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Mobile: Not yet the end of the beginning

No time for complacency for most banks offering mobile banking

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  • Written by  Dan Latimore, Celent
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  • Comments:   DISQUS_COMMENTS
Celent's Dan Latimore says most banks have a long road ahead of them on mobile banking.UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection. If you have some "UNconventional Wisdom" to share, email Celent's Dan Latimore says most banks have a long road ahead of them on mobile banking.UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection. If you have some "UNconventional Wisdom" to share, email [email protected]

Celent recently collaborated with FI Navigator to publish a report—Mobile Banking Quantifiedanalyzing the mobile offerings of more than 6,400 U.S. banks and credit unions, along with the details of 48 different retail banking mobile app vendors. This broad research provides an in-depth look into what’s happening at virtually every U.S. financial institution that offers a mobile banking app.

And what we discovered is that when it comes to mobile offerings, most banks and credit unions have a long way to go.

Digging into mobile offerings

We analyzed 32 different mobile banking features and found that the two most adopted features are bill pay (provided by 88% of institutions) and mobile deposit (provided by 63%). (This is outside of the very basics: viewing balances; intrabank transfers; transaction history; and ATM/branch locators.)

After the top six features, the next most popular are searching transaction history and account alerts, both at 22%.

When focusing on mobile banking trends, we need to remember something: The top banks and credit unions—the ones typically included in headline-grabbing analyses and media coverage—are not representative of the vast majority.

For instance, mobile deposit is available at 95% of institutions with more than $100 billion in assets, but is offered at only 71% of banks and credit unions with assets of $100-$500 million.

Mobile features vary by asset size because institutions’ standards, resources, and strategies are worlds apart. Time plays a role as well. The longer a firm has been offering mobile, the more features it generally offers.

No matter the company’s size, however, every institution wants to differentiate itself from both a growing number of traditional competitors and newer entrants offering niche products with incredible customer experiences.

Banks and vendors have shared stake

Perhaps the most important difference between the largest banks and everyone else is the amount of resources they can devote to mobile.

Most of the 6,400 institutions profiled depend on an outside provider for their mobile offering. Indeed, you might say that the banking and fintech industries are symbiotic.

Banks and credit unions must provide customers the right products and experiences, and while many vendors offer a wide range of features, many banks simply have not implemented them.

Why not? Institutions cite a variety of rationales. They include cost, hypothesized lack of customer demand, or implementation difficulty are among them.

But with many vendors offering the tools to compete with much larger banks, smaller institutions should reconsider why their mobile offerings aren’t more robust.

For institutions to thrive, they must provide competitive mobile banking offerings that enrich the customer experience—that means going beyond the basics. And vendors will thrive when consumers enthusiastically adopt enhanced mobile banking.

Consider just how popular mobile P2P payments has become in the past couple of years. Offerings from Abra, Venmo, ApplePay, and Square Cash illustrate the potential of this feature. Among banks and credit unions with more than $100 billion in assets, mobile P2P is available at 75% of companies, but among financial institutions with $10-$100 billion in assets, that number drops to 40%, with the decrease correlating down the remaining asset segments.

Time for teamwork

Smaller companies cannot go it alone. All must identify a vendor that can help improve their mobile banking offerings.

We’ve begun to see a number of institutions that have been through their first-generation mobile platform and are now looking to upgrade with more features, better user experience, and integration with their online offerings. As they evaluate their upgrade options, banks and credit unions should use vendors to learn about trends and preferences in the marketplace.

As for vendors, they should be working with institutions to help them increase customer adoption—especially because they’re typically paid based on the number of mobile users.

It’s akin to consumer products companies that spend marketing dollars in grocery stores to increase sales of individual products, an activity which also benefits the store.

Compared to a top financial institution, a community bank has limited marketing expertise and resources to increase mobile adoption.

But what community banks do have are customers. And since the vendor is working across a number of different clients, it should use that expertise on behalf of individual financial institutions.

There are exceptions to every rule. But perhaps one of the most interesting points gleaned from out work is that one of the top five credit unions in the country doesn’t even offer a mobile banking app yet.

But for those institutions that do, expectations have never been higher. It’s time for institutions to up their game, and for vendors to help them do that.

About the author

Dan Latimore is senior vice-president of Celent’s Banking practice. Celent is a research and consulting firm focused on the application of information technology in the global financial services industry. Follow Latimore on Twitter @DanLatimore.

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