Growth In Mobile Banking Adoption Will Be Driven Mainly By Smartphone Apps

Since banks like Bank of America launched native iPhone apps for Apple’s app store in late 2008, there has been an ongoing discussion about whether the future of mobile banking will be dominated by native apps or browser-based services.

With the adoption of smartphones that let people download mobile apps (like iPhones, Andoid phones, and BlackBerrry devices)  still being small today, banks will need to continue offering browser-based mobile banking services to reach most of their customers. But with smartphone ownership growing fast, I expect that most growth in mobile banking adoption will come from native apps and not from browser-based services in the coming years because:

1) Native mobile apps offer a much more compelling mobile banking user experience:

  • Apps are easier to find. App stores have become an important way for consumers to discover content. To find a mobile app, customers simply need to search for the bank’s brand name in the app store. Furthermore, mobile banking apps often appear in the list of most popular free apps — which creates additional promotion. Banks promote their native apps heavily since it positions the firm as an innovation leader and associates their own brand to other popular brands like Apple. By contrast, it is more difficult for customers to find out about their bank’s mobile banking Web site domain. Initiatives like dotMobi, with specific domains for mobile-dedicated sites still suffer because it is not clear which sites carry the .mobi extension and which don't. Furthermore, — since mobile search is in its infancy —searching via search engines like Google require additional effort.
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European Banks Shouldn’t Neglect Developing Mobile Banking Apps for BlackBerry

Earlier this week, Ulster Bank announced that it launched the first free mobile banking app in Ireland for the iPhone. The bank follows many other European banks that have jumped on the iPhone app bandwagon in the past 18 months.

In a report titled "The State Of Mobile Banking In Europe: 2010" that I published earlier this year, I argued that thanks to its large-screen, touch-screen interface, the app store, and the fact that it mostly comes with fast all-you-can-eat data plans, it opened many people’s eyes for the potential of the mobile channel. In fact, iPhone users are about three times as likely to use mobile banking as other mobile phone users.

Of the 42 largest banks in the UK, Germany, France, Italy, Spain, the Netherlands, and Sweden, as many as 28 now offer iPhone banking apps — a whopping 67%. Although their launch has generated a lot of free PR, these iPhone apps have limited reach today. According to Forrester’s Consumer Technographics data, only about 2% of European mobile phone users have an iPhone and no individual country exceeds 4% adoption.

To reach more customers, many banks are launching apps for other platforms these days. So far, 12 out of the 42 European banks we reviewed offer apps for Android (29%). But only two banks (5%) — Spain’s la Caixa and Germany’s Sparkasse — can be found on RIM’s BlackBerry App World.

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New “State Of Retailing Online” Doc To Be Released On Shop.org Next Week

The findings from part two of Forrester’s annual survey conducted in conjunction with Shop.org will be available on the Shop.org site next week.  This installment of the "State Of Retailing Online" series will delve into the world of key metrics as well as multichannel and global strategies.

 Some highlights include:

  • Identifying improvements in performance and customer retention
  • Developing strategies for successful global expansion
  • Avoiding the pitfalls that many multichannel organizations face

 We look forward to sharing the full version on Forrester.com near the end of October.

Where Are You On The Social Spectrum?

Social shopping -- and service -- has become a reality: The percent of US online consumers opting out of social media -- Inactives -- has fallen dramatically, from 52% in 2006 to just 17% in 2009 while all of the categories of social media usage have increased. In response, eBusiness executives are doing the best they can -- as fast as they can -- to experiment with social media and create solid strategies.

The challenge? Most social initiatives originate in interactive marketing departments with marketing goals like awareness and branding, while eBusiness executives must tie their efforts to increased sales and decreased service costs.

Social then tends to raise more questions than it answers: Who owns social? What is the role of eBusiness in setting the social strategy? How do we create a strategy that helps our online sales while coordinating with other departments? Our new report The Building Blocks For Social Success in eBusiness explores how some firms are dipping their toes in the water -- we call them “experimenting” eBusiness groups -- and how others are in the “directing and governing” phases with social -- owning not just the templates and process for social, but the execution as well, for their entire companies.

Where are you on the social spectrum? Does your company host a Facebook fan page? Do you offer customer ratings and reviews? Are your social efforts focused on increasing sales or increasing brand awareness?  Is social integrated into your online sales experiences? I told you social raises more questions than answers! I’d love to hear your thoughts on the role that social can play in driving online sales.

The Continuing Globalization Of Online Retail

The past couple of months have seen a number of new initiatives and shifts on the global online retail front: Zara went live with a series of eCommerce sites (in five languages in Spain alone) while Gap started selling to an international online audience. At the same time, eBay conceded the market in China and looked to partner with market leader Alibaba. More companies have started coming to us asking about eCommerce in less traditional markets, with markets like Russia and Saudi Arabia being brought up with increasing frequency in our calls with clients.

We’ve recently published some research that helps companies sort through different international online markets: our Global Online Population Forecast looks at how the online population is shifting around the globe while A Snapshot Of Emerging Mobile Commerce In China puts the growth of mCommerce in China in perspective with its regional neighbors. Establishing A Global Online Retail Footprint looks at where US online retailers have expanded internationally and what factors they should consider as they decide which new markets to target. A few takeaways from recent research:

  • The BRIC countries (Brazil, Russia, India and China) will add more than 300 million new Internet users over the next five years; one-third of all Internet users will live in these countries by 2014.
  • North America’s share of the global online population will decline from 16% to just 13% by 2014. By contrast, Asia’s will increase to 44% of the total.
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Forrester Research is hiring - become a part of the team focused on helping eBusiness & Channel Strategy Professionals!

