In the latest issue of BAI's Banking Strategies Karen Epper Hoffman explores whether or not there is a viable business case (from banker's perspective) in developing mobile banking capabilities.
At mid-2007, at least nine U.S. banks had begun to develop or had rolled out a mobile banking service to their customers, either through a proprietary mobile Internet banking site or via an application embedded into the handset. Proponents believe cell phone banking will grow quickly based on ubiquitous cell phone usage and consumers' growing expectation of anywhere/anytime access. Yet, with banks providing the service to customers for free and carriers clamoring for a piece of the action, a business case remains elusive. Banks say they will justify the investment based on strengthening customer relationships, lowering delivery channel costs and paving the way for more sophisticated mobile financial services in future years.
With very few actual consumers using mobile banking, it's too early to tell how things will play out. I'm an early adopter (my bank, Wells Fargo, offers access to both my personal and small business accounts) and I'm already hooked on the ability to check balances and make transfers from anywhere.
According to the article, these are the key components of the cost-benefit equation:
- Building stickier relationships with customers (just as investments in online banking are justified)
- Lower usage of more costly channels, such as the branch and call center
- More advanced tasks, such as making expedited payments or remittances, for which the banks can then collect incremental revenues
- Competitive reasons (similar to online banking, mobile access will become "table stakes" to compete effectively)
- Per transaction or per user fees paid to mobile carriers (telcos)
- Intermediary companies, bridging the gap between banks and the various handset/carriers, that must be compensated for their investment
- Internal bank investment in the development of a new channel
- Lack of standards across devices and software platforms
Mobile Banking: Where's the Business Case?
by Karen Epper Hoffman
BAI Banking Strategies