Is Mobile Only Banking the Future?

Ved Sen, mobility practice head, UK and Europe and Tony Virdi, head of UK banking and financial services at Cognizant

The speed at which the mobile market evolves is staggering. We have seen disruptive technologies such as the tablet really change the way we interact and go about our daily lives in recent years, both as consumers and within business. And newer devices including smartwatches are poised to have a similar impact. The market moves so fast that mobile trends we were talking about three to six months ago as ‘something for the future’ are now a reality for some financial organisations. Just as we started to look at mobile first, where banks need to align their services and strategies to cater for mobile before desktop or other traditional channels, the notion of mobile only is now slowly creeping into the fore. But who are these mobile only consumers? Are they real? Are we really heading for a mobile only world?

Tony Virdi

Consider this report which says that a third (33%) of Barclays’ digital banking customers are mobile only. To be more specific, they are app only. Your own experience with customers may suggest a very different percentage. However, there is no denying that there is a segment of digital consumers for banks that will only browse and buy products and services on their mobile devices. We have spoken to many financial organisations already about this, who are preparing to serve the mobile only troupe, so the wheels are definitely in motion.

In fact, the sums being transferred online are already massive and, as Juniper Research predicts, mobile transactions will hit $1.3 trillion worldwide by 2015. As a result, we are seeing businesses turning to mobile devices for payment acceptance as more and more consumers buy and browse for products and services on the go.

Knowing mobile growth, it will hit you fast. The question is, are you ready for it? From our experience, many banks are still lagging behind. Others are being forced to change their retail model, with a major bank having recently announced it will be closing 44 branches across the UK, based on a 30 per cent fall in in-store transactions over the last few years.  It is also clear that the cost to income ratio for the mobile channel is much healthier than traditional channels.

What is more, with the PC market in decline, there will soon be households that have tablets and smartphones, but no PCs and we think this is even a reality in many places already. A simple test every bank should conduct is to explore how easy or difficult it is for consumers to sign up and conduct all of their transactions via mobile devices. You will probably be surprised by the result.

We have come across a number of banks in the past year who believe that the mobile app or the mobile optimised website is not significant for them, because their customers are not using it. In many cases customers are not using those channels because they are under developed and provide average to poor customer experience. To avoid this misconception, banks need to do all they can to put themselves in their customers’ shoes and judge whether they would be happy with the service and functionality of mobile applications themselves. The testing and development stages are critical times to do this, but you should be checking on a regular basis to spot any glitches before the customer does!  There also needs to be seamless links to social media.

Ved Sen

Another simple check is the micro-transaction. Consumers tend to break up longer and more complex tasks into much smaller, micro-transactions on mobile devices, as this fits not only the screen size but also the typical use case scenario. So rather than spend an hour on Saturday on your bank website, sorting payments and bills, customers may be doing this in five and ten minute chunks at a bus stop or in between other jobs.

Once you understand the mobile experience you are offering, how do you identify your mobile only customers? One of the simplest ways is to use analytics to map consumers device profiles, and behaviour patterns. Combined with monitoring social media channels, it would not be too complex to create a profile of the mobile only consumer.

The mobile only customer is a reality today and their tribe, though relatively small, will undoubtedly grow to become significant. The opportunity to personalise banking products via digital channels helps to reposition both banking and non-banking services, increase wallet share and income, and hence provide an important driver for change. By identifying and supporting mobile only customers now, financial organisations will be able to enhance their mobile operations and customer services to run better, while taking the innovative lead to stay one step ahead of the competition to run differently.