That the mobile device is the banking channel of the future is no longer a matter for discussion. But the possibilities of mobility in banking extend far beyond its utility as a point of transaction and touch. Mobility will pervade banking to such a degree that providers will have no option but to go “mobile first.” For the banks of today and tomorrow, mobile capability is more than just another priority. It is a vital necessity to be focused on proactively.
Here are the areas where we see the maximum impact:
The power behind bank innovation. In the 2014 edition of our Innovation in Retail Banking survey, respondent banks voted mobility as the most important theme in their innovation agenda, scoring it a near perfect 6.5 on a 7-point scale, ahead of Big Data and social technologies. Mobile payments was seen to be one of the hottest areas for action, with a high potential for delivering value. Banks expected start-ups with innovative business models to continue to disrupt this space.
However, the options for mobile innovation comprise much more than payments, and include applications such as mobile voice biometrics, location-based services and mobile personal financial management. And then there are emerging areas such as wearable devices. Half of the banks in the survey are already invested in location services and one in four is exploring the idea. Even the nascent wearable technology already has 8% of banks investing in it, with another 20% considering the option.
The enabler of the banking enterprise. A few months ago, a leading provider of virtualization, mobility management, networking and cloud services analyzed clients’ data to find that device enrollment in their enterprises had increased by 135% in the space of a year. While productivity and business apps dominated the enterprise app stores, when diced by vertical, banking apps came in at a poor 16 out of 20.
If that is an indicator of lag in banking enterprise mobility, the industry should sit up and take notice. This is because enterprise mobility can play a big role in realizing every one of banks’ top priorities, be it consumer engagement, operational efficiency or regulatory compliance. Research shows that other industries are pushing forward on bring your own device (BYOD) – hailed as the biggest computing phenomenon after the PC – with about 4 in 10 chief information officers (CIOs) saying they will stop providing personal devices to company employees by 2016.
One analyst predicts that mobile workers will number 1.3 billion in 2015, or 37% of the total workforce. Since banks too will find the same trend overtaking their workplace, it is better they embrace it with a well-thought out framework of infrastructure, security and policy, rather than get caught unawares.
The appeal of mobilizing employees on their own terms (read devices) or otherwise is undeniable. Mobility enables self-service, which improves employee efficiency, but it also creates empowerment and agility of response. For example, by enabling their relationship managers with the right set of mobile apps that are integrated with their core banking and back-office platforms to provide access to information in real-time, banks can enhance both conversion rate and customer engagement. Budget trackers and forecasting tools on mobile would enable busy bank executives to stay up to the minute with their line of business’s financial performance. In the area of risk and treasury management, mobile apps providing easy access to important information, such as liquidity positions and funding sources and alerts on critical parameters, can be a real asset to those in charge.
But even as they push ahead with mobility initiatives at an organizational level, banks must also institute robust identity and access management policies to ensure that only authorized users are able to tap into various enterprise resources.
Embrace and distance the banking customer. Mobility has played a transformational role in the world of banking services. In emerging markets, mobile payments and money transfer offerings have changed the lives of millions of unbanked customers by opening the doors to financial inclusion. In the developed world, mobile apps, augmented reality, location services and gamification have elevated the banking experience to a new level. The insights of mobile analytics have enabled banks to make the customer relationship more meaningful with contextual, timely, relevant and highly personalized products and services. Going forward, developments in wearable technology and the Internet of Things will further reduce the separation between the consumers and providers of financial services, and allow the latter a role in not just banking interