Monday, 25 February 2013

Everything you wanted to know about a Mobile Banking Strategy but were afraid to ask

Mobile banking is no longer a new concept as it fast becomes common place in many markets. This is transforming the way in which banks reach and sell to customers and is creating substantial potential for banks to increase customer loyalty and revenue as well as attract new customers and strengthen existing client relationships. But only if it's done correctly and more often than not - it's not.

 
It is no longer enough to simply develop mobile banking features. Banks must take into account the differences between their mobile banking customers and tailor mobile strategies to specific segments of mobile customers. This will greatly increase the likelihood that goals will be achieved such as increased loyalty and revenue. Mobile banking in the UK: Sizing the Market Opportunity recommend a series of different strategies for various segments which they have identified. For example, they classified one segment of customers as ‘Innovators’. These customers use mobile banking on a daily basis and are happy to pay for services which makes them a profitable segment. However, loyalty amongst this segment is low and demands are high. As a result, this report recommends that banks advocate the “time-saving qualities of mobile, allowing loan and overdraft arrangement via this channel, and allow full customization of mobile services.” They believe this strategy will help banks reach full potential for this segment. B minus - less talking more action please!

They also classified another segment of customers as ‘Mainstreamers’. These individuals aren’t yet using mobile banking services but are set to use them soon. This segment is focused very much on simple and easy to use features. However, they are likely to use multiple providers for all their product requirements. This report recommends banks advocate ‘integrated management of all holdings’ to help ensure they are the only provider for customers banking needs.

Bain and Company recommend that banks segment customers by wealth. They found that mobile banking in the US was used more as customer incomes increased but at the same time, they were also found to be one of the least loyal segments as they expect more and are not easily impressed with functions. This means that banks cannot expect mobile banking to simply increase loyalty for all customers, they must go beyond this. C minus - could do more!

Bain and Company also state banks should focus on the more affluent customers as they are the most profitable segment. The reason for this is that once they are happy with services offered by the bank, they are more likely to promote the bank to their affluent friends and family and take on further products. In order to keep this segment happy, Bain and Company recommend services are tailored to the individual, expert advice is given and personal banking relationships are developed in order to turn wealthy mobile banking customers into promoters of the bank.

There are multiple ways to dice customer data, but as long as banks develop clear segments and tailor their services accordingly, they are more likely to enhance customer loyalty, increase revenues substantially and attract new customers in an extremely competitive market. Read our UK Banks catching up with Mobile Banking blog for some ideas on future mobile banking innovations.

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