Financial services firms globally are investing strategically in enterprise mobile financial service solutions to deliver more mobile-based banking services and reduce the overall cost of operations. According to a recent survey by KPMG, mobile banking has already reached critical mass with 33% of US consumers conducting banking transactions over their mobile devices. This number is expected to significantly increase based on several trends. First of all, more consumers are becoming comfortable with the security of executing mobile transactions. Second is the continued penetration of smart phones and third is the rapid emergence of tablets as both a mobile device and in many circumstances, a replacement for standard desktops/laptops.
The first wave of mobile applications could be viewed as simple extensions of existing online capabilities to a new channel (e.g. view your checking account balance on your phone as opposed to desktop). However, the next wave of innovation is driving capabilities unique to the mobile market, leveraging the technology capabilities of mobile (always on, handheld, portability) as well targeting a specific set of users (lifestyle, social, collaborative).
Financial institutions are investing considerable time and resources to take advantage of these trends as they see opportunities for enhancing customer experience and setting up potential new fee revenue, while at the same time minimizing operational costs and streamlining operations.
Some interesting mobile applications that are changing the marketplace include:
1. Mobile Check Deposit
These applications allow you deposit checks from anywhere at any time without making a trip to the branch. While remote deposit capture has been a mature offering, it is largely targeted at business and other high volume check depositors. Mobile check deposit targets the everyday retail banking customers, providing them with a capability that did not exist. While it offers consumers new accessibility, mobile check deposit also reduces costs for banks due to less trips to the branch. JP Morgan Chase’s Chase Mobile app supports Mobile Check Deposit on iPhone/iPad or Android.
2. Peer to Peer Payments/Mobile Money Transfer
We have finally reached the time when consumers can execute a person-to-person payment without having to write a check and without needing to know the recipient’s bank account information for a wire transfer. New mobile capabilities have arrived that allow you to send or receive money merely by using the recipient’s mobile number or email address. PayPal offers ‘Send Money’ functionality through its mobile application that allows you to pay through your credit card or your PayPal account. What’s more, the application also provides capabilities for bill splitting when you are out with friends for dinner or other social events, allowing you to settle your tab immediately.
3. Photo Bill Pay
Danske Bank has deployed a mobile application that allows you to take a snapshot of a bill (utility, phone, credit card etc.) and submit payment from your mobile device. The Photo Bill Pay application quickly corrects image distortion of photo, extracts appropriate details (such as account number and payment amount) from it and then allows the user to process it. This eliminates the need to enter details manually.
4. Advanced Trading and Research
Fidelity’s App for iPad allows customers to track their holdings online, perform market research, execute trades, manage account information and initiate customer service requests. The app is specifically built to leverage the iPad’s touch and visual capabilities allowing you to select up to 10 technical indicators across a variety of fully interactive charts that you can pinch, zoom, tap, and customize to your needs. It provides integrated audio/video plus GPS navigation to find the nearest Fidelity Center.
5. Mobile Wallet/Payments
In the latest turn in a rapidly evolving market place, PayPal has announced a pilot program with Home Depot to allow shoppers who have a PayPal account to make purchases in store simply by entering their cellphone number and a PIN. Future features will allow customers who scan an item in store with their phone to receive discounts to be used if they purchase the item. In time the program will also link gift cards into your PayPal account. PayPal is piloting the program with Home Depot but intends to offer the program at 20 major retailers by end of 2012.
These examples above represent several innovative trends happening in the mobility space for financial institutions. Adoption rate for mobile applications is rapidly increasing and we are beginning to see entirely new capabilities based on the device characteristics and convergence of social and consumer preferences. Financial institutions are investing in mobile, making it a high priority, as they see opportunities for new revenue streams and new customer segments while reducing costs.