The Case for Keeping Mobile and Online Banking Separate

DENVER — Requiring customers to sign up for online banking before they can enroll in mobile could deter would-be digital customers from some transactions.

"To tether or not to tether mobile to online will become a bigger issue," said Teresa Epperson, managing director of AlixPartners, during a panel at BAI's Retail Delivery conference. "Younger consumers aren't interested in online payments."

Indeed, the consultancy has observed from its research lower online bill pay adoption (often viewed as the hallmark for customer stickiness) among younger age groups when compared to older age cohorts. The trend suggests millennials are paying bills in other ways that let them manage liquidity in real-time, said Epperson

To put it another way: some people expect to be mobile-first customers.

To date, however, many banks require customers to first enroll in online banking – partly due to security and compliance concerns, partly due to integration challenges. Even so, some banks are separating mobile from online.

U.S. Bank, for one, already lets people enroll in mobile directly and activate some services without needing additional online setup. (The bank also offers imaging technologies that simplify the deposit and payment process, including mobile photo bill payment).

"Experience is king," said Chris Peper, U.S. Bank's vice president of mobile channel management.

Such channel separation could also help a bank gain new customers in the future. Epperson pointed out how mobile banking capabilities, such as mobile deposit, are influencing a person's bank choice. Plus, consumers are pressuring companies, including financial institutions, to give them precisely what they want or they will take their business elsewhere.

"The consumer is the driver of everything," said Lee Scott, former president and chief executive of Walmart and current board member, during his keynote, which was preceded by a rock-concert like strobe light display.

And banks had better listen to consumers' demands, cautioned bank tech vendors.

Digital Insight's President and Chief Executive John O'Malley noted that younger customers are opting out of using banks' bill pay in favor of other payment services. To that end, he urged the banker audience to better mine its data. "Nonbank competitors do much deeper data mining than a lot of banks today," said O'Malley. [We] have to find ways not to run from the challenges."

Mobile deposits, meanwhile, were identified as an app success story.

"Mobile deposit is the hot topic of the day," said Sumit Deshpande, vice president of mobile channel and online account services at BB&T.

Some of the audience seemed to have reservations about the feature, with one questioner asking panelists about the threat of dual check deposits, while I also overheard two men chuckling behind me as they chatted about how a consumer will "double dip" by making a mobile deposit and then cashing the check at a cashier counter.

Still, three banker panelists agreed: the amount of double deposits has been negligible and is often the result of a mistake.

For U.S. Bank and Regions, mobile deposit offers a new revenue source. Both institutions charge customers for the convenience. Despite outcries from people on social-media sites, both banks report solid usage of the feature.

"The response on social is strong but adoption is continued," said U.S. Bank's Peper.

Meanwhile, bankers stressed the need for easy-to-navigate experiences designed specifically for the form factor with varying real estate: tablets and smartphones require a different design layout.

Banks must make sure their buttons are in the right place on a tablet, so a user avoids exiting an app because of a so-called fat finger, pointed out BB&T's Deshpande.

"White space can be your friend in mobile," echoed Peper.

Bankers were coy on future mobile development plans, other than remarking how simplifying the experience and layering in additional security measures are on their to-do lists.