Pete Daffern, CEO of Clairmail, recently contributed the following byline article to Bank Systems & Technology:
At the start of last year, Forrester Research predicted that mobile banking adoption would stall if financial institutions didn’t begin implementing differentiated capabilities unique to the mobile channel. Mobile payments are one such capability and are steadily becoming a focal point in the race for mainstream adoption of mobile banking.
Forward-thinking FIs are implementing bill pay, person-to-person and remote deposit capture abilities to differentiate their mobile offerings and add convenience for their users.
User experience, more than any other piece of the mobile banking and payments puzzle, is what will define the success of mobile for FIs.
Where We Are Now
Mobile payments, as they stand now, remain a largely Wild West territory — carriers, credit card issuers, FIs and startups are all trying to navigate the channels needed to deliver compelling mobile products to their customers. The result is a mobile payments and banking ecosystem fractured in the eyes of consumers, with dozens of apps available promising to do the same things.
It has been proven that a unified user experience is key in delivering mass appeal with new technologies. Apple revolutionized the mobile phone by combining multiple tech products (digital cameras, iPods, PDAs) into one device with the iPhone. Netflix married instant content distribution to instant content consumption and has eclipsed an entire world of staid competition. Even other mobile application industries have done this — smart apps like Foursquare, Yelp or Instagram tie their respective product with social integrations to keep users inside the application for as long as possible.
Mobile banking and payments need a similar intersection and streamlining of functionality in order to capture user attention and offer convenience to FI customers. Banks need to provide these services to their customers to stay in the loop on revenue streams, maintain top-of-wallet status and retain customers. Thankfully, although there may end up being multiple types of models delivered to the market, no player in this quickly evolving space is better suited to deliver on the promise of mobile finance than banks.
Why Banks Will Win
FIs have a powerful trifecta needed to succeed in tomorrow’s payment landscape:
1. User Experience
Today’s users expect consumer services that are seamless: Facebook’s pervasive “Like” button around the Web, Apple iCloud’s sync of files and preferences across devices, etc. So, too, do financial customers expect a seamless service across their mobile banking and payments tools — a complete workflow of personal finance which requires the integration of payments, offers and other services with existing mobile banking services.
This elevates a “mobile” payment from the existing payments of today by integrating with offers and rewards systems, and unifying point of sale (POS) or person-to-person (P2P) payments, instant ID verification and auto-tagging. It’s what happens around the payment through the bank and its partners that will truly set the technology apart.
2. Risk Management
Banks and payment processors continue to provide strong, proven risk management and fraud protection to their customers across all channels of business. With e-channel fraud increasing, consumers will turn to the FIs that can provide fraud risk management across multiple products and channels concurrently and in near real time — something that is strengthened, not weakened, by the deputization of consumer mobile devices. A cell phone’s close proximity to its owner, geolocation services, instant actionable alerts and multifactor authentication across a device and mobile banking applications all make the phone a formidable opponent against fraudsters.
3. Brand Trust
A better, seamless user experience paired with the dedicated risk management and fraud protection systems found in FIs prove what a majority of users believe: your bank is the most trusted provider of financial services and information. A recent Fiserv Consumer Trends Survey found that a majority of survey respondents would trust their bank or credit union more than any other card issuer or payments startup with handling mobile payment technologies, and we believe this number will only increase as increased security standards are applied to new payment technologies.
Again, it’s what’s around the payment that really matters in this evolution of mobile finance. Tying in geolocated offers and coupons, mobile receipts, loyalty incentives and the ability to consolidate payment accounts onto one device will signal the marriage of mobile banking and payments capabilities into a consumer economy driven by mobile interaction.
Imagine — a bank customer is having lunch at a mall and receives an instant offer for 15 percent off at a favorite clothing retailer, as analyzed in their transaction records. The customer leverages location services or social check-ins and finds that that she can apply the time-sensitive offer now because the merchant has a retail outlet in the mall where she is having lunch. While checking out at the point of sale, a receipt is instantly delivered to the user’s phone, complete with an incentivized offer to return within the next 10 days for another 15 percent off.
While this scenario may still be a few years off, FIs continue to march down this path through partnerships with mobile vendors, rewards companies, payments companies and smart in-house development to tie all of these disparate systems together into a streamlined application. Smart new players to the mobile payments game, such as Google with their marriage of Google Wallet and Google Offers, are also flexing their muscles — partnering with all players in the game to bring a differentiated product to market.
The race towards mobile finance is on, with banks having a distinct advantage moving forward as mobile offerings become increasingly differentiated from other channels. Just remember that in this race, the ultimate winner is the customer — and that’s the way it should be.