Consumers Calling the Shots in Mobile Banking

MIAMI — In mobile banking, customers are faster at conveying what they want than banks are at delivering the goods.

That was one of the main messages conveyed by a panel of bank technologists at the Mobile Banking and Commerce Summit on Tuesday.

The customer in control marks a wild transformation from years past, when banks waited for account holders to call them. Such a passive communication approach is no longer acceptable for financial institutions. This shift is largely driven by the fact that the majority of people are now equipped with smartphones that they paid for. "The consumer owns the experience," said Neff Hudson, assistant vice president for emerging channels at USAA. "It's their phone. …They will choose to put a [bank] app on their phones."

As such, customers are the ones driving mobile banking product development, while banks are akin to the cars' passengers, hanging on the edge of the door, flying down the highway, Hudson told attendees who chuckled. USAA offers insurance, banking, investment and retirement products and services to more than 9.4 million members of the U.S. military and their families.

And developments for mobile banking are nowhere near complete for financial institutions. "It's almost impossible to run out of ideas in how to use [the smartphone's] sensors," said Hudson. Looking ahead, he views opportunities to help members make smart everyday purchasing decisions as a mobile development area.

Continuous improvement is required of any functionality rolled out, however. "Once a product is live, commit to making it better," Hudson said.

To that end, he highlighted a new mobile remote deposit feature the San Antonio company has rolled out: To capture check images to make deposits, members can now hover their smartphones over the checks; the phone's video camera is automatically activated to capture a perfect picture of the document. USAA also recently added voice technology into its mobile app to improve navigation on the form factor. "It's a small screen and easy to get lost," said Hudson. "Voice gives users the ability to search rapidly."

USAA is in good company in devoting resources to improving the mobile experience.

Wells Fargo & Co. recently rolled out low balance real-time alerts to customers, as it sees helping people control their finances as an area ripe for innovation, said Armin Ajami, vice president and senior product manager at Wells Fargo.

"We are layering in more advanced capabilities," he said. To that end, the fourth-largest bank by assets now allows mortgage customers to view their account activity in mobile, which marks a departure from earlier bank thinking that assumed people would only do simple transactions through the channel. "Now, customers want to do everything on mobile," said Ajami.

Citigroup, meanwhile, is working on creating a tablet app that works in 30 countries. The undertaking is big, but Citigroup's global mobile and tablet banking director Andres Wolberg-Stok said Citi is persuaded the payoff is there. "Having a different app in every market isn't sustainable," he said.

As important as continually improving the mobile banking experience is, banks should pick their new features carefully, all three panelists noted. "Don't chase every new shiny object," USAA's Hudson told attendees.

When asked by a member of the audience how the banks explain the ROI of the channel, the execs agreed: mobile already pays for itself.

"You don't have to look for ways to charge for services," Wolberg-Stok said. He pointed out that Citi's mobile customers tend to engage more with the bank, have a propensity to go paperless, come with lower attrition rates and save the bank from costly call center contacts.

The money gained through the channel will climb. The panelists touched on digital wallets, saying what many in the industry say: The potential is huge but so is the hype for digital payments taking off any day soon. Translation: digital wallets remain in experimental stages.

Mobile payments was "the hot thing" in 2006, pointed out Wells' Ajami. He highlighted how Wells Fargo experimented with a couple of mobile wallet pilots among employees already, with testers discovering there weren't enough businesses accepting mobile payments even in the San Francisco area. The value chain for all parties — banks, merchants, consumers, etc. — must come together. "It has to be more than payments," Ajami said.

"Companies need to create value to inspire people to replace the swipe," added Hudson. "There will be winners and losers in the space. That's why these conversations matter."