Banking on a mobile relationship
The last five years have been tough for the UK banking sector, but optimism is slowly returning, writes Ian Byrne, banking director UK & Ireland at Wincor Nixdorf. Capital reserve ratios are largely being met, the prices of bank stocks are becoming more stable, and there is now even talk of the Government divesting its stake in the banks which it bailed out. Indeed the sector has deserved this boost, but it has got a lot of work to do before it can rekindle the relationship with today’s more technology-adept consumer.
According to the Edelman’s Trust Barometer Index, UK banks have the lowest consumer trust rating (29%) compared to any other developed nation in the world. As a consequence of the economic downturn, reduced investment in retail banking services is likely to have widened this trust margin even more, by causing banks to fall out of touch with consumers.
If banks are to succeed in regaining consumer trust and growing their retail business too, they must exploit this window of opportunity and invest further into an omni-channel strategy. Doing so will enable a more convenient way of banking and make sure that the demands of today’s and tomorrow’s customers are met.
One trend in particular that is changing the way customers interact with banks is the increased adoption of smartphone devices. Most customers of banks already use smartphones and tablet computers to manage various aspects of their daily lives and now demand a similar level of access to their financial information via the same means.
According to Juniper Research, the number of mobile banking customers is set to grow to one billion by 2017, representing 15% of global mobile subscribers. Such acceleration of users is staggering when considering that smartphone banking has only been available for three years; it is a definitive indicator of just how prevalent mobile is set to become within the banking industry.
Mobile banking should be seen as a logical extension of banks’ existing sales and service channels, with the main driver being convenience for the customer. The Federal Reserve estimates that 21% of mobile users began using mobile banking tools in the past 12 months, though the most popular uses remain basic i.e. checking account balances or performing transaction inquiries. As customers adopt a more mobile-centric lifestyle, they are likely to demand a greater range and quality of features that are available at bank branches and ATMs on their smartphones, such as cash withdrawal and efficient money transfers.
Integrating mobile services into banks’ existing channels is the name of the game, as current offerings are distinctly fragmented into physical, mobile and online functions and offer little in way of cross-channel solutions. Amalgamating these banking channels seamlessly is complex but possible. In order to do this, banks must solve the issue of incorporating modern solutions alongside legacy technology in a way that is cost effective.
In with the old and the new
The banking industry has been slower than others with adapting to the mobile generation. This is largely due to the challenges in overlapping new back-room technology over legacy solutions. Combining this with other pressing industry IT investment issues, such as the withdrawal of extended support for Windows XP, which has meant all banks are required to migrate to the newer Windows 7 operating system, has only compounded these challenges.
In order to be able to provide customers with innovative solutions and, at the same time, be able to integrate new and legacy hardware together seamlessly, banks should invest in modular web-based software components.
Ernst & Young’s, 2012 Global Consumer Banking Survey states that customers would be more satisfied if banks offered a greater mix of services across a range of outlets. Having software that operates on an open, network-centric architecture can act as a firm backbone to ensure that a bank is capable of providing this mix of services across multiple platforms, regardless of the technology.
Blending physical with digital
The integration of digital banking innovations with traditional banking facilities can allow customers to enjoy the best of both mobile and physical banking. The increased adoption of mobile does not mean that we will see the end of physical banking. In fact, mobile could be used as a means to encourage people to visit branches more often through informing them about useful services or facilities that are available in branches on a particular day. This information could even be tailored to a customer-specific level based on the types of facilities they require or use regularly to drive additional service value.
Some UK banks have enabled their customers with solutions that allow them to withdraw cash at ATMs using just a smartphone. Customers simply request the amount of cash needed into a smartphone app and they are then presented with a secure numerical code which they type into an ATM in order to withdraw the cash requested. This tool eliminates the need to carry a card, can reduce queue times at busy ATMs, and is also a helpful solution for those who have lost their bank card and are in need of cash.
We should also expect to see more NFC-enabled banking solutions making headway too, as soon as payments businesses, mobile operators and banks establish a more effective way to work together for customers. Today it is mostly being used as a payment delivery tool. But perhaps in future, banks might use it to identify and authenticate customers, and our personal preferences, when in store or at a computer.
How mobile will shape the future: The custom service
It may not be long before we see wearable payment solutions like wristbands or watches on the arms of customers. The branch of the future may house walk-in pods, which customers can enter to privately solve queries through an authenticated touchscreen terminal, or even to discuss financial matters with a member of staff via a virtual Skype-like interaction. Soon, banks might even be able to provide completely customised banking solutions, tailored to each individual’s needs.
What is almost certain is that the future of banking lies literally inside the palm of customers hands. Traditional forms of banking are set to remain important for a long while yet but what will change is the sophistication in how these traditional banking processes are connected with mobile and online banking. The technologies mentioned above are only a glimpse of what is possible, not only between the physical and digital but also the new and the old. As innovation becomes more complex to match the demands of the customer, banks must ensure that they have the correct software framework implemented if they are to best meet them.