After almost 10 years at Forrester, I'm incredibly lucky to now lead the team dedicated to making eBusiness & Channel Strategy Professionals successful every day. And, more than ever, senior executives leading eBusiness efforts need help. Ubiquitous connectivity, new devices, and empowered consumers translate into very specific challenges. How do I drive commerce effectively anytime and anywhere my customers demand? How can I ensure a seamless and productive experience regardless of the channel employed? And, how do I align my people, processes, technology, metrics, and culture to support my customers?

If you or someone you know is interested in helping eBusiness & Channel Strategy professionals with these and other challenges, please consider the following open positions for which we are hiring:

  • Senior Analyst - Serving eBusiness & Channel Strategy Professionals with Retail insights (US)
  • Senior Analyst - Serving eBusiness & Channel Strategy Professionals with Retail insights (Amsterdam or London)
  • Senior Analyst - Serving eBusiness & Channel Strategy Professionals with Technology insights (US)
  • Research Associate - Serving eBusiness & Channel Strategy Professionals (US)
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Calling All Multichannel Retailers! We Want To Hear From You!

Forrester just kicked-off our 2010 Retail Executive Survey, and we want your input. We partnered with Pricegrabber, PayPal, Commission Junction, and StoreFrontBackTalk to create a survey which looks at multichannel retailers' organizations and topics relevant to the challenges currently facing their roles including:

  • eBusiness technology decisions
  • Globalization
  • Social media and mobile trends
  • Online customer service
  • Customer loyalty programs
  • And more!

The survey takes just about 15 minutes to complete and all of the data will be used anonymously and in aggregate. As a thank you for completing this survey and once it is closed, you will be able to access the data to help benchmark against your peers.

The results from the survey will serve Forrester's eBusiness and retail research agenda; we look forward to gaining insight from your responses.

Click here to take the survey!

The Right Metric To Measure Click-To-Call

Last week, I had the opportunity to participate in a Webinar called “Right Channeling Customer Service: A Practical Guide Webinar” sponsored by ATG and IntelliResponse. The Webinar focused on aligning the right customer with the right channel at the right time.

There were a lot of good questions at the end of the Webinar, and one in particular struck my attention. The question was, “What is the cost per contact for click-to-call compared to a call originated by a customer?”

Ryan Hoppe, director of product marketing at ATG, answered the question. I thought his comments were insightful and wanted to share them.

According to Ryan, click-to-call sessions pass context from the session to the telephone rep. As a result, there is less discovery time required. This can reduce interaction time by about 10%.

 Ryan also advised that contact resolution time isn’t the only key metric. In fact, click-to-call sessions may take a bit longer depending on the nature of the call. He said ATG has a client that found click-to-call transactions were a bit longer, but the client experienced a significant reduction in subsequent calls. This occurred because click-to-call was employed to help customers manage their accounts online. Having a live rep help customers get started meant they didn’t need repeated calls.  Ryan recommended looking at First Contact Resolution (FCR) rates when assessing the value of click-to-call.

Here is a link to the Webinar in case you’d like to listen to the recording or download its slides. I hope you’ll find the content relevant and thought-provoking.

Will Collecting Online Sales Tax Really Make The Difference?

Okay, so it’s no Brown v. Board of Education, but for those in retail, the 1992 U.S. Supreme Court case of Quill v. North Dakota could be considered just as landmark.  For the uninitiated, it spelled out the regulations surrounding collecting sales tax for states in which they have no physical presence – in short, that they weren’t allowed to do it.

With elections around the corner, many politicians and associations are stumping on this very issue.  They believe that many retailers are exempting themselves from paying the sales tax that the state ultimately deserves.  After all, 45 states in total collect sales tax from brick and mortar stores, which end up accounting for roughly 25 percent of their total income.  Sensationalism abounds in the discussion of this lost revenue: "Some of the things that have gone on in this recession would not have happened if sales taxes had not gone uncollected," said Scott Peterson, executive director of Streamlined Sales Tax Governing Board.

Since 2003, a majority of the remaining retailers have followed suit in collecting tax, leaving pureplays, many of whom are mom and pops who in this economy are at least earning income. Assessing taxes on these businesses won’t really help anyone except Walmart. And let’s be realistic here: Even studies like the one by the University of Tennessee say only 25% of eCommerce sales taxes that are “due” go uncollected. And we know from our surveys that 65% of people say that Web sales taxes (if increased) would cause them to decrease their online spend. With these facts that chip away at the supposed billions that supposedly go uncollected, this appears to be a much less pervasive issue than once put forth. 

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Toys "R" Us Throws A Hail Mary Pass With Pop-Up Stores

On Wednesday of last week, Ann Zimmerman of The Wall Street Journal reported on my former employer, Toys “R” Us, which is planning to open up 600 temporary “pop-up stores” in anticipation of the holiday shopping season.  The WSJ describes it as a super-sized bet while the company maintains it is a proven strategy.  Like most prospective retail decisions in this uncertain economic period, it is likely a mixture of both.

Ann certainly has some legitimate weight behind her assertions:

  • The space in which the pop-up stores will reside is distressed for a reason.  Who can guarantee that a watered-down version of Toys “R” Us will be able to overcome inherent issues such as poor foot traffic or a bad location?
  • Toys “R” Us has historically experienced issues with inventory; the majority of it never turns and Toys "R" Us often sells out of its best sellers before the season comes to a close.
  • While trends show improvement, there is no guarantee of economic rebound for the holiday seasons.  This could spell disaster if Toys “R” Us moves forward with 600 new shops.
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