Flashbacks to the 90's? A mobile banking story

(*I wrote this post this morning's Bank Director blog as part of my weekly look at how technical trends and tools are changing the banking experience.  For more Bank Director posts, visit our blog)

In the mid-to-late ‘90s, when companies like InteliData were promoting online bill payment and presentment technologies, I was introduced to a wave of industry optimism that such technologies would dramatically improve our overall banking experience.  While the adoption cycle for online banking proved far longer than many forecast, history may be repeating itself.  Indeed, we are in another period of technological exuberance, albeit mobile in nature.
 
Given our growing love affairs with mobile devices of all shapes, sizes and underlying technologies, it’s really no surprise that mobile banking continues to transform the way people manage their finances. Now, I realize I’m just one of many sharing this perspective; indeed, far more experienced voices, such as Fiserv's CEO Jeff Yabuki, has been known to tweet out thoughts like this:
(*April 30, 2011)
 
Much like the pre-IT bubble days of online banking, I’m inundated with promotional materials from tech vendors promising to enhance the experience of a bank’s customers while reducing an institution's costs.

Ah, the promise of mobile banking.  All upside, right?  Well, the Boston-based Aite Group offers an interesting counterpoint.  Last month, the research and advisory firm published its analysis of the group's mobile banking consumer behavior survey. Its big takeaway: Banks will have to make significant investments to improve or develop their mobile marketing capabilities based on:
  • The lack of retention benefits from the mobile banking channel;
  • Potential losses of overdraft fees from balance monitoring; and
  • Shift in consumer attention towards mobile banking capabilities.
Juxtapose Aite's observation with a recent TowerGroup forecast. There will be 53 million mobile banking users by 2013, which represents an annual growth rate of more than 50 percent.  Clearly, this is a huge opportunity for financial institutions to use mobile banking as a growth strategy.  According to FIS, another leading technology firm in our industry, those institutions that are not waiting on the sidelines are benefitting in a number of ways:
  • Attracting new market segments;
  • Reducing operating costs;
  • Creating brand differentiation;
  • Deepening account relationships;
  • Increasing satisfaction and loyalty; and
  • Generating revenue.
Despite the promise of these benefits, far more financial institutions have yet to go mobile. For those who haven't, what are you waiting for? And no, this is not a rhetorical question. We'd like to know as we prepare to roll out our new digital platform for the financial community next month, so we might better help you understand the benefits and drawbacks of products and services.

 

A look into mobile banking strategy

Aa_flight

(*I wrote this post for Bank Director earlier this week as part of my weekly look at how technical trends and tools are changing the banking experience.  For more Bank Director posts, visit our blog)

It’s funny the things that cross your mind in an airport. I snapped this picture of a classic American plane docked in Chicago pre-flight to China this morning. Patiently waiting by the gate must have been 200+ people, 95% of whom appeared glued to their iPad, iPhone or Android-powered mobile device. To say I was impressed is an understatement. Users of mobile technology are known for being many things: patient is not one of them. They want new tools, new applications and they want them today. Maybe I should have photo'd the departure lounge...

From the board room to a branch office, it’s no state secret that today's mobile banking customers expect access whenever and wherever they are. With so many banks investing in new technologies that allow customers to complete transactions, manage accounts, and perform banking research via their mobile devices, one can see why. Mobile banking services -- think remote deposit capture, two-way text banking, apps for locating branches and ATMs using GPS and bill payment -- have become the norm. So how to differentiate your bank from your competitors?
In my next few posts, I’ll take a look at this question.  With banks (both big and small) riding the mobile wave to strengthen relationships and add to their bottom lines, I thought to set the table with insight gleaned from our friends at PwC.  Last month, the Banking & Capital Markets group published "How Retail Banks Can Thrive in a Disruptive, Mobile, Regulated World" to assess the implications and opportunities created by mobile phones and social media.  My cliff's notes:
  • Social media continues to provide banks with new ways to improve brand recognition, expand customer reach, enhance a customer's experience and introduce new products (for more, see these posts we ran in January about how to benefit from social media and social networking platforms);
     
  • While most large national banks have slowed their pace of retail bank acquisitions because of regulatory limits, banks with access to capital continue to view acquisitions as a growth opportunity. Such acquisitions benefit banks by enabling them to (a) reduce combined operational costs by eliminating redundant back-office functions, (b) spread technology investments and regulatory compliance costs across a larger base, (c) gain access to new markets and customers for cross-selling, (d) increase the ability to invest in state-of-the-art technologies; and
     
  • Leading institutions are adopting a new customer-centric model to replace outdated product- centric models.
A few big takeaways for me? Bank execs need to quickly and decisively adopt new approaches or risk being left behind. Moreover, by tailoring channels to a specific customer segment or purpose, banks are capitalizing on the distinct and complementary roles of distribution channel, all while managing costs. Yes, this is the land of opportunity, and the applications of new mobile technologies and strategies bears close watching. More to come next week.

Job One

Maybe it’s all the traveling I am doing these days, but customer loyalty is top of mind. From American Airlines' advantage program to Hyatt's guest rewards, sometimes the littlest of things add up to something big (e.g. 1,099,622 miles flown on AA as of this morning). So yes, customer loyalty and me have a special bond, one worth exploring in the context of today's financial community.

Pnc

Case-in-point, I had the chance to watch PNC's president (and head of Retail Banking) Joe Guyaux share his hows and whys of focusing on customer loyalty for one of the nation's largest diversified financial services organizations. A keynoter at American Banker's recent Best Practices in Retail Financial Services Symposium, he talked about PNC focusing on customer loyalty as a means to build a differentiated brand and grow customers while increasing (but not always maximizing) revenues.

As a loyal PNC customer, I made a point of introducing myself to Joe after his talk concluded. You see, from slides on PNC's definition of customer loyalty ("an enduring emotional connection and bond beyond our customers, employees and the PNC brand") to the bank's approach to creating brand ambassadors through social media, I was impressed to hear "the message from the top." Indeed, what he shared with bank execs in Miami translated to the branches I regularly visit in Washington, D.C.  

Truth be told, one slide really stood out: PNC's framework for winning loyal customers. Sure, we all know that loyal customers are integral to any business model. Still, interesting to note the elements that PNC defines to build and maintain that loyalty. Naturally, it starts with (and requires) engaged and empowered employees -- and extends to:

  • A drive to deliver exceptional customer service;
  • The challenge to protect and grow its payments business;
  • A focus on earning a "share of a customer's wallet;"
  • The discipline to maintain positive operating leverage;
  • Managing risks; and
  • Encouraging real and ongoing community involvement among staff.

While a number of banks espouse similar approaches to customer loyalty, PNC's rise to its current position in the marketplace reminds us all that customer service really is job one. Seeing a message like Joe's distributed and embraced across a national franchise? Impressive, to say the least.

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*This post first ran on Bank Director's blog on 3/29