Consumers clearly demand more convenience from their banks and credit unions, and mobile banking is the one category where the smaller banks are challenging their big league competitors:
When it comes to mobile banking, “There’s no one bank who really hit the ball out of the park,” said Dan Latimore, senior vice president in the banking group at research and consulting firm Celent. [as quoted in the current issue of Bank Director]
The majority of banks seem to be trying to woo new customers with the convenience factor, using free mobile banking as a draw. The plan is to use mobile banking to save on in-branch overhead, and the hope is that smartphone owners are a better class of banking customer.
But these days, the novelty of mobile banking has worn off. Banks of any size can offer convenient mobile banking services such as remote deposit, bill pay, and even peer-to-peer transactions, so basic mobile banking is no longer a market differentiator. Being able to check your balance, move money, and do basic banking from your phone are the just price of entry these days, What will distinguish the true innovators are extending mobile support to additional banking services, such as loan qualification.
In the same Bank Director article, Latimore notes that bankers have to remember that, branch or no branch, customers want service and banking is merely a means to an end. In the case of a loan, for example, consumers don’t want to have to necessarily execute a loan online, but they want a fast “thumbs up/thumbs down” decision ad to whether they qualify for a new car, a home improvement loan, or a mortgage. The banks that determine how to extend relationship banking to the smartphone will have a clear leg up on their competition, no matter how big they are. For example, the new “Chase My New Home” app allows users to search and rate home and calculate mortgage payments, and even though they can’t use the app to apply for a mortgage, Chase reports that one third of users are more likely to pursue a mortgage with Chase.
And while convenience may be a motivating factor in where people bank, the question remains, will consumers pay for mobile banking convenience? Can banks recoup their mobile banking costs and maybe even make a profit through fees? Although the consensus is that basic mobile banking, such as checking your bank balance, will probably remain free, there is an opportunity to charge more for services that customers consider value-added. U.S. Bank, for example, charges $0.50 per transaction for remote deposit. Our research shows that consumers will pay up to $2.60 per month for mobile deposit and on average $2.50 per month for mobile photo bill pay.
Where customer service is the name of the game, and consumers see more value in emerging services such as mobile banking and this is where community banks can take the lead. Quoting our own Senior Vice President, Dr. Dan Geller:
“For the first time in banking history smaller banks have the same opportunity to service their customers to the same degree that bigger banks do…”
Innovation that drives customer service will be the key to ongoing success, and no bank can corner the market on innovation.