC, QR codes, tags and mobile devices at the point of sale and will also provide a connected wallet supporting other cards.

Will see if this newest venture of allowing app developers to develop more shopping apps that allow you to pay before checkout serves to create more acceptance among consumers and merchants for mobile payments.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
2/24/2014 | 4:44:29 PM
re: Mobile Banking Trends For 2014
The research released today by MasterCard shows customers are starting to understand mobile payments and warming up to them:

http://www.usatoday.com/story/...
bankonAM
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bankonAM,
User Rank: Apprentice
2/24/2014 | 4:33:31 PM
re: Mobile Banking Trends For 2014
Thank you for a brilliant article masterfully crafted
capturing several of the current dimensions on this critical space.

With multiple aggressive demands, based on both market
forces and enterprise needs, the need for prioritization of the key feature
sets is critical.

Even with several features in scope, a systematic release
planning approach is in order, so that the expectations may be set at all
levels on this journey.

Agility is required on all fronts, strategy tactics and
operations. Speed and precision of execution is vital on the key priorities
identified.

Decision-making involves M&A and contract awards with
partners whose core strengths lie in this space.

The results include customer satisfaction press visibility
in addition to cost reduction on account of self-service workflow.
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