Customers have started using their mobile devices increasingly to conduct their banking transactions, making payments and doing their online shopping. A recent survey report published by the Board of Governors of the Federal Reserve System in March 2012 throws up the following interesting findings:
- 84% of smartphone users have accessed the Internet on their phone in the past one week
- 90% of mobile banking users used this facility to check account balances or recent transactions and 42% of them used it for transferring funds between accounts
- 47% of mobile payment users used mobile banking for making online bill payments
- Concerns regarding security are holding back wider adoption of mobile banking
- 29% of the “under-banked” population used mobile banking and 17% have used mobile payments in the past 12 months
Interest in mobile banking is driven by customers who interact more with mobile banking solutions than they do with Internet banking. Financial institutions are getting into this space to attract younger customers. While most banks have a common mobile banking application for all of their customers, it is likely that banks will start developing customized banking applications that are tailored to the needs of specific groups. Banks that currently offer the basic features through mobile banking will need to offer the entire gamut of services through this channel to maintain parity with competition. Else they risk losing some segments of their existing customers to competitors who are seen as offering this convenience.
Mobile banking features
Banks have historically offered basic features like viewing account balances, account history and performing fund transfers. Additional features include locators that enable customers to find the nearest branch or ATM locations. Some of the features that have evolved in the recent times include:
Mobile Check Deposits: One of the recently launched features is mobile check deposits that allow customers to quickly scan the physical check and electronically transmit the same to the bank for processing and subsequent credit to their accounts.
Digital Wallets: Digital wallets enable customers to pay for their purchases using their smartphones. This feature has the potential to become a game changer. However, the checkout process on the mobile is not fully evolved and this results in high drop rates.
Person to person payments: With the advent of real time settlements, the uptake for mobile banking services is increasing for making person to person payments.
When developing mobile banking applications, organizations need to ensure that they pay attention to the following aspects:
Usability: This is an important dimension that organizations should keep in mind. The application should be developed such that they are light weight and easy to use with the right confirmation dialogs and appropriate screen size. Organizations should bear in mind the difference between e-banking website and mobile banking applications when designing the navigation and layout.
Security: When the application is being developed, care should be taken to ensure that the user is not permitted to store all the security credentials in the application. This would ensure that the users’ account information is not compromised in the event of a loss of their device. Additional security can be ensured by employing appropriate encryption techniques to protect transactions and data streams.
Mobile technology has evolved by leaps and bounds to empower customers to conduct their financial transactions at a time and place convenient to them. The widespread ownership and usage of mobile devices can expand financial inclusion to those segments of the population that was hitherto under-served. While security concerns may limit the uptake of mobile banking, addressing these concerns can lead to higher adoption rates. And banks that are not on to the bandwagon will have no choice but to offer the entire gamut of services to ensure that they do not lose market share.