How is mobile banking impacting other channels?

A new report revealed adoption of mobile banking solutions has soared as trust in the technology has grown.

For many consumers, particularly younger individuals, mobile devices have become one of the primary ways in which they interact with their banks. Indeed, for some, it may be the only way in which they interact with financial institutions, as the success of mobile-only banks such as Atom and N26 have proven.

While some believe the future of banking will be increasingly mobile-only, there’s plenty of evidence to suggest that for the foreseeable future at least, mobile banking should be seen as complementary to other channels, rather than a complete replacement for traditional methods of banking.

The impact of mobile on self-service and online

This was one of the key takeaways from a recent study by Raddon, which stated that as mobile banking becomes more ubiquitous, it will be essential for financial institutions to understand the differences in how key groups of customers use the technology and how this should impact their strategy.

The study found more than four out of ten consumers (41 percent) now use mobile banking, compared with just seven percent in 2010. Younger consumers are even more enthusiastic adopters of the technology, with 69 percent of millennials using a smartphone or tablet for banking activities.

However, the study revealed there are some important differences in how the use of mobile banking affects consumers’ use of other banking channels and, ultimately, the overall relationship with their bank.

For example, while one in three respondents (33 percent) stated they use in-person branch services less as a result of adopting mobile banking, almost a quarter (23 percent) actually increased their use of ATMs since turning to mobile devices. Meanwhile, 38 percent of mobile banking users stated they used online banking services more often.

The need for an effective omni-channel approach

The findings suggest that ideas that mobile banking will draw business away from other channels are oversimplified, and that this technology should not be treated in isolation or viewed as an alternative to traditional ways of interacting with a financial institution.

Bill Handel, vice-president of research at Raddon, said: “Mobile banking drives increased usage of services like online banking and ATMs. This is positive from an engagement perspective, yet it leaves financial institutions grappling with how to best serve this ‘want-it-all’ consumer.”

To ensure they are meeting the evolving demands of consumers, banks therefore need to understand how mobile services fit into users’ lives and adapt their focus to meet those demands. Mr. Handel noted that it would be a mistake to overinvest in technology under the assumption that mobile will become the only channel, but at the same time, underinvestment could be equally damaging.

It will be especially important to bear in mind that banks must not neglect traditional channels such as the branch as they move to mobile. Raddon found that 71 percent of mobile bankers said it is very or extremely important for them to have a branch of their primary financial provider nearby, as well as have easy access to an ATM from their home or work. This compares with just 58 percent of non-mobile bankers, which indicates a personal, physical touch is still highly valued by even the most tech-savvy consumers.

Written by Glenn Tom

Glenn Tom

Glenn Tom is NCR’s Senior Director of Global Solutions Marketing. In this position, he is responsible for leading global marketing efforts for all of the division’s consumer- and FI-facing solutions, including digital banking, branch, ATM hardware and software, channel management, payments & transaction processing and enterprise fraud & security. Prior to joining NCR and Digital Insight in 2008, Glenn previously held marketing and general management positions at Intuit, Morgan Stanley, Citibank and American Express. Glenn has a BA in Liberal Arts from Claremont McKenna College, a BS in Industrial Engineering from USC and an MBA from The Wharton School, University of Pennsylvania.

Read more articles from Glenn Tom
Get the latest updates in your inbox Subscribe