Mobile banking growth in the US continues to be fueled by aggressive adoption of smartphones and regular mobile web use. The problem with this scenario, as noted in my new report, US Mobile Banking Forecast, 2010 To 2015, is that consumers are still struggling to figure out exactly how they will use mobile banking. Lacking any clear differentiated functionality, mobile banking appeals most strongly to those consumers already inclined to use the mobile channel. Unfortunately, this segment is dominated by those already using online banking. As a result, banks are not realizing the full benefit of switching customers to cheaper servicing channels, but instead are seeing cannibalization of one low-cost channel (online) by another (mobile).
To reach one in five US adults, as Forrester predicts mobile banking will do by 2015, US banks will need to enhance today's functionality significantly to create a unique value proposition that resonates with both online and offline consumers. This can be achieved in several ways:
Introducing innovative new features — like mobile remote deposit capture — not commonly available through other channels
Optimizing existing functionality to offer superior user experiences through the mobile channel
(which of these transfer interfaces would you rather use?)
Leveraging the unique capabilities of mobile devices and the mobile channel (think visual ATM locators and other location-based services)
Later this month, Bank of America will roll out a mobile payments trial to its employees in the New York metropolitan market. One of the primary goals of the pilot is to understand the user experience expectations of potential mobile payments customers, according to Michael Upton, Bank of America’s executive leading the initiative. The trial involves outfitting users’ phones with a microSD card that supports contactless payments based on near field communications (NFC) technology.
This is not the first large trial of contactless payments. Citi, Chase, and other large US banks have invested millions of dollars in trials of NFC programs launched by MasterCard and Visa. These efforts, though, have relied primarily on chips embedded in the user’s credit or debit card. Citi earlier this year also introduced an NFC sticker that users can apply to their mobile phones, alleviating the need for a physical card. The Bank of America pilot takes this a step further by including a mobile wallet application that can support multiple payment cards. Users could, for example, make contactless payments from their Bank of America, Citi, Chase, and American Express accounts all through a single mobile app.
Online personal finance pioneer Wesabe.com today announced it would be exiting the account aggregation and online personal financial management (PFM) space. While the unexpected home page announcement caught users by surprise, the site had for some time been struggling to build a larger user base in the face of better funded competitors and bank-hosted offerings from Yodlee, Intuit, and others. Wesabe had launched its own white-labeled PFM solution for banks last year, but Springboard, as it was known, failed to attract much interest.
Wesabe is not shutting it doors entirely. It will continue to run the community, or Groups, part of its web site, where it had attracted a loyal and very active group of participants. Wesabe had also begun licensing its Groups content to other institutions in 2009. This “community –in-a-can” concept allowed institutions to quickly add a social component to their sites without having to build it from the ground up. Addison Avenue Federal Credit Union last summer began offering the Groups functionality on its site.
Company CEO Marc Hedlund noted on Wesabe’s home page today that “competitors have either dismissed the value of community, or have not been able to create a community as rich as Wesabe Groups, so I'm very happy we are able to keep that part of the service going.” Wesabe is getting assistance on that front from one of its current Groups customers.
Facebook’s recent bad press regarding privacy changes on their site and reported leaks of customer information contribute to a growing concern among users. The uproar also underscores what Forrester and our clients have known for years about security and privacy online: they are the bedrock on which solid online (and mobile) customer relationships are built. Nowhere is this more important than with financial services customers.
It comes as no surprise, then, that 71% of online consumers surveyed by Forrester say they have little to no interest in accessing their bank accounts through social networking sites like Facebook. What is the number one reason why? Security concerns. Number two? Privacy concerns. Seems like FarmVille and financial services just don’t mix. Perhaps more surprising, though, is the 17% of respondents who say they are interested in accessing their bank accounts via social nets.
The real question is how interested are these consumers’ financial institutions in offering account access through Facebook and other social networking sites? As financial firms today look for every opportunity, in every channel, to deepen their relationship with their customers, it’s hard to ignore a community with a 30-day active population of more than 400 million users, 50% of whom visit on any given day.
As financial institutions begin to look more carefully at how to tap into consumers' enormous interest in social networking sites to better service, cross-sell, and up-sell their customers, it’s critical to understand consumers’ concerns and how to mitigate them, while still taking advantage of the rich interactions these sites engender.
Intuit announced yesterday that it is purchasing online personal finance management (PFM) competitor Mint.com for $170 million. On the surface, the marriage makes perfect sense. Synergy between the two should result in better PFM tools for both Mint.com users and Quicken Online devotees. Mint.com founder and CEO Aaron Patzer gushes in his blog that “by joining Intuit, we can accelerate our ability to add more fantastic new product functionality into both Quicken and Mint.com.”