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Connexus : Issue 36
E) Online banking improvement C) Social media A) Mobile banking D) Branch renewal B) Contactless payments F) Core banking system upgrade Source: Survey of Abacus CEOs, December 2010 Mobile banking is one of the top three initiatives for mutuals in the year ahead. 70.4% 51.9% 48.1% 35.2% 14.8% 7.4% THE VALUE PROPOSITION At face value, mobile banking is perhaps the least expensive service channel for institutions. However, there's also the need for customer education to change their habits and inform them of the benefits and incentives. They'll be asking "What's in it for me?" and "What can't I do online?" One obvious value proposition is convenience -- banking on the go. Value propositions for customers aside, most institutions don't have clear strategies for generating revenue from mobile banking. MULTIPLE SOLUTIONS Deciding which access method to use is a tricky proposition. Downloadable applications, mobile web, text -- each pathway has its pros and cons. Some institutions, such as Bank of America and Wells Fargo, offer all three. But this could be cost-prohibitive for smaller institutions. The popularity and user-friendly nature of smartphones such as Apple's iPhone and Google's Android are coaxing consumers to use downloadable banking apps. While most institutions provide free iPhone apps for balance checking, fund transfers and locating ATMs, the challenge is to create new apps for other smartphones to widen the reach. St George's boosted mobile banking app can be used with iPads/iPhones, Blackberry's Torch 9800 and Android. Another appeal of apps is their branding value. The institution's icon sits on the mobile phone interface even when the app isn't being used. EDUCATION FOR ALL Smart and third-generation (3G) phones are still emerging technologies. Most consumers -- 70 per cent, according to KPMG -- are yet to own a smartphone or haven't completed a single mobile banking transaction. Many people who do have a smartphone don't fully understand their device's mobile "...rather than taking a generalist approach, you need to carefully define and target your initial customers." banking functionality. Even customers who commonly use apps need careful educating, not least because of the concerns with potentially insecure apps and malware. Mobile banking may be the greatest thing to hit the industry since ATMs or online banking, but the move to mass consumer adoption remains a work in progress, particularly when it comes to more transactional functions. In the Datamonitor survey, about 30 per cent of consumers agreed or strongly agreed with the statement "I would feel comfortable using my mobile phone to check my account balance." Only 24 per cent agreed or strongly agreed with the statement "I would be comfortable using my mobile phone to make bank transfers or bill payments." After developing a mobile banking platform, a large part of your project activities will be about encouraging usage. In the same way consumers gradually warmed to banking through a computer, so they must be acclimatised to the idea of banking with their mobile phone. And some tasks will take longer to get used to than others. -- Shu Fhang Soh is a senior industry analyst, Abacus. The mutuals' agenda for 2011 This is an edited extract from an article first printed in Abacus Market Scan 2011. connexus www.abacus.org.au 49 TECHNOLOGY 0% 10% 20% 30% 40% 50% 60% 70% 80%