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How Banks Should Prepare for the Future of Mobile Banking

Merkle's reaction to Forrester Research's 2015 US Mobile Banking Functionality Benchmark report

Forrester Research recently published a report entitled “2015 US Mobile Banking Functionality Benchmark.” Its purpose was to evaluate the mobile banking services of five leading US banks (Bank of America, Chase, Citi, U.S. Bank, and Wells Fargo) in seven categories:

  • Range of touchpoints
  • Enrollment and login
  • Account information and money management
  • Transactional functionality
  • Service features
  • Cross-channel guidance
  • Marketing and sales

Using a customer description of 36-year-old Michael who is married, very busy, and uses online banking, increasingly on his smartphone, the banks were evaluated on how well they satisfied Michael’s goals/usage. These were defined as:

  1. find and view a recent transaction;
  2. send $20 to his niece for her birthday without having her account number; and
  3. pay a bill.

It should be noted that the scenarios outlined by Forrester are banks’ desired uses of mobile banking as they are transactional in nature and provide “stickiness.” For context, a recent Federal Reserve study indicated that 39% of respondents used mobile banking in the last 12 months (compared to 74% who said they used online banking). Among respondents, 45% cited checking balances and transactions, 27% transferred money between accounts, 21% utilized BillPay to pay a bill, and 10% transferred money to another person (PtoP). 

Not surprisingly, there was no clear leader, and all of these titans of technology basically scored the same overall. The major “aha” from not being able to crown a champion is that all of these banks satisfy the basic needs for checking balances and transactions, quickly and easily making P2P payments, and paying an urgent bill — all interactions that require basic ease and quick resolution — without unwanted distraction. Bottom line is that they all satisfy the basic customer needs very well.

Mobile banking usage has definitely increased over the past few years and is garnering most banks’ attention. However, it should also be tempered with the fact that in the Federal Reserve study, 87% of respondents said they had visited a branch or spoken to a bank employee in the past 12 months. When asked the three main ways that they interact with their bank, respondents cited ATM (30%), online banking (30%) and teller/branch (26%). While mobile banking usage has grown, only 7.5% of respondents cited the mobile channel as one of the three primary channels used and 89% indicated that they probably or definitely will not use mobile banking in the next 12 months.

[keystat number="87%" width="50%" text="The percentage of Federal Reserve study respondents who have visited a branch or spoken to bank employee in the last year" last="no" align="left"][/keystat][keystat number="89%" width="50%" text="The percentage of Merkle survey respondents who will probably or definitely not use mobile banking in the next year" last="yes" align="left"][/keystat]

Additionally, 62% cited that they were concerned about security of using a mobile banking app. While it is clear that millenials are not as concerned with security and primarily use mobile devices, is that really because of the mobile device’s convenience or because the mobile device is the only one they have (i.e., no desktop/laptop), and is that more of an economic condition rather than choice? As millenials mature, will they require more interaction in other channels?

Our contention is that the majority of bank customers are using mobile banking for convenience or urgency and are most likely not where they have access to a desktop that allows for more functionality. While many industry experts are predicting the future of banking lies in mobile apps, it is likely that the mobile channel is simply an additive interaction point and not replacing other devices or channels, similar to the additive channel of online banking in the 1990s. 

The good news is that multiple devices and channel usage provide added engagement for banks to not only satisfy basic banking needs (which is a critical thing when the need is urgent), but to impress and delight the customer with integrated and consistent marketing that the customer sees in other channels. 

The premise of the Forrester report is that mobile banking is becoming a major interaction point for all bank customers in the near future and creating features within the app that entice and delight the customer should be a priority. Some of Forrester’s recommendations are for banks to improve access and login functionality (or allow for basic information without login), integrate more sales and marketing information, and provide more robust money management content for mobile banking. They suggest that these attributes can set banks apart from competitors. 

Merkle believes banks should consider that while mobile banking usage is increasing, the majority of customers want to manage their banking relationship with more functionality than they can access on a small screen and may not want ads and offers popping up when they are trying to address a critical need. In the end, banks have to ascertain if spending their limited IT resources on building a “breakthrough” mobile banking app is worth the investment. 

Perhaps banks are better served in doing the basics in mobile banking really well and concentrating on the context, content, and connectivity of marketing data to provide more consistent and relevant marketing across all integrated channels and contact points with the customer.