Mobile Banking ROI Is Small Today But Will Grow With The Addition Of Next Generation Functions

In our new report, "The ROI Of Mobile Banking," Forrester presents a flexible model to help eBusiness and channel strategy executives estimate the ROI of — and outline the business case for — their mobile banking strategies. The resulting return on investment comes to roughly 15%. While positive, the ROI from our model is far from a ringing endorsement of mobile as a money maker for banks today.

For the report, we use our model to estimate the ROI of a multifaceted mobile banking effort by a US-based retail banking provider with 500,000 deposit account customers. Forrester’s model includes eight modifiable inputs: four cost inputs and four benefit inputs. These cover the cost of developing, testing, and implementing mobile services, as well as the potential savings and revenue that a provider might expect from offering such services.

Our findings do not mean mobile banking initiatives should be scrapped. Far from it: Supporting the mobile channel is no longer optional for banking providers in most markets. Their customers and prospects — especially the younger set of Gen Xers, Gen Yers, and teen Millennials — will demand it. Forrester’s Technographics® research shows that 22% of US online adults say it is either “important” or “very important” that the deposit account provider they choose offer access to their accounts through a mobile phone or device. And more than a third of adults younger than 35 feel this way.

What our ROI model does demonstrate, however, is the need for mobile strategists at banks to be objective when weighing and articulating the business case for their planned mobile efforts as well as pushing the envelope on next generation functionality that will likely lift the ROI to more substantial levels. We believe new mobile-only functionality, as well as some hard-to-quantify benefits, will boost ROI for banking providers in the future.




Mobile Banking ROI

I reviewed this article and liked the approach. I had a couple of questions relative to the assumptions and outputs you had:
1) Where did you derive the 13.5% attrition rate for bank customers. I couldn't find it in the article or footnotes and thought you might have another research paper that discussed this.

2) How did you calculate the reduced cost of service? I looked at your spreadsheet and could figure out all the other cost savings, but this one stumped me.

ROI Model Response

Thanks for the questions Keith. The 13.5% attrition rate comes from our techographic surveys. We periodically ask consumers across a range of financial products if they have recently switched providers. We have not written an article around this data yet, but I plan to in Q1 next year. The reduced cost to service too comes from questions we asked mobile bankers. We asked them to self-report based on using mobile banking what had been the reduction in the use of the branch as well as calling the call center. This calcuation came directly from that data.

Hope this helps and thank for reading.


Mobile Banking ROI (follow up)

I got a chance to go back to this again and still not sure where the $186K cost savings came from. Here are some of the calcs I made ... I assume my logic somewhere is flawed.
1) There are 79,384 mobile banking users (500,000 x 15.9%)
2) There are 34,423 mobile banking users that will make fewer calls (79,384 x 43%)
3) There are 13,769 mobile banking users that stop utilizing the IVR (34,423 x 40%). At a cost of $0.10 per call this is a $1,377 cost savings.
4) There are 6,885 mobile banking suers that stop speaking with a call rep (34,423 x 20%). At a cost of $6.25 per call this is a $43,029 cost savings.

Adding 3&4 together got me to $44,405 in cost savings versus your figure. Is there an average number of number of calls per year per banker that gets factored in?