Mobile Internet Usage is Driving a New Wave of Mobile Banking Services
A new report from Arthur D. Little has identified investment in mobile banking as a promising revenue growing opportunity for the global financial services industry. Moving well beyond simple text-based balance updates, Mobile Banking 2.0 will capitalize on customers' increasing mobile internet use to carry out complex transactions and introduce novel ways to reach customers through the mobile medium.
Around the world, customers' banking behavior is changing, with a significant decrease in branch use and a steep increase in the use of internet and telephone banking. In its new report, Arthur D. Little argues that mobile banking is reaching product maturity, and the traditional SMS-based mobile banking service is simply no longer enough to meet customers' increasingly sophisticated telecommunications expectations. There are four specific areas driving the development of next generation mobile banking, all of which have scope to increase banks' revenue, customer retention, and brand equity. These are:
- Convergence - no longer just industry jargon, convergence is now a reality. Today's internet user is increasingly mobile (for example, 29% of Chinese internet users have no computer access, and access the web via mobile handsets)
- Advanced handset technology - the iPhone and other internet-ready mobile devices are driving integrated web- and telephone-based banking services, supported by specific mobile applications
- Security concerns - increased risk of fraud, theft, etc. further boost mobile banking with its incorporated personal security safeguards such as PIN-protected chips and operator-controlled functions
- Near field communications - technology that allows mobiles to communicate with other nearby devices could be revolutionary in offering online payments, providing authorization and processing services, and supporting a range of location-based services and marketing opportunities
"The mobile phone has become one of the most indispensable devices the modern consumer carries with them each day. For banks to deliver on personalized service and an exceptional customer experience, offering sophisticated mobile banking solutions will be a key differentiator in the coming years," said Dr. Gerrit Seidel, Managing Director and Global Head of Arthur D. Little's Financial Services Practice. "There is clearly a great deal more banks can do to develop and upgrade their mobile banking offers in order to move beyond the SMS-based model. However, the most significant benefits will come to the banks that invest now and take the lead as early innovators in next generation mobile banking."
Benefits to the banks
Given the current economic situation, banks are understandably cautious about making investments into new technology platforms or unproven products and services. However, with banks under pressure to retain customers, develop new revenue streams, and maintain their competitive advantage, Arthur D. Little's new report argues that next generation mobile banking offers several benefits that outweigh the set-up and operating costs. These are:
- A decrease in call centre queries - a major cost savings for banks
- New revenue opportunities - from personalization- and location-based services
- A new tool for customer acquisition - attracting niche customer segments (i.e. technophiles)
- Improved brand image
"With mobile internet at the precipice of mass adoption, the banks that will succeed in making the most of their mobile banking offers must act fast. Developing innovative technology solutions that are efficient, secure, and cost-effective while understanding the customer's growing desire for personalization and real-time access are the dual tracks to successful Mobile Banking 2.0," concluded Dr. Gerrit Seidel, Managing Director and Global Head of Arthur D. Little's Financial Services Practice.
Banking on the go is now available for download at www.adlittle.com/bankingonthego (registration required)