Retail Bankers - Wake up to the 21st Century!

HSBC's response came through more formal channels. See here:

The problem is not so much cost as revenue.  mBanking doesn't generate real cash and although you can claim customer sat and retention and even adds, the banks (and the mobile operators) are sceptical about how tangible those things are compared to the cost of implementing, operating and evolving the service.

Secondly, like all surveys, if you ask a customer if they want something, they will say yes. Whether they will actually use it and check their balance daily is another matter.  Banking is not daily like Facebook (unless you're a banker!).

I can get my PC/Browser Banking on my Google phone - a bit fiddly on a small screen, but at least its a familiar layout and I know where to look. An App would make it nicer, but I would't pay for it and I don't think it would tie me to my bank either.

John,

I hear this all the time in respect to mobile. Let me give you two points to think about:

1. Are customers more or less likely to use mobile going forward - if more likely, then the longer you wait the more expensive implementation is likely to be, and the less customer satisfaction you will see, and

2. More importantly, you can't learn how to generate revenue from the platform if you aren't participating in the platform. This is about adjusting to consumer behavior and meeting needs, in order to get deeper relationships (read cross-sell/up-sell). 

Banks who are sitting back are likely to be penalized in this regard. ROI is there - BofA, Jibun, Shinshei, etc have all shown it works. Rhetoric from bankers at this stage of the game on lack or ROI,etc tends to show a gross underestimation of changing consumer behavior as regards future revenue of the retail bank.

BK

Brett, I agree with the principle entirely.  I implemented my first mBanking solution in 2001, when customers were asked and prepared to pay a small service charge.  But Banks and Mobile Operators have always dithered when it comes to partnerships and Banks in particular tended not to dabble directly with mobile for years (worried about security mainly) - culminating first in text banking services and eventually some WAP/App banking.

Your point is the best - you cannot win if you are not playing the game.  But too often the budget holder(business) think we cannot lose either.  It takes more than a few customer requests, it takes tangible evidence of damage to the bottom line.  I agree that it will help a lot to get some fresh thinking evangelists inside the business.

Mobiles and smartphones in particular (yes, brought into focus by the iPhone) are as important as your wallet, and could eventually replace it.  Now that the mobile internet is open, the banks can move ahead with mobile services - but I think its always the security fear and what they don't know that holds them back.

It's not entirely clear at this point whether apps are the way to go (and the number of smartphone platforms is still increasing) or whether it's better to have standards-compliant web pages optimised for mobile browsers.

If apps do become the preferred method then there is an opportunity for someone to offload mobile app development and testing from the banks - they would need to have a pretty robust cross-platform toolkit.

That still leaves banks with the integration challenge. Bolt-ons to the ATM network don't cater for those products that aren't on that channel. And banks with 1st generation internet portals too closely coupled to the banking engine may be faced with either bespoke development, or a rushed upgrade.

So, it's easy to look from the customer point-of-view and say 'where's my iPhone app?'. Behind the scenes though, there's no easy answer. If there is, I'd love to hear about it!

Chris,

Confusing yes? The fact is with Google making a play, the iPad's success, this space is getting more and more complex. Sitting back and waiting for a dominant platform or approach isn't going to work - there isn't going to be one. But customers will be mobile and expecting their bank to be there too.

This makes it difficult because actually what it means is that there is no one size fits all approach, and sitting back and waiting doesn't provide clarity. So banks need to be able to respond to the dominant platforms or approach in each market quite quickly to get the benefit of the initial momentum and learn from those interactions. This is tough if you are bankers and not software developers. So how do banks stay alive in such a challenging space?

The trick for banks is to open up development of these apps or m-portals to a developer community like Apple has with the iTunes platform. They can still control security, compliance and other such issues through clever core APIs and capability. The problem is to keep on top of consumer shifts, the typical bank approach of cautious investment slowly over 3-5 years simply won't cut it anymore. Customer behaviour is just changing too fast.

