The story of U.S. financial institutions adopting mobile technology is a cautionary tale, according to Andrew Mikesell, mcommerce product director for Sybase, a global leader in delivering enterprise and mobile software to financial services, telecommunications and other industries. He points out that while many banks and credit unions in this country continue to sit back as they grapple with mobile’s ROI, mbanking and mcommerce — encompassing additional services such as mobile payments and mobile remittance — are commonplace in developed and emerging markets around the world. Yet he feels this scenario is finally changing.
“In mobile services, there is a long-established adage that North America is massively behind when it comes to mobile services,” said Mikesell. “This is increasingly no longer true; and, in particular, it is not true for mobile banking.” In fact, he sees an evolutionary path from mbanking to mcommerce under way for financial institutions.
Specifically, Mikesell identifies four phases in this evolution:
In Phase 1, a bank addresses the mobile channel by making customers aware they can have proactive relationships on a mobile device. This phase is best addressed by using alerts and notifications as a means of reaching the end-customer while providing value.
Phase 2 occurs once customers are comfortable receiving alerts and now can be migrated into using the mobile device for simple interactive functions like checking balances, reviewing the last three transactions and so forth. This phase is really the first step in getting a return from the mobile channel in the form of cost savings.
In Phase 3, a bank begins to offer innovative mobile-channel-only services for which fees can be charged, thereby taking the first steps toward monetizing the channel.
The final Phase 4 culminates when customers are comfortable using a mobile device as part of their daily financial lives. This phase involves fee-generating services like micropayments and person-to-person transfers.
“In terms of ROI,” said Mikesell, “initial mbanking services are generally focused on cost savings from moving existing transactions into lower-cost channels. It is only as services expand beyond non-transactional services and new services are created that new revenue can be realized.”
Sybase, which clearly grasps the potential of mobile financial services in the U.S., offers two solutions for what is becoming known as the mobile ecosystem: mBanking 365, a platform approach that provides mobile services to individual and business customers, including alerts, balance and transaction detail, and bill payment: and mPayments 365, a modular solution designed to allow FIs to introduce new services such as micropayments; the ability to purchase goods from merchants; and person-to-person, loan and bill payments.
“We don’t see mobile banking as an end-point,” said Diarmuid Mallon, senior product marketing manager for Sybase 365. “Rather, we see it as the start of the path to a complete range of mcommerce services. We strongly believe a complete mcommerce solution is comprised of mbanking, mpayments, mremittance and mCRM (vouchers, loyalty programs, customer engagement and marketing).”
Sybase represents a growing number of companies offering solutions for mobile financial services. Yet Mikesell and Mallon emphasize, as many others have before, that for these services to be successful, all stakeholders — telecoms, banks, smartphone manufacturers, retailers and merchants — need to work together. The good news is that the stakeholders have gotten the message.
Michael Scheibach is senior editor of BankNews.
Copyright (c) October 2011 by BankNews Media.