The big banks have been reporting their quarterly numbers and JP Morgan is leading the pack with a boom in consumer deposits. American Banker reports that in the last year, JP Morgan Chase has added $50 billion in the last year at the same time the number of mobile users grew by 18 percent to more than 25 million users. There is no coincidence that the number of mobile users has increased at about the same pace as deposits. The convenience and power of online and mobile banking technology is what is driving many consumers to the big banks, and one of the areas we see smaller and community banks scrambling to compete with their own mobile banking platforms.
It’s no secret that one of the things that sets the big banks apart is the size of their technology budgets. Consumers, especially Millennials, want convenience and cool mobile banking tools, and as a result, JP Morgan’s consumer and community banking group grew 10 percent to $586 billion. As Gerard Cassidy, an analyst with RBC Capital Markets, notes, “The strong gain in mobile usage is evidence of greater penetration into the consumer market.” To help drive new technology, including mobile banking, JP Morgan increased its tech spending by 11 percent to $1.6 billion.
In fact, JP Morgan believes so strongly in its mobile banking strategy that the company has even come up with Chase Pay, its own mobile wallet designed to compete head-to-head with Apple Pay and PayPal. Starbucks and Shell Oil have already signed on as the first partners to accept Chase Pay.
At the same time, JP Morgan has been able to slash overall expenses, partly by closing more branches. While branch penetration in strong markets such as San Francisco and Miami is on the rise, the number of JPM branches overall has been steadily declining.
So with banking behemoth JP Morgan claiming more of the mobile territory for banking does that mean that smaller banks can’t compete? Not at all. We are seeing more community and regional banks stepping forward with their own mobile banking solutions, including more mobile banking promotions. In our research for our ProductBuilder database of new bank and credit union marketing ideas and products, we are seeing more regional and community institutions offering incentives for customers to use their e-statements, online banking, and mobile banking tools. We also are seeing more banks actively marketing mobile banking. Florida Community Bank, for example, is offering a cash bonus to attract new mobile banking users.
While the big banks may seem to have an unfair advantage with larger technology budgets, smaller financial institutions are developing their own strategies to compete using many of the same strategies and tools. Technology can be a great equalizer that is accessible to all, so the smart bankers are watching the big guys such as JP Morgan and learning from their technology successes as well as their mistakes.
Mobile banking is becoming commonplace, but combining convenience with personalized services and specialty products is where smaller financial institutions can gain an advantage. Any bank can implement a mobile banking strategy, but the smart banks are using technology to address customers needs and are nimble enough to adjust their rates and develop new products that provide real value as well as wireless convenience.
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