Monetizing mobile banking

Mobile is all the rage these days. With Facebook now routinely ahead of analyst estimates largely due to their drive to monetize the mobile channel through improved ad sales performance, it is no wonder that “mobile” is making headlines day in, day out. Companies are scrambling to not only adopt mobile but profit from it.

But what are banks doing in this space?

From a customer perspective, banks have been adopting mobile, but fairly slowly. Part of the reason for that is banks tend to see mobile as a channel to reach their customers, when really mobile is part of larger change in banking that is moving from traditional to digital. The future of banking is much more about customer centricity – and part of that is you need the data to understand customer needs, and the agility to deliver products and prices in the way that customers want. Some banks understand this, and for them, mobile is less of a channel and more a means of aligning interests between the bank and its customers. For example, CEB TowerGroup estimated the cost of handling a transaction in-branch at about $1.34 versus $0.14 through a mobile device. The smartest banks are allowing customers to choose how they interact with banks in a way that aligns the customers’ needs with the bank’s wants. This is the smart way to monetize mobile banking.

If you look at a leading bank like Barclays, they are really doing some innovative things that go beyond just adopting mobile. First, they have Pingit, which is a simple application that allows customers to send or receive money with just their mobile. Yes, it is mobile, but it is also digital rather than ‘traditional.’ Barclays also has the Features Store, where customers can choose the features and benefits they want with their current accounts. As Barclays says in their ads, “some [features] are free; some you pay for.” These are two great examples of the digitization of banking – moving from ‘one size fits all’ to ‘banking my way.’ Smart innovators, like Barclays, understand this transition and are becoming more like retail stores. The challenge is that in a bank, the product and pricing environment is inherently more complex than in a retail store, yet customers still demand a simple banking experience.

As part of the trend toward simple, digital banking, banks also must look to the cloud, which is a means to unlocking further value through mobile devices. For example, having the power to deliver innovative customer experiences through mobile, which traditionally would have been limited by the raw computing power of mobile devices, is not really relevant if you can host managed services virtually. For example, today, if you want to do something simple like quote a price for a customer based on the relationship value, you can do that very easily by running your relationship-based pricing computations virtually, and delivering just the result to the mobile device. If it seems strange to imagine the shared experience of viewing a screen with pricing information on it, that is because we have unconsciously created a physical gap between the bank and the customer, partly through ordinary design and partly through clunky systems. It is through simple, tailored experiences like on-demand relationship pricing, that we can reduce the distance between banker and customer, and increase returns through mobile.

From an ROI perspective, we recently explored the opportunities for banks in mobile in our Relationship Banker Journal. We look at the potential returns and explore various carrot and stick models which could be effectively deployed for consumer and SME segments as revenue enhancement strategies. To learn more, you can read the article online or subscribe to the Journal for free.