Why mobile banking adds up

Rajashekara V Maiya | Updated on March 10, 2018 Published on February 19, 2015

Banks that see the mobile phone as their primary channel of innovation will meet customer expectations

A US bank ran a pilot programme for improving the security of credit card accounts using voice biometrics, in 2014. The chief innovation officer at the bank’s Payment Services division said using voice to authenticate customers was a natural extension of the growing voice-based interaction between smartphones and their owners.

This, to my mind, captures the progressive bank’s outlook on mobility. There’s no doubt that the mobile phone is the route to innovation in banking. In the Innovation in Retail Banking 2014 Report, presented jointly by EFMA and Infosys Finacle, respondent banks emphatically said that mobility was the most important theme on their innovation agenda, deserving a 6.5 on 7.

But that does not necessarily mean that everyone has the same level of mobile maturity, or indeed, is even on the same page. Many institutions still consider mobile as just another channel, but there are some for whom it is clearly first among equals. These entities think of mobile as the primary channel; all innovation begins with mobility from where it flows to other touch points.

Mobile-progressive banks are trend spotters and setters, both. So, it is interesting to see which way they’re pointing.

Where the action is

This year’s EFMA-Infosys Finacle study revealed a growing traction in what might be considered emerging mobile innovation categories, such as personal financial management (PFM), location-based services and wearables.

Personal financial management: Not surprisingly, Moven is one of the early movers in mobile PFM services. Its offering is unique in that it integrates with the Facebook social timeline to demonstrate how customers’ social life is influencing their spending. Not only that, the application updates and alerts the customer to the spending profile in real-time, as and when transactions happen. Then there’s German start-up NumbrS, which collates all the activity on a customer’s cards and bank accounts to forecast future income and outgo.

Location-based services: According to the 2013 edition of the EFMA-Infosys Finacle survey, 18 per cent of banks had deployed location-based mobile innovations and 51 per cent had plans in the making. Accordingly, this year, the proportion of banks invested in location-based services has shot up to 51 per cent, with another 24 per cent exploring the idea.

Serial innovator Deniz Bank is among those at the forefront. In 2012, its mobile wallet, FastPay, gave customers the convenience of contact-less mobile payments. In 2014, the bank did one better with hands-free payment based on iBeacon and Bluetooth technology. The FastPay wallet application is detected by the participating merchant’s iBeacon system, enabling the customer to pay at checkout without touching the phone.

Wearables: This year’s mobile innovation honours must go to wearable technology. Although only 8 per cent of banks in the 2014 survey have invested, and another 20 per cent are looking at it, the excitement around wearables is catching on. Spain’s CaixaBank leads the way with a number of applications, including a fully functional branch finder on Google Glass, a stock price checker on a smartwatch, and an encrypted version of a payment card loaded onto a contact-less payment wristband.

There’s no other choice

The differentiation between such mobile-centric players and “regular” mobile banking services lies mainly in the thinking. Many banks continue to view mobile as yet another delivery channel, in stark contrast to mobile-progressive entities for whom it is always mobile first. To the latter, mobility is about providing a simple, personal and highly contextual experience, and only then about functionality. Experience is a means for changing customer behaviour, as in the case of AXA Bank’s Soon, which nudges customers to act more responsibly towards their finances.

Since many mobile-progressive players are start-ups or small firms, they know how to leverage their ecosystem to strike the right partnerships, even with traditional banks, if necessary. Take the example of Irish start-up Instabank which offers a mobile banking solution to banks who can simply lay it on top of their existing infrastructure. On the other hand, traditional banks tend to go it alone, and in the process miss out on the opportunity to reap synergies in learning, reach, cost and scale.

There’s also the question of agility. Riding the wave of new technology, mobile-progressive players have disrupted their way into niches like payments, mobile commerce and social lending. In comparison, traditional banks are hampered by size, conservatism and fears of cannibalisation. They need to put these aside and embrace mobility without reservation. Customer demand for uninterrupted mobility and the development of technologies like geolocation and wearables fulfilling such demands, leads to only one conclusion — that it must be mobility first and foremost.

(Rajashekara Maiya is Associate Vice President & Head – Finacle Product Strategy & Pre-sales, Infosys)

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Published on February 19, 2015
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