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Bank For The Future

By: James DeBello

Americans love their mobile devices; more specifically, their smartphones and tablets. In just the first three days of the iPhone 5 launch, Apple announced that it had sold 5 million units of the newest version of its smartphone. Consumer demand for everything mobile is forcing financial institutions to act quickly for competitive advantage when it comes rolling out new mobile banking applications, or risk being left behind.

For example, think about the monumental success of mobile remote deposit capture — the ability for a user to download a mobile app from his bank and snap a photo of a check from his smartphone camera to make a deposit into his account. Just two short years ago, only the largest financial institutions were offering mobile RDC. Today, hundreds of institutions of all sizes are offering it to their customers because it has become, as Forrester Research noted, “table-stakes” for banks.  Mobile RDC is the new face of customer engagement because it offers convenience plus a fun user experience.  In other words, if a bank does not have mobile RDC, it better be on its roadmap because people will switch banks to get it.

The rapid adoption of RDC technology can arguably be mapped directly to the rise of the camera-enabled smartphone and tablet device. The smartphone market is exploding; analyst firm IDC predicts that globally 1.16 billion smartphones will be shipped annually by 2016. The rapid growth in adoption of smartphones and tablets by every demographic provides a new opportunity for banks to take to advantage of a feature that is unique to mobile devices: the camera.

By integrating mobile imaging technology that uses images captured by smartphone and tablet cameras into mobile banking applications, financial institutions can reach audiences in new ways and engage them anywhere and anytime on their favorite devices. It is time for banks to think about what is next as they forecast future mobile banking strategies.

Mobile Photo Bill Payment

According to a recent Javelin Research & Strategy Report, “The number of U.S. consumers who pay bills through their primary bank or credit union is on an unacceptable five-year course of stagnant growth.” The report goes on to say, “Therefore, financial institutions urgently need to target the 22 million Americans who are one step away from converting to FI bill pay and to renovate bill-pay offerings to accommodate consumers’ expectations in an era of interactive finance.”

Bill pay is seen as a “sticky” service by banks, meaning it is a service that will keep customers loyal to a financial institution and make customers reluctant to switch. Javelin also reported that bill pay provides value in all four categories bankers covet: retention, cost savings, revenues and acquisition.

However, today only half of all U.S. account holders use bill-pay systems. Why? The majority of online bill-pay systems are tedious and time-consuming and for mobile users who are used to easy, user-friendly applications; they are frustrating with outdated functionality that does not meet customer expectations.

For example, most banks today do not even provide users with the ability to add a new payee from their mobile devices. Forrester Research surveyed some of the top banks and reported in the April 2012 report, 2012 U.S. Mobile Banking Functionality Rankings, that of major financial institutions they surveyed, only one bank allowed users to add a new payee from the mobile channel. As a result of user dissatisfaction, bill-pay use has completely stagnated as users either use their banks’ bill-pay system on a limited basis or forego it all together and instead use checks, or pay their bills online directly to the biller. 

With U.S. households receiving an average of nine bills per month, easing the process of paying bills with electronic bill payment offerings needs to be a priority as a key customer retention service. Banks need to act fast to revitalize bill pay with new, easy and convenient mobile features to attract and keep the millions of Americans who are on the fence about paying bills through their banks instead of directly to the payee.

Mobile photo bill pay makes the promise of easy online bill pay a reality. Much like what mobile RDC did for making depositing checks easy and convenient, mobile photo bill pay delivers that same convenience and user experience in a mobile bill pay solution.

Mobile photo bill pay uses the same underlying technology as mobile deposit to enable consumers with camera-enabled smartphones or tablets to add a new bill payee, and schedule or pay a bill by taking a picture of the bill or remittance coupon. The technology automatically extracts relevant information from the paper bill, auto-populates the fields required, verifies the user’s account information, adds the new payee and makes a mobile payment with no manual typing, or even a computer, required. The user can then schedule the payment and click “pay” right from the mobile device. With mobile photo bill pay, users can quickly add new payees to their online bill pay, pay one-time or non-recurring bills, and set up recurring bills and payments from anywhere, at anytime.  Easy, fast, convenient: just what mobile users expect.

The Rise of Alternative Banking

Mobile imaging innovation is also powering the growing prepaid market. In just the past six months, more than 20 mobile-fueled prepaid initiatives have begun from top banks, retailers and technology companies.

Once relegated to a small segment of the market, prepaid cards are quickly going mainstream with offerings from some of the top banks and retailers looking to tap into the millions of Americans interested in alternatives to traditional financial services. In fact, Mercator Advisory Group predicts that by 2013, consumers will load $117 billion onto prepaid cards, a 200 percent increase in just three years.

Prepaid cards are not a new concept in financial services and banks have long tried to reach the underbanked and the growing number of users who simply do not want to use traditional bank accounts. These groups tend to use prepaid cards and check-cashing facilities instead of debit cards attached to traditional bank accounts. Until recently their success has been limited due to the cumbersome process to fund and manage prepaid accounts.

With widespread adoption of smartphones across all demographics and the prepaid card issuers now integrating mobile imaging technology to solve the pain points associated with opening and maintaining a prepaid account, however, the prepaid market is now growing exponentially.

By integrating mobile imaging technology (the same underlying technology as mobile RDC) into the prepaid account process, consumers can easily and quickly use smartphones or tablet cameras to enroll, fund and reload prepaid cards by taking a picture of a driver’s license or ID card and the front and back of a check. Within seconds, a user can load a prepaid card and get access to his funds faster and easier. The ability for prepaid card users to load their cards on the go from anywhere without forcing them to visit a check-cashing location, a bank or retailer is proving to be wildly successful.

As more and more financial institutions look to add prepaid card offerings, integrating mobile imaging technology to give users the ability to enroll, fund and manage prepaid cards from their smartphones is paramount to usability and, ultimately, the success of the initiative.

By integrating mobile imaging technology into their mobile banking strategies, financial institutions can capture the market ahead of the curve, increase revenue opportunities, get a leg up on the competition while meeting customer demand for intuitive, easy-to-use mobile applications.

James DeBello is president and CEO of Mitek.

Copyright (c) May 2013 by BankNews Media