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April 28, 2015

Retail Banking Goes Upwardly Mobile

Posted by Sai Kumar Jayanty (View Profile | View All Posts) at 6:30 AM

If the Internet was instrumental in transforming the fundamental dynamics of banking interactions, mobility promises to push the envelope even further. Innovative technologies, from Near Field Communication to Augmented Reality to Social Analytics, are not only simplifying transactions by eliminating traditional pain points, but are also playing a significant role in making banking an immersive experience.

Retail was one of the first industries to be disrupted by the power of mobility, which compelled it to introspect on the role of physical stores in the context of channel-agnostic digital consumers. It's a situation that retail banking is now grappling with as the relevance of the branch continues to come under scrutiny.

It may be a bit too early to write off the branch completely. But it is indeed time to reassess and recalibrate the function of the branch given changing banking dynamics and customer behaviors in the age of mobility. Here then are three trends that will have the biggest impact on the future of retail banking.

Mobility will compel banks to further hone their focus on customers. Early conversations on mobile banking invariably evangelized digital natives over older demographics. But the realization has since dawned that technology adoption is driven by utility rather than age. Mobility not only challenges generalizations but also gives banks the opportunity and the analytic tools to unambiguously establish expectations, motivations and behaviors at the level of individual customers. One example is the mobile Personal Financial Management service from German start-up NumberS that consolidates all user financial transactions from multiple service providers into a unified view to help customers build a comprehensive and personalized financial roadmap.

Mobility has already cut down the need for person-to-person interactions for a whole range of routine banking transactions. This trend will soon extend to complex transactions as developments in mobile biometric technologies deliver more sophisticated and secure alternatives to traditional methods of identification and authentication. Even traditionally high-touch practices like wealth management or advisory, could soon use technologies like augmented reality and video conferencing to make remote interactions as productive and compelling as face-to-face meetings. For instance, IndusInd Bank not only has a digital branch featuring a facility for videoconferencing but has also launched a Video Branch smartphone app that allows customers to connect directly with their relationship managers.

Mobility's biggest impact has been in the area of payments where it has not only delivered explosive growth but has also enabled maximum disruption while significantly raising the risk of disintermediation for traditional banks. Innovation is what distinguishes payment disruptors from conventional banks and this is what banks must focus on if they are to be a part of this huge opportunity. Banks like Turkey's Denizbank are already delivering innovative services to their customers by bundling merchant offers with geo-locational capabilities and payment applications in a comprehensive and engaging solution.

Mobility is both an opportunity and a challenge for traditional banks. Mobile banking is triggering more frequent interactions between customers and their service providers, each of which is an opportunity to build engagement. The challenge for banks is to optimize each interaction to the needs and expectations of that individual customer so as to realize mutual value.

April 10, 2015

Taking mobility beyond transactions

Posted by Venkatramana Gosavi (View Profile | View All Posts) at 6:19 AM

As the banking sector evolves towards a 'mobile first' end state, banks need to take a more holistic view of the possibilities of mobile banking. The focus needs to be as much on customer experience and engagement as on converting that into wallet share and profitability.

In a 'mobile first' paradigm, banks have to focus their strategies on mobilizing the entire customer lifecycle rather than on merely enabling transactions. Take account origination for instance. Even as banks endeavor to bring this feature up to scratch and scale in the online universe, customers' expectations have already skipped ahead to mobile devices, which it is estimated will account for up to 12 million checking accounts by 2020. As more and more customers evaluate banks on the basis of mobile capabilities, a simple and streamlined account opening experience that leverages the native capabilities of mobile devices could indeed be the acquisition lever that banks need.

If mobility has the potential to create a convenient and new customer acquisition gateway for banks, they need to follow it through by also mobilizing their sales processes. Mobile apps that have been optimized for sales & marketing, in terms of identifying and leveraging opportunities for up-selling or cross-selling, are still quite rare. This represents a huge opportunity cost for banks considering that cross-selling, together with cost reductions and customer retention, could take mobile banking ROI up to nearly 16 percent. And mobility offers some uniquely native opportunities, like geo-location, to efficiently deliver products that not only fulfill need, but do so in the correct customer context.

The concurrent focus must be on mobilizing financial empowerment. Personal Financial Management (PFM) is also emerging as a key determinant of service provider choice among millennials. There is also an established positive correlation between active mobile banking users, usage of PFM solutions, and profitability. Banks need to deliver PFM solutions & tools that will help customers build an aggregated view of their finances across multiple service providers in order to build a holistic strategy that will help them achieve their goals.

And they must not forget to mobilize their employees. Mobile-first is not a cultural shift that applies exclusively to consumers; it's a broad social trend that is equally relevant to employees. The advantages of BYOD in terms of employee productivity and organization performance have already been documented and enterprise mobile strategies cannot afford to ignore the inherent payoffs of a mobility-empowered workforce. More specifically, real-time access to information and applications can also help field sales personnel achieve higher levels of service and engagement.

Finally, now that it seems fairly certain that the future is going to be 'mobile first', if not 'mobile only', the approach should be to quickly graduate from mobilizing discrete transactional chunks of banking to redefining the entire banking experience around the possibilities of mobile. It would probably help to be aware that a new breed of 'mobile only' startups has already bet all its VC money on that opportunity.

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