It's a tough world - but banks are going to have to live with it. If not, third-parties will start to come in and disenfranchise banks from customers because of their ability to create better engagements with the customer (e.g. PayPal, Square). In the end, I fear most banks will just end up being the 'wires' processing the back-end transactions, because they won't be able to innovate effectively enough to stay connected with their customer base who is increasingly more sophisticated in their utilization of tech and media.

Brett

Brett -

So long as the hype is with apps, it fuels the perception that there is no dominant platform. Actually there is a dominant platform - the mobile browser. It's just not as sexy.

The suggestion of opening up mobile banking app development to all through open APIs is worth considering. However, you can't totally de-risk it through back-end development. That wouldn't stop a rogue app sending customer details to a fraudster from the client end, for example. Banks would at the very least have to test and certify any such app and it's not clear where liability would lie.

So, I still think there is an opportunity for some clever developer to open a one-stop-shop for mobile banking app development.

Chris

Chris,

Fair enough. I'll back your mini-browser play with one proviso - HTML 5 needs to be the underpinning tech - so it provides the required usability. The remaining issue is multiple size screens, different standards, differing network connectivity, etc.

Given the iPad's recent success, I'm not sure we're done with Apps just yet. Think also of the issue of extending user experience. Widgets, Applets, use of Avatars, etc - Cloud computing aside, these are all potential extensions on to the desktop, tablet-top, device-landscape.

The key is - improving customer interactions. At this point I just don't see banks invested in THAT.

BK

'The key is - improving customer interactions. At this point I just don't see banks invested in THAT.' Totally agree - even when the strategists have all the new toys to play with, they somehow think the customers aren't ready. Maybe we all need a Listening Post

The first point I would make is that "Apps" for the iPhone only mean anything to the few iphone users (<100m/4billion).  Back in the days when I was trying to drag the music industry into the 21st century the entertainment companies weren't interested in catering for the ~5% of Mac users even though the execs themselves were often Mac users -they couldn't justify the cost of catering for that 5%. Far less than 5% of phones are Macs.  Are we here to bank or just make the iphone seem sexier for Jobs?

Banks, despite a desire to be seen as such -are not expert at designing or implementing  easy to use secure software.  Haven't seen anything yet anyway.

l believe that one system of "banking" for mobiles will dominate.

The issue is what the customer sees "mobile banking" as, or more importantly what they want from mobile banking.

 I have always believed that they want balances and the ability to ditch the cards. (and the documentation, Hoo-Haa and peripheral devices we actually are expected to use in the real world).

Perhaps focusing on that first?

A simple to use ubiquitous system which works on any phone you carry for checking balances, making purchases and payments and 'activating'  services/products.

It will happen because that is also where the profits are - the purchases - but who knows?  Banks may be content to be Visa/MC agents...

I note that Visa is promoting using their debit card on the web because outside Oz few use direct debit payments for web purchases and perhaps other customers prefer to risk money that is theirs rather than credit funds.

I have once been wrong. Gordon lost the U.K election - but there wasn't even an iphone app for his gob.  Sorry Gordon - you should have listened eh? But then again perhaps you are the real winner after all. Time will tell.

Dean,

Read Chapter 1 of BANK 2.0 where I talk about the three phases of disruption to retail banking. Mobile represents two of those phase shifts and the third is what you are discussing here - payments modality.

The banks will become the wires - the phone the customer engagement device. Unless banks have their products, messages and service capabilities tied to mobility - they will lose out to software developers, handset manufacturers and others who understand customer interactions better.

BK

Interesting.. But in India, things are done a little differently and SMS based mobile alerts are in operation for about a decade and is very popular now and extensively used..The banks probably realised that doing transactions over mobile may yet not happen in large scale.. but the information service through push and pull SMS would be a clear winner.. And that is what happened.. Most of the bank in India offer SMS based pull and push services for balances and transaction details...

When it comes to txns,  I think, with the kind of technology advances we see in the communication space, there may not be any need for a separate mobile commerce or mobile application.. The internet would be available on mobile - and so would be the internet applications. Therefore, I can understand some of the banks thinking that why invest on a thing that may not last...