Mobile News

The future of banks has been subject to scrutiny since the internet accelerated the potential for disintermediation - the demise of traditional retail channels. The speed to market inherent in the development of electronic delivery channels involves a `launch and learn’ attitude antithetical to the end-to-end certainty that banks possessed in their customer relationships. Traditionally banks have leveraged their unique regulatory position as deposit takers and their access to payment gateways to strike deals with suppliers and corporate customers. Relationship ownership is under siege in the mobile channel and banks fear the repercussions of relegation to the back of the value chain.

The construction of the mobile channel for banking services disrupts banks’ customer control–issues to be confronted include:

Empowerment of the consumer with multiple delivery channel access set against customer acceptance of technology

Banks have traditionally controlled distribution and owned delivery channels (eg branches, ATMs). The mobile channel is controlled by the customer via the device manufacturer and the mobile operator

Branding outgrows bank control since non-bank services are required for service access. A consolidated trust environment necessitates brand dilution

The personalisation and convenience of the mobile channel allows differentiation through content–a product uniqueness that requires enhanced CRM.

Although the development of the electronic channels does not innately preclude the involvement of existing banking structures, telecoms operators are cited as well placed to usurp the trusted role of banks in terms of both security and service delivery. The motivation for banks to develop the mobile channel can be distilled into three main factors:

Decreases cost of servicing customers

Provides support for multiple customer access channels

Enables strategy to confront new niche players (eg mobile operators, internet-only banks).

Meeting customer demand for greater convenience, choice and access to banking services requires investment, the return on which is predicted to be significantly higher via development of the electronic channel rather than through bricks and mortar channels. Banks view the mobile channel as an extension of the internet channel - within one year of its October 1998 launch, Egg, the direct banking arm of the Prudential, was managing GBP6.7 million of savings. Interestingly, 30% of Egg’s customers run accounts online while 44% shop online–the innovative use of internet banking with e-commerce suggests banks would be well placed to add new services (eg m-payments) to traditional services in order to enable m-commerce for their mobile banking customers. Drivers for the development of mobile banking services include:

- Potential cost reduction through customer migration to mobile channel

- Customer loyalty is more important than revenue streams–such a focus enables logical development from basic services towards the `lifestyle’ concept that is so pertinent to the mobile channel and the personalization it offers. If the fixed internet banking encourages channel substitution (thus internet-only banks), mobile banking confirms product `stickiness’

* The need for differentiation as basic mobile banking becomes a commoditised offering, service enhancement, including device-specific applications that cater for increased personalisation and more value-added points of contact, will stress the need to provide unique, differentiated services

* Multi-channel distribution mix which both separates and homogenises–the mobile channel must be incorporated into a strategy that leverages, and is leveraged by, other channels:

- the mobile channel as the prime source of time-sensitive, location-independent information

- use of other channels to help deploy mobile channel (eg use of website to personalise content and configure alerts)

- use of mobile channel as traffic builder for other channels (eg website where content is richer).