The meaning of the word mobile has changed over the last decade to mean much more than the ability to move freely from one place to another. From a simple cordless phone that allowed users to move away from the base, to a device that can do much more than make and receive phone calls, mobiles have become popular with the Gen Y. Mobile banking or mobile money as it is popularly known, has become the medium of choice for many banks and their customers. According to the Global Mobile Money Report 2015, although the biggest obstacle to the growth of mobile banking is trust, there is no doubt that mobile banking is booming.
The Millennium Generation prefers non-traditional banking methods
More than half the Millennials are already using non-traditional payment methods such as PayPal. The major driver for this increased usage is convenience and ease. Less than 30% consumers of advanced age, however, use non-traditional payments. Gen Y is therefore more likely to use mobile wallets than their predecessors are. With better NFC penetration, better transaction support is required.
The Social Scenario
Peer-to-peer transfers, loans and other transactions are likely to increase and the finance industry is perking up to make the best of it. P2P lending yields lucrative ROI and the industry is poised to take full advantage. P2P affords efficient transfers and once regulations are in place, traditional banks will have to reconsider.
New Opportunities for Cross Selling
Mobile devices facilitate cross selling of products and services. Banks have begun to offer property searches, ready reckoners, instant EMI calculations and much more using the mobile banking channel. A classic example is the Chase My New Home launched in 2012. Other services such as e-coupons, coupon reminders when visiting malls, and discounts for mobile wallet users are on the increase to promote cashless transactions using mobile money.
Something more than Knowledge
Knowing does not endear the consumer to mobile banking. Trust and confidence that are achieved through experience will endear the consumer. Banks need to invest more in this area by familiarizing them with the benefits and ease of mobile banking. Today’s consumer is aware of the dangers of the internet. Reassurance that their money is safe will go a long way to increase mobile wallet use.
The Free Mobile Wallet
A free gift is always attractive. Banks should collaborate with mobile service providers to devise new plans for mobile money transfers. Payment with plastic cards is a familiar and easier option to the mobile wallet. Most customers prefer to be safe using a procedure with which they are familiar. New plans with no additional costs will encourage customers to use the cheaper option of mobile wallets.
Separate the Tablet and the Mobile
While both the tablet and the mobile phone are considered mobile devices, they differ in usage and the type of customers who use them. Tablet users are generally older and more mature than mobile users. They share a longer lasting relationship with their banks. They are generally affluent and well-placed individuals. Recognizing the difference and understanding it can provide better opportunities to both the banks and their customers.
The approach to retail selling is changing as stores strive to meet the diverse demands of the mobile customer. The consumer now demands rather than accepts the features of the mobile banking apps of the retailers. Demands vary from simplicity to complex all-inclusive apps that provide entertainment, save time, and yet are simple to use.
New Shop Windows
Mobile apps are becoming the new shop windows. These windows showcase products and services right inside the customers’ homes. According to Forrester Research, banks indulge in very little marketing and product research. Even so popular belief has it that customers will now search for financial products just as they do other products on smartphones and tabs. Mobile play stores are becoming the single window for every product and service. Applications via mobile stores will increase and the Gen Y consumer who seeks advice and not advertisement will shape the future of mobile money according to Gina Bleedorn of Adrenaline.
Mobile Wallet Acceptance
Although the mobile wallet is yet to catch on, Capgemini says that m-payments will grow in future. Apple Pay and similar services are the payment method of choice for the Gen Y set. What is required is proper back-end to support the m-pay process. Says David Brear of Gartner, banks and other financial institutions have to establish new channels of communication with the consumers. Domnic Venturo of U.S. Bank seconds this by saying that although wearable device solutions for meeting the consumer demands will be basic to begin with, the move to contact fewer terminals is a given outcome of mobile banking.
The New Challenge to Banking
Digitization of banks and mobile banking is changing the way customers interact with banks. While the Gen Y demands the convenience of mobile and internet banking, the older generation and the more affluent customers want tailor made plans and personalized advice. Turning the affluent customers to digital customers and sustaining them is the new banking challenge. Banks today are struggling to sustain customers and turn loyalty into financial gains. According to a Bain Report, the future moves aimed at sustaining customers include ruthless efficiency in serving low-value customers, new offerings for the high-value customers, redesigning of channels to serve the affluent customers and mass market, and reclassification of customers to design a new loyalty system.
The banking industry is experiencing a paradigm change as it goes digital. From cashless plastic transactions to mobile wallets, the industry has come a long way from traditional system of personalized banking. A Bain survey finds that an increase in mobile banking and the low loyalty of affluent customers brings to light the need for integration of the digital and the physical channels. This is just the first step towards a new digital banking era.