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New banking opportunities arise to address mobile-only users

While traditional banking is not going anywhere anytime soon, mobile is creeping up as a primary choice for banking, with some banks even going branchless in favor of the new medium.

Two banks, Simple and ING Direct, offer consumers branchless banking that emphasizes the consumer need for transacting at any time and from any place. Mobile has opened up new possibilities in the realm of banking and is pushing to the forefront of the vertical.

“As smartphone adoption and consumer awareness have increased, banking has moved from ‘mobile-also’ to many consumers preferring ‘mobile-first’,” said Mike Strange, chief technology officer of Mitek Systems, San Diego.

“We believe that this trend will grow even stronger, with a segment of consumers preferring ‘mobile-only’,” he said. “We believe consumer sentiment will soon be: ‘Mobile is not just another channel to access my bank, it is a convenient method of managing my money, my way.’”

Shifting behaviors
As mobile devices continue to become the center of consumers’ lives, companies are working to cater to new behaviors and preferences, and financial institutions are no exception.

If a consumer is at a gas station and remembers that he forgot to pay a bill, he wants to be able to remedy that immediately, and that is where mobile banking comes in to play.

“Very little in the banking world goes completely away over time,” said John Pizzi, chief operating officer of mFoundry, Larkspur, CA.

“But we can be certain that mobile is becoming the primary channel, taking the place of more expensive transactions in other channels or otherwise enhancing them,” he said. “Both of which are important to the bank and valuable to the consumer.  And these changes are happening now.”

While security worries may still be an issue for some consumers, it seems that many are becoming more comfortable with accessing financial information via mobile, and this trend seems to be growing.

Traditional banks can look to address this trend by adding mobile features such as mobile check deposit or letting consumers pay friends via the bank’s app. Banks need to make sure that they are in the mobile arena to stay relevant for consumers.

Mobile banks
As traditional banks try to integrate mobile features into their offerings, some banks are starting off with a mobile-centric agenda.

Simple is one of those new banks that is heading into the industry with a mobile-first outlook.

Consumers still have to request an invitation to bank with Simple, but Venmo users are able to skip the 250,000-person waitlist to join Simple immediately.

Simple recently enabled payments with Venmo Touch, which allows users to make a payment within an app in one click.

Simple holds funds in its partner bank, The Bancorp Bank, and provides a Simple Visa Card along with its iOS and Android apps and Web site.

As a branchless bank, Simple focuses on real-time banking and providing customers with smarter and less complicated features that are always available.

According to Josh Reich, CEO of Simple, Portland, OR, Simple customers have 2.4 times more mobile sessions daily than traditional banking customers.

“Our mobile approach and the real-time banking insight we offer customers has contributed immensely to helping our customers spend smarter, we are changing the way people think about their finances,” he said. “Our customers are more engaged with their spending and saving.”

Simple has also found that 68 percent of mobile sessions occur more than one hour away from the actual swiping.

“Unlike traditional banks, the time of app sign-in for a Simple customer is not directly correlated to a transaction,” Mr. Reich said. “Simple customers engage with their finances in an inquisitive, rather than a transactional, manner.”

ING Direct has been around since before mobile banking but opened in 1997 as a branchless bank and as such has adapted to mobile banking very quickly. The bank first offered a call center, then added online and then mobile.

“If you look at banking, people went from branches to ATM to a call center, to online using the Web and a browser, and now to wherever they are whenever they want using mobile devices, so it’s an evolution, and our view on this is to be where our customers want to be,” said Charaka Kithulegoda, chief information officer of ING Direct, Toronto, Canada.

“The channel preference that our customers use is up to our customers,” he said. “It’s not our job to tell our customers what to use. What our job is, for whatever they choose to offer a compelling experience. If you’re on your mobile device and using one of our mobile apps, you should get a contextually rich experience.”

For Mr. Kithulegoda, the most important thing is to provide a seamless experience that allows consumers to transition from channel to channel in a transparent manner. If a consumer begins an action on a mobile app, but then needs more help and calls ING Direct, the data from the app action will be forwarded to the call center so that the consumer does not have to start over.

Human touch
While mobile is definitely making its way to the forefront of banking, even Simple and ING Direct will admit that there is no replacement for human interaction when it comes to banking.

“Technology is no substitute for empathetic, responsive and human customer service,” Simple’s Mr. Reich said. “Simple has smart, empowered people answering customers’ questions via our in-app messaging and over the phone. Our customer service sets us apart just as much as our technology, and even if banks get the technology right, they have a long way to go with service.”

ING Direct’s Mr. Kithulegoda agrees that apps and mobile sites alone will not be able to entirely replace a desktop site and a call center. While Simple and ING Direct may not feel a need to offer a physical branch and in-store interaction, they do not plan on getting rid of their call centers.

“You’ve got to give people the tools to do what they want to do, but however good the technology is, there is going to be a time when a person can help you and should help you,” Mr. Kithulegoda said. “In those points, I think mobile gives us a way to seamlessly connect with the call center.

“I think it’s about mobile-first thinking and thinking about how the world’s evolving.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York