Does Mobile Banking Mean the Chop for Branches?

Deloitte estimates that a further 20 million customers will take up banking services and consequently banks will focus on developing mobile banking to compete for new customers. Banks are expected to move away from cost cutting strategies and invest more in IT to capture new customers. 

As banks continue to focus on mobile banking innovations, what does this mean for branches?

There is much debate as to whether mobile banking signals the end for branches. Bain and Company don't think so and I agree. Research by BT Global Services demonstrates that branches remain the most trusted and preferred channel for many as people need a certain amount of human interaction and want to put a face to 'who' has their money. However, as mobile banking continues to develop, adoption rates increase and customers' security concerns diminish, trust levels for mobile banking is likely to rise and this will impact on the banking channels used by customers. Think about it. 'Who' do you want to speak to when you are annoyed or have a question - definitely not a computer!

However, as further mobile banking innovations are introduced, we should expect to see increasingly less reliance on branches. At the moment, many banks are offering basic mobile banking features such as the ability to check account balances and transfer money which helps reduce the number of people visiting branches as they are able to complete basic transactions themselves. However, demand for more advanced technology is growing as customers seek more control over the management of their finances such as imaging for cheque deposits using their smartphone. This means that customers won’t have to visit a branch and wait in line to deposit a cheque – they can do it instantly with the touch of a button! But the fact remains, branches are unlikely to disappear as customers will, at some point, seek face to face interaction.

The role of branches and the functions they carry out on the other hand is very likely to change. Bain and company state banks must change from dealing with costly routine inquiries to high value inquiries. This makes sense as customers are increasingly able to carry out routine activities themselves and this will allow banks to reduce costs. In order for branches to remain relevant, useful and achieve optimal productivity as channels such as mobile banking continue to seek dominance, banks must review the role branches perform.

Celent research looked at different ways banks are changing their branches in light of recent technology changes such as mobile banking. Banks are increasingly empowering customers to use technology to assist with services rather than requiring them to go to a branch. One bank mentioned that customers are able to open a credit card from their mobile or book an appointment with a member of staff at a branch using their mobile. One of the key themes was to view each channel as a host of ways to reach customers and ensure consistency across all. This allows customers to contact a bank using a contact channel that suits them, and allows branches to become more focused on helping deal with more complicated inquiries, offer information and focus more on a sales approach.

Banks are increasingly reviewing their infrastructure and rethinking the purpose and role of branches. SunTrust Bank in the US is closing a number of branches after customers began using other channels such as mobile and online banking, helping them cut costs significantly. CEO and Chairman William Henry Rogers also agrees that branches still have an important role to play and will not disappear, stating,  “They’re still where most new products are sold and where clients typically go to resolve a problem. So while the role of the branch may be changing, they remain a key sales and service distribution channel.”

To find out more about how mobile banking can help your financial firm reap benefits such as reduced costs, higher customer loyalty and new customers (to name a few) please visit our Solution Planner

For further information regarding HSL, visit us at:

http://www.hslmobile.com 

follow us on LinkedIn, Twitter @hslmobile or Google+

or call us on +44 (0)1506 605260

or email us at sales@haysystems.com

 

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.

For further information regarding HSL, visit us at:

http://www.hslmobile.com 

follow us on LinkedIn, Twitter @hslmobile or Google+  

or call us on +44 (0)1506 605260

or email us at sales@haysystems.com