This is the year that mobile banking will really make a dent in branch networks, according to James DeBello, CEO and president of Mitek, a company that is helping make that happen. It introduced remote deposit capture — take a picture of a check with your smartphone and send the image to your bank. Now it is introducing mobile account sign-up, so you can open an account from your phone or tablet without ever setting foot in branch. Just shoot images of the front and back of your drivers license.
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With the emergence of “mobile first” and “mobile only” consumer segments, financial institutions will need to tailor marketing strategies to address their unique requirements, Mitek said in its 2014 predictions. “A growing population of consumers will abandon traditional banking relationships altogether, opting instead to never set foot in a branch. The new year will mark the tipping point where organizations start to market directly to mobile-only users.”
That will require making the process easier. DeBello said that 90 million Americans tried to enroll in banking through digital channels and 25 percent abandoned the process. The company thinks imaging will make mobile banking more attractive because it won’t force customers to do much on their small phone keypads.
By the end of 2014, 90 percent of the US population will have access to mobile deposit, said DeBello. Using a mobile phone, users can take pictures of a bill pay stub or a credit card balance and transfer them to another bank or pay bills with images.
“We believe that mobile banking will be adopted by 60 percent or more of smartphone users by the end of 2014.”
“We have passed the tipping point and will see continued adoption,” agreed Mark Ranta, senior product marketing manager at ACI Worldwide, an electronic payments firm. “Adoption numbers far surpass what we expected at banks, and we think the numbers will continue their meteoric rise.”
“I think the trajectory of tablet and smartphone use is going to continue at a torrid pace,” said DeBello. He also expects wearable devices to enter mainstream use much faster than most industry experts are predicting. One of the big switches as this mobile banking evolves is the use of the camera, and apps, to replace the keyboard.
“We are trying to address usability. It is all about eliminating keystrokes, digitizing data without typing it,” DeBello explained Banks can’t just take their paper or online enrollment processes and ask people to fill in the blanks on a phone’s tiny screen. Instead, Mitek can read documents and then it depends on its bank customers to write the apps to make the information from the image capture useful.
“The mobile-only consumer is a new phenomenon,” said DeBello, who used to work at Qualcomm’s Internet Service Division. “We anticipated this a decade ago, but what people didn’t anticipate was that it would be to the exclusion of desktops and laptops. No one is growing that business. People are depending on these mobile devices only, and they don’t want to go to a branch.”
For traditional banks, which already have a weak grip on customers, this could be a huge headache. Customers can snap their current statements, whether bank accounts, credit cards, insurance or even mortgages, and instantly compare them to other offers and then immediately transfer the balances or the business.
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“You aren’t going to enter data or call a call center; people are busy,” said DeBello. “People with today’s lifestyles want it quickly and conveniently. Now you can snap a picture of your statement and get a counteroffer from a mortgage provider, insurance carrier or a credit card.”
JPMorgan Chase was the first national bank to offer mobile deposit, DeBello said, and they picked up new customers as a result. Reviews on the app stores had comments from customers of other banks who said they would switch if their bank didn’t offer mobile deposit soon.
“But if you are slow and don’t address mobile, you will lose,” he added. Mitek launched mobile deposit in 2008, it began gaining users in 2010 and by 2013 it had 20 million users.
“I think that in 2014 it will be part of the regular vocabulary of banking. You can’t have a bank without mobile and mobile deposit.” Qualcomm figured new technology would take eight years from launch to mainstream adoption, he added, but mobile is moving faster. He provided a link to Ellen DeGeneres doing a monologue about depositing checks by phone on her daytime TV show.
Besides saving customers time, mobile deposit saves the banks money, because it is about $4 cheaper to take a deposit by phone than by teller. While traditional banks are working to meet new regulatory requirements, new bank initiatives like Ally and American Express Bluebird that are less encumbered can move ahead fast with mobile.
Peter Roe, an analyst at UKTechMarketView, wrote about mobile banking: “There are two fundamental principles to the payments industry; it is a scale business so volumes are vital and it is dependent on partnerships and good cooperation between industry players. These fundamentals create an interesting dynamic as innovative ideas and technology are injected by new companies into a usually staid and slow-moving industry, populated by large, comfortable and slow-moving incumbents.
Roe thinks the appeal will be greatest among millennials — who will eventually become the mainstream — and among people who just don’t like to deal with banks. Now they can use their mobile phones to deposit checks, pay bills and transfer money to friends and family.
The effects of mobile banking will extend beyond finance, according to a study that ACI Worldwide conducted with 5,200 mobile consumers in 17 countries.
“People who owned a smart phone changed their financial shopping and payment behavior,” said Michael Grillo, another senior product marketing manager at ACI Worldwide. “They were more willing use the phone for shopping, for banking, to purchase goods or search for better deals. As people continue to purchase smart phones and get more comfortable with them, we will see an evolution in the types of activity they use them for.”
“The smartphone creates a new dynamic for the user,” Roe wrote in his report. “The experience is much better than on-line for quick transactions (e.g. buying a train ticket, rather than buying a holiday). With its increased functionality and the fact that it is always close by and always switched on, the device has become central to the management of many people’s personal lives.”
2014 should be a challenging one for banks trying to keep pace with mobile users.
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