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Mobile Banking Technology Helps Small Banks Build Awareness, Compete

As mobile technology becomes more accessible, smaller institutions such as Avenue Bank are leveraging the mobile channel to compete with the big banks.

Avenue Bank, which has $500 million in assets, doesn't view itself as a community bank. Rather, the Nashville, Tenn.-based bank sees itself as a client-focused financial institution that blends the personal touch of a smaller bank with the products and services of a larger one. That's why, when Avenue Bank launched its mobile banking platform in February, its leadership viewed the new technology as an extension of the institution's mission to deliver convenient, personalized services to its more than 4,000 customers, according to Vickie Storm, EVP and director of client services.

Launched as a mobile browser-optimized version of Avenue Bank's online banking services, the new service aims to make the bank more accessible for its existing customers and to draw in new customers, Storm relates. "Part of our strong demographic is in young, tech-savvy clients," says Storm. "The rest of our strong demographic would be in higher-net-worth individuals, and they want convenience. This is a big convenience factor for our clients. It's important to them, and it's important to us." She adds, "It's not just about the brick and mortar anymore so much as it is about the utilization of technology."

Developed by Avenue Bank technology partner First Data (Atlanta), the mobile service was made available to customers in February alongside a redesign of Avenue Bank's Web site. The service allows clients who are registered for Avenue Bank's online banking to access accounts, view recent transactions and transfer funds between accounts, according to Storm, who indicates that additional features likely will be added in the future and that a downloadable smartphone app could be ready as soon as the third quarter of this year.

CREATING AWARENESS

According to Mark Schwanhausser, senior analyst for Pleasanton, Calif.-based Javelin Strategy & Research, mobile technology is becoming more readily available to banks of all sizes and could be an effective tool in customer recruitment and retention. "One of the beauties for a smaller institution is they can create an application very quickly and take the consumer straight to their mobile banking Web site," he says. "At the very least it can be a shortcut or an icon on their screen to remind the customer every time they pick up their phone that that's who their bank is, and that they're only a button or two away from being able to monitor or manage their money."

Schwanhausser suggests that devices such as the iPhone are helping drive consumer adoption of mobile banking. Whereas in the past mobile phones were seen as devices to make calls, take photos and send text messages, the latest smartphones are enabled by a host of apps and options for customization. "In terms of the consumer adoption, we're seeing that it is increasing," Schwanhausser says. "There are currently 26 million adults who are using mobile banking, and we're forecasting that 99 million adults will reach for their mobile phones for banking by 2014."

Nonetheless, Schwanhausser points to three barriers to mobile banking adoption: consumers might not understand it, they don't feel it is safe and mobile data plans can be costly. Banks can control the first two barriers, Schwanhausser notes, through education.

And an institution such as Avenue Bank potentially has an advantage in customer education, asserts Christine Barry, research director at Boston-based Aite Group. "A lot of it is education, and that's where the community banks have the advantage -- they have relationships with their customers," she says. "At a smaller bank, they can talk their customers through to get them to understand the benefits, to get them to feel comfortable with the technology and adopt it."

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