Commercial banking: Can mobile banking yield big returns?

By Andrew Mikesell, mCommerce product director, Sybase, an SAP Company Mobile banking introduces new ways to interact with customers, add revenue and enhance customer relationships. Start planning now to extend your market reach. mCommerce services and mobility have the potential to significantly improve both business customer and consumer perceptions of bank innovation and technology. For …

June 2, 2011 | Sybase

By Andrew Mikesell,
mCommerce product director,
Sybase, an SAP Company

Mobile banking introduces new ways to interact with customers, add revenue and enhance customer relationships. Start planning now to extend your market reach.

mCommerce services and mobility have the potential to significantly improve both business customer and consumer perceptions of bank innovation and technology. For commercial banks, mCommerce, especially mBanking, can introduce a new revenue stream in terms of product fees – it also provides opportunities to enhance customer service, develop a stronger customer relationship and reduce customer churn.

Banks are approaching mCommerce by introducing mBanking, which helps them focus on cross-selling and reaching customers who have been historically under-banked in terms of bank products and services. Mobile banking services allow banks to access a market that is much larger than online banking. Unlike online banking, where customers need a computer and Internet service, mobile banking requires only a mobile phone, and as many customers already own mobile devices, the potential user base is vast. To turn mobile phone owners into mBanking customers, banks must emphasize both the user experience and user benefit.

With just a little imagination, banks can define any number of new mCommerce products and services for their customers. These four strategies will help lay the foundation for a robust mobile banking suite.

• Create a corporate mobile application for business customers. Two well known mobile corporate applications are in use at Wells Fargo and RBS-Citizens. These corporate mobile applications provide traditional account and reporting information as well as extending business functionality to account actions, such as wire release, funds movement approvals and payment decisions.

• Deliver tablet-based applications. To create a mobile presence, banks have been focusing on smartphones and large-screen phones. Now is the time to develop tablet-based applications that provide dashboard views into a company’s accounts, cash flows and what-if scenarios. Integrating commercial card services and foreign exchange services are also great options for mobile application development projects.

• Leverage embedded smartphone mobile technology. The camera feature, which is available on almost every mobile phone, can facilitate services such as remote deposit capture and billing invoice information capture. Other mobile phone features can support location-based services for branch and ATM locations and push alerts via SMS for wire release and payment decisions.

• Consider services that reach across business lines. mCommerce services support cross-selling. For example, offering business partner coupons through the mBanking application using location-based services will drive debit card transactions and associated merchant fees.

Investing in mobility

Before mobile banking services can become as common as customers visiting the local bank branch, commercial banks must invest resources in education and evangelism that explain to businesses the benefits of mobile capabilities, including immediate funds movement, approval management and ‘anywhere-anytime’ access to banking features and services. In addition, moving from the traditional desk-based cash management activities to mCommerce banking applications for businesses enables these institutions to better accommodate their customers, who are already familiar with mobile technologies.

The banking industry will also have to make macro changes. Interoperability and standardization for payment transactions need to be first on the agenda. Several industry-based and independent organisations, such as the NACHA Payments Council and the Mobey Forum, have working groups focused on standardization. However, these groups tend to be geo-focused, and these regional approaches have created different interoperability standards for North America, Latin America, Europe and Asia. Having multiple standards has resulted in highly fractured and regional markets, because solution providers must either support multiple interfaces and payment processing systems in parallel if they want to have a global presence, or they must limit their market reach and focus on a particular geography.

Near-Field Communications (NFC) technology is a perfect example of how the fractured, regional approach is jeopardizing the development of a single, global standard. NFC has many standards and no universal interface, which is contributing to a lagging adoption rate and slow uptake of the technology. A cohesive approach to NFC and other technologies will go a long way toward advancing mCommerce and, in particular, mobile payments.

mCommerce for life

mCommerce and mBanking present a new challenge for banks, but a challenge with many opportunities. The time to act is now. Once a stronger foundation is set for mCommerce, banks are expected to reap a high return on investment. According to Howard Wilcox, an analyst at Juniper Research, the mCommerce market is forecast to reach as much as $630 billion gross transaction value globally by 2014. Commercial banks can tap into this growth by providing mCommerce services, which all banks to interact with customers throughout the life cycle – from relationship start to end. Mobile banking services represent more opportunities than banks have witnessed in years.

Four tips for mobile success

1. Make sure that the lead, or “mobility czar”, for your mCommerce strategy has the experience and authority to reach across the many bank silos. Banks often initiate multiple mobility initiatives without recognizing the different activities within business units. Not having a cohesive strategy leads to multiple vendors and highly specialized solutions that don’t interoperate well. Without a single vision, banks will be unable to offer a comprehensive set of integrated services, such as banking, investment, currency and wealth management, from a single application. Instead, multiple mobile applications will provide different product features to the same customer.

2. Plan for multiple phases across product lines. Rather than taking a silo or piecemeal view, get buy-in from the business-line owners around the mobility offering. Whoever is appointed the mobility czar needs to have the decision-making power to cross silos.

3. Make mobility a corporate initiative at the executive level. Mobility should be a corporate-wide decision; not a business-line decision. Once on the mobile path, build an aggressive timeframe and roadmap and execute according to plan.

4. Get the word out using multiple communication channels. When milestones are met, heavily promote and market these features and functionality using traditional, online and social media.

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