Making money on Mobile Internet Banking

published by Ben Allen

Netbanker is a site that I rely on. It provides great coverage for all things digital within the financial sector. A few weeks ago they posted an interesting article about how, in their opinion, USAA Makes Mobile Banking Better than Online Banking. A quote that stuck out within that article got me thinking. Here is the quote:

"The key to making mobile a profitable channel is to make the user experience BETTER than online."

The thing that stood out to me was the notion of the same service being "better" depending on the channel of delivery. This idea is certainly not new. Today we have 5 ways, at least, you can engage with your bank:

  1. Bricks & mortar branches
  2. Snail mail (you remember that, right? the thing the hole in your door is good for)
  3. ATMs
  4. Call centre
  5. Internet banking (via the desktop/laptop web browser)
  6. BONUS features if you're with a progressive bank - SMS/text banking, kiosks, native mobile apps, optimised web apps, access via 3rd parties like Mint, Wasabe or Yodlee

The right tool for the right job - its about context

When it comes down to it, no matter what channel, I get the same service - banking. I will get different levels of service depending on the channel of delivery. Some channels are massively more convenient than others - it all depends on the context within which I'm trying to get something done. To simplify, it depends on:

  • what I'm trying to do e.g. check balances, make a transfer, get a mortgage
  • what I've got available to do it with e.g. basic phone, smart phone, a method of transport (to drive/walk/train to a local branch), a computer, an internet connection, an ATM card etc.
  • how I like doing it e.g. if I'm tech savvy & I trust the bank's online service my first port of call is going to be Internet banking

Depending on this context one channel is going to be more convenient than another to get certain tasks done. Some tasks are just plain hard to do well in one channel and so I need to turn to a different channel to get the job done. Let's look at a couple of examples, keeping a mobile experience in mind:

  1. Task - checking balances. Massively simple to do. Easiest for me, as a tech savvy customer, to do this on my mobile phone. The value of checking my balance, within the shop, just before I indulge in retail therapy would be high. The task is well suited to the channel.
  2. Task - buying my first house. I just cannot see myself, a self confessed geek, screaming "Hey, darling, let's buy a house. I've got an app for that". I'm sure this is not because I lack imagination. I just don't believe the channel is cut out for the process of buying a home. The value of completing this task on the go is low and, in all likelihood, completely impractical. I probably need access to all sorts of paperwork to buy a mortgage. Paper work which is at home, near my desktop and my big screen where my better half can watch me go through the motions (and do some back seat driving). All this without my fingers and thumbs getting in the way.

My first amendment to the Netbanker quote is:

"The key to making mobile a profitable channel is to make the user experience, for certain tasks suitable to the mobile channel, BETTER than online."

Ways to make money with mobile internet banking (MIB)

The other point that got me thinking was the idea of mobile profitability. Obviously, if you're writing a business case for a mobile app or mobile optimised web app you need to make sure you know what the ROI is. How are you going to turn a profit? Here is a list of ways I could think of:

  1. Ad supported content. This for me is out for mobile internet banking (MIB). The trade off does not make sense from a usability perspective. Screen real estate is at an absolute premium on a mobile device and plastering ads all over the small screen sacrifices real estate I'd otherwise use to get a job done. Mind you Apple and Google certainly think there is something to be said for it
  2. Have your customers purchase your app and generate revenue from app sales. This seems like an unnecessary barrier to entry given that the bank stands to make more money from users engaging with them. I guess The Guardian got away with it but they didn't have a way to make money once the users got engaged. This is not the case with MIB
  3. Don't build an app, get someone else to do it while licensing your API. This approach seems short sighted too. While I do believe developers would queue up to get their hands on a banking API (think Mint, Wasabe, Yodlee) its unlikely that developers would do so just to focus on your brand. It is more likely that the aggregators would support an experience like "hey, your current bank account with Bank of America sucks and we can recommend a new one which is way better and its with Citi bank". The other drawback here is it only takes 1 bank to give away their API access and suddenly your at a competitive disadvantage in the eyes of the developers
  4. Make your functionality more accessible & charge for some types of transactions e.g. international transfers, rush payments.  If you charge for the same things you charge for in the online banking service the experience is the same between channels. Customers are unlikely to be surprised by this status-quo. The point here is that if you make your functionality more accessible, by having that functionality available from the mobile phone, you increase the likelihood of people using it. I think this is where Netbanker were coming from
  5. Up-sell or cross-sell from within MIB. Here is a huge opportunity if its done right. The bank tells you about a product which they feel is better for you or is complimentary to another product you have and you accept their offer. This experience does not have to suck. There could be an offers component to the app, there could be contextual, non obtrusive messaging within a flow e.g. if I'm looking at a loan balance it might be nice to know about the pre-approval I qualify for.
  6. Build out a cross-channel experience. Let your customers start an application online, do some of it on the phone with a call centre agent and then finish it off on MIB. Again - more access, more money
  7. Invent a new method of mobile payment and take a cut on each transaction. Sound mad? Alas dear reader - PayPal & Square did not take their medicine
  8. Make happy customers by letting them enjoy awesome customer service. "Delight users". The term is over used but the essence makes so much sense. If you're a business doesn't it make sense to keep your customers happy? Providing customers with greater access  to your functionality should not be seen as a new frontier upon which to plaster generic banner ads. It should be seen as an opportunity to engage your customers, making them happy because you, Mr Bank, get where your customers are coming from and what they need right now. Call it a retention strategy if you want - to me it's just awesome customer experience. I know of people who change banks because their new bank has a better online banking service. How long before we say "I hate my bank. I can't even check my balance/pay a bill/review my stock on my phone"? To put it another way - how long before your retention strategy becomes an acquisition strategy?

My second amendment to the Netbanker quote is:

"The key to making mobile a profitable channel is to make the user experience, for certain tasks suitable to the mobile channel, BETTER than online AND by choosing the business case which makes sense for you and your users."

Final thoughts

Who knows what year will be the fabled "year of the mobile". Do econsultancy know? Do The Guardian? What is clear is that smart phones are increasing in their number and mobile data packages are becoming pervasive within this space. To put it another way - it's got to the point where if you're a "young professional" in Chicago you look pretty silly pulling out your clam shell Verizon rubbish e.g. me.

"Mobile web" adoption & access is as fabulous as it is interesting from a user experience point of view. More phones, more operating systems, more browsers, more app stores - while the choice may be confusing for the consumer the variety of solutions produced to solve interesting user interface problems make mobile the most interesting digital space today (IMHO). This fascinating divergence will be matched only by the inevitable convergence so we may as well enjoy it while it lasts!

I'd suggest that drawing closer to or reaching that mobile tipping point has it's drawbacks - while everyone and their dog wants to offer functionality to their consumers they also want to work out how to make money within this new space. The salivation of anticipation is audible in big business e.g. Apple and Google. While this mobile land grab takes place all businesses need to learn from previous usability mistakes, striving to understand the channel they're dealing with, what the channel is good for and how their business can add value for their customers within this space.

In short - banking is coming to a mobile phone near you and if you're a smart bank there has never been a better time to work with user experience professionals.

Over to you

  • Do you use mobile internet banking today? On what phone/bank combo?
  • What bank does mobile internet banking well today? Web or native app?
  • Do you trust the idea of mobile internet banking? Do think it's secure?
  • What banking tasks are well suited to mobile internet banking?
  • Would you buy banking products from your mobile phone?
  • Can you see a day when we buy mortgages from our mobile phones?
  • Can you think of other ways to make money, as a bank, from mobile?
  • Have you seen any sponsored apps where the banks are the primary sponsors?

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