July 11, 2011 – Anyone who owns a smart phone knows new apps and program updates are posted every day and even the handsets themselves evolve every year or so.
For banks, that makes mobile the most challenging technology they've dealt with yet in terms of charting a detailed game plan for adoption. The heightened pace of new functionality also corresponds with fast user uptake: people see something at the app store, and they want it from their bank right away.
"Mobile is a real-time world. When Chase launched mobile remote deposit capture, we were asked, 'Why don't you have this?' by our customers," says Ginger Schmeltzer, a senior vice president at SunTrust Banks. "If [another bank] launches something new on the web, we don't hear about it from our customers as quickly."
Performing due diligence, writing use cases and deploying new apps is tough to accomplish at a rabbit's pace, and even the most innovative banks will be required to trust the specialized market intelligence of vendors and other partners more than before. "There's pressure on financial institutions to keep up ... It's an unsettled situation," says Aaron McPherson, a practice director for IDC Financial Insights.
Mobile banking has morphed from text alerts to mobile remote deposit capture and GPS-enabled marketing via smartphones in just a few years, much faster than the decade or so that it took for Web banking to mature. And with tablets just down the road, the pace isn't likely to slow down. "Compared to other technologies, mobile is unique. There are very rapid cycles of development," say David Albertazzi, a senior analyst at Aite Group.
Schmeltzer says SunTrust has made alterations to its development strategy in response to quick consumer uptake of mobile technology – it's made mobile RDC a priority, for example. "We are more than willing to reprioritize our investment. But we can't do things overnight, as much as we would like to," she says.
The bankers and tech providers that BTN spoke with say consumer demand for new technology roughly corresponds with the public's perception of a channel's overall tech savvy. While it's certainly important to keep branches and websites up to date with user experience expectations, there's more time for banks to decide what types of branch automation fit their overall mission, or what web banking products to embrace. "People don't expect branches to be as innovative as the ATM, or expect the ATM to be as innovative as online, or online as innovative as mobile," Schmeltzer says.
The fast pace also puts pressure on mobile banking vendors such as mCom, mFoundry and ClairMail. In a dynamic development environment, bank strategy will rely on honest vendor counsel. "The key for banks is to have a stringent due-diligence process when selecting vendors, and to allow vendors to react to the fast-changing environment," Albertazzi says.
The pressure that's on banks to find a stable, innovative tech partner is also a pressure point for the vendors themselves. The selling points for the vendors and other tech providers will be an understanding of not only the development of mobile technology, but how consumers are using that technology for non-financial activities and then determining how those activities translate to banking.
For mobile tech providers who are charged with being a partner when managing the fast pace of mobile, providing intelligence and respecting a bank's comfort with that pace have become table stakes for new relationship management.
Part of that intelligence includes a recognition of the differences between mobile and web technology, and determining how new mobile technology can build a base of users that makes it a valuable proposition for a bank.
"The web browser hasn't changed in years, so while online banking has features that are advancing, the technology itself isn't advancing," says Drew Sievers, cofounder and CEO of mFoundry. "Mobile is different. It's about understanding the penetration of technology and understanding the bank's willingness to bet on a new platform." Sievers says one metric to follow in terms of placing a new innovation on a bank's radar is the mobile technology's ability to accumulate a critical mass of consumer users. "It has to get up into the millions of users to get to a point where the cost of developing is worthwhile."
Carl Tsukahara, ClairMail's CMO, says that when his firm approaches new or current bank clients to discuss emerging mobile technology, it manages the relationships in the following manner:
- Respects the bank's overall release cycle for new technology projects.
- Partners with the bank by monitoring innovation across multiple areas and recommending or advising on best practices.
- Helps the bank decide how to partition capability between server and apps, which is critical to minimize maintenance and enable more agile mobile solutions. Hybridizing mobile development between a bank's (or ClairMail's) servers and the end-user's phone enables release cycles to quicken and lowers the need for constant updates.
"The vendors are positioning themselves as the support for a new channel, which makes perfect sense," says Aite's Albertazzi, who suggests banks consider the vendor's long-term tech development road map when making a selection, as opposed to a mobile strategy that looks to tap a short-term app. "Banks want to look for more of an end-to-end platform, as opposed to one that's designed to meet a unique need. And I would want to see all components of risk management in terms of vendor assessments: financial viability, operations and controls, and regulatory compliance."
A solid vendor partnership is a big part of SunTrust's mobile playbook. The bank has hired Fiserv and mCom to provide tech services and guidance, tapping the tech firms to keep pace with consumer use of mobile applications, and how that use translates to banking.
"We rely on them to help us know where the market is going," Schmeltzer says. The bank's also drawing on its own expertise – Schmeltzer and a number of others on the bank's tech team are well-versed in mobile, but "we're busy, so we look to vendors to validate what we are seeing."
For many banks, there's a compromise between speed to market and other issues surrounding new mobile innovation, such as developing a security posture and researching the tangible value for the bank and its consumers. Winning the race doesn't always depend on being first for these institutions.
"While there are opportunities to push mobile out quickly, we are focused on deploying the right solutions in the right way for our customers," says Mark Warshawsky, senior vice president of mobile channel design and planning for Bank of America. "We will not always be first to market with new capabilities, but we spend a lot of time making sure the solution works well and delivers value."
And it's not just the mobile functionality that's growing rapidly. The ubiquity of mobile phones and the near saturation of smartphones in the U.S. consumer market that will occur over the next year or so is having a fundamental impact on the manner in which people engage with banks.
Eric Crozier, senior director of new product development for Barclaycard US, says people are gradually moving toward a "mobile first" mindset, in which people initially use mobile handsets to contact their bank, as opposed to branches, phone or the web.
"Our model is built on 'we ship you paper and then try to get you on to the site or onto mobile,' " he says. "When that turns around, how do you engage with the customer?"
In addition to being nimble enough to quickly answer questions such as "native app or browser?" "iPhone vs. Blackberry," "when do we offer tablets?" or "RDC-only app vs. RDC/banking combo?" banks are now also challenged to marry the overall mobile experience seamlessly to other delivery channels, and to do so sooner rather than later.
This poses a couple of challenges: authentication and cross-channel communication. Crozier says most mobile apps and payments today are predicated on the assumption that someone has already been "verified" in another venue, with those credentials then helping to enable the users' mobile application and identity.
"If you set up the credentials on the mobile app as a starting point, then go to the site and the call center, you want a seamless transition so the site and call center can recognize that person. That's a big challenge," he says, adding that is where the ability of all banking channels to communicate with each other accurately and through a common tech infrastructure is useful.
Crozier says the bank's strategy is to create a middleware-powered centralized communication hub - all modes and channels will use the same bank portal to interact with users.
"If I do something on the web, it has to show up on the mobile phone. If I'm communicating with you through email and go to the mobile-wallet message center, that communication has to show up at a single communication portal," Crozier says.
Bottom Line: Mobile moves fast, and consumers have high expectations. A trustworthy and stable tech partner is a lifeline for a busy IT shop.
This story originally appeared on Bank Technology News.
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