Mobile Banking Is Not Just A Channel; It Is An Ecosystem

Banks have embraced mobile banking services and apps in their delivery technology, and customers are adopting mobile technology at a rapid rate.  Mobile is growing fast, and is predicted to grow even faster according to Bank Systems and Technology.

However, the focus for most banks is mobile as a new delivery channel of existing services, or coordination of mobile with existing channels to be “omni-channel.”  This approach has led to significant investment in new delivery technologies, but not new revenue sources.  Meanwhile, our research shows banks continue to lose customer transactions and revenues to non-bank payment providers.

The reason is “mobile” is not simply a channel, but an ecosystem.  Mobile allows marrying data that previously was separated and not linked.  For example, with mobile functionality today a consumer can marry banking data to location, detailed product information, “show rooming” comparisons, purchase offers, loyalty data, purchasing history, financial budgets, product comparisons, and settlement.  Thus an ecosystem is created of information well beyond simply what the bank provides in terms of mobile bank information. 

In such an ecosystem, the value proposition changes dramatically.  Customer purchase information at the retail level at the top of the ecosystem creates far more value than just the banking and settlement information at the bottom of the ecosystem.  Bank investment in mobile technology without embracing the larger concept of the ecosystem will leave banks at the bottom of the ecosystem as a settlement process.  PayPal, Amazon and Alibaba, all offering in-store and online payment methods, will win customers at the top of the ecosystem and dictate to bank accounts at the bottom.  Retailers offering settlement methods like Target's Red Card will steal bank debit transactions. Settlements will occur as debit ACH eliminating interchange and other service related revenue such as liquidity services.

The key to customer and revenue growth is to recognize the entire ecosystem and offer “purchasing” benefits that reach to the top of the mobile purchasing ecosystem.  This can be done simply with services like our PaySound^® Checking Plan and Companion Card.  These services provide payment features customers want, such as “no overdraft fees ever,” affordable liquidity services for purchases, and customer-controlled enhancements for online and in-store transaction security against compromised card data.  The PaySound^® services are delivered through the bank’s mobile technology, and can be “omni-channel” in that e-signing can be done in-branch or at home.  The 30% revenue growth for banks offering PaySound^® comes from its power in recognizing mobile as a new ecosystem.