Saturday, February 28, 2015

Is Mobile Banking a unique Channel?

iPhone 4s, showing Google Search
Source: Hebrew Wikipedia
Apple's iPad (left) and ,  Amazon's Kindle Fire (right)
. source: Wikipedia

The advantages of Self Service channels are well known in Banking, as well as in other verticals. 
The advantages are depicted in a post I wrote two years ago. The post is titled:  The Marriage of Customer Centric and Multi-Channel

Recently I read an article titled: Consumers Addicted to Mobile Banking, written by Jim Marous.

According to the article "Mobile devices are transforming the way consumers conduct their everyday banking. Digital is disrupting existing banking paradigms and creating tremendous opportunities for new financial industry players".

As far as the question: Is Mobile Banking a unique Channel? is concerned, no doubt that Jim Marous believes that it is unique because is is a paradigm change.  

The article cites a survey of Carlisle and Gallagher Consulting Group. 1,005 American consumers participated in the online survey.  According to the article, 55% of the survey participants used Mobile Banking 2-3 times a week. This finding supports the conclusion that the Mobile Channel is very popular and probably will be used more frequently in the future.

Business Characteristics of Mobile Channel Users
"Laptop Banking is the strongest Digital Channel". This survey finding supports the idea that at least currently, the Mobile Channel is not unique.

All my banking activity is from a Laptop. However, almost every time I use my Laptop for a banking activity I use it from my home. Probably, I am not the only one who use Laptop instead of Desktop. 

Mobile Channel users whose business characteristics could be different from other Retail Banking customers are Pablet users.

According to the survey, Pablet Banking users are usually young male (25-34). They are habitual Mobile banking users and multi-device owners.   

Ten years ago Internet channel users were usually preferred customers. 
They have more money and less time than other channels Channel users. The young Internet users are expected to have high income or a lot of assets in the future.   

I guess that today Pablets users characteristics are similar to ten years ago Internet users characteristics i.e. very attractive banking customers.

Pablets users characteristics which make them attractive customers  are:

1. Busy  
They do not want to waste time in order to go to a bank branch or wait until they get home and use the Internet channel. 
Probably, they are busy because they work and earn money or study and have a potential for future high income.

2. Tech-savvy
In the emerging Digital world, tech-savvies income or future potential income is usually higher than other people's income.

3. Young
Young people's income is frequently lower than their future income  

4. Male
Statistically men's income is higher then women's income.

Which Banking Functionality is popular in the Mobile Channel?
The survey findings reveal that the most popular activity is viewing balances (more than 90% of the Mobile Channel users). Other popular activities are transferring funds and paying bills.
Depositing Checks is gaining popularity.  

My Take
 Smart phones and Pablets raise our Availability to almost 100% of the time we are not sleeping. We use this Channel for performing many tasks, which were performed via other channels few years ago. Mobile Banking is not an exception. The Mobile channel will be used more than it used currently, however we should be aware of its limitation and risks. 

Retail Banking users activity patterns
I access daily my bank website. I view my balances and if necessary, I deposit money or draw money from a deposit account. Sometimes I transfer money. I deposit checks in an automatic machine. Occasionally, I pay bills using my credit card. 

Most Retail Banking customers I know, access their bank accounts less frequently than me. 

Their activity patterns are usually similar to my activity patterns.
If you will read again the paragraph titled: "Which Banking Functionality is popular in the Mobile Channel", you may deduce that Mobile Channel users activity patterns are probably similar to other channels usage patterns.

What is the Value Proposition of the Mobile Channel?

1. If you are very busy you can perform your activity anytime.
I do not think that this flexibility is significant advantage for most Retail Banking Customers. 

2. You can save time by transferring money immediately from your Mobile device
You can transfer money via Internet and Contact Center as well.

3. You can deposit checks from your Mobile device instead of finding an automatic machine or a branch
It could save a lot of time. Personally, I think that this functionality has the higher Value Proposition. It looks like that I am not the only one. According to the survey, this functionality is gaining popularity.

Security is the most important concern. Currently, the Mobile Channel is less secure than other channels. 
The device could be stolen or breached. The Connectivity via Public Networks and Wifi is less Secure than your home or office networks etc.

The Bottom line
The Mobile Channel as defined in Carlisle and Gallagher Consulting Group's survey is not unique. 
The Pablet and Smart Phone channel is not yet unique. It may be unique channel, if its usage patterns will provide significant Value. 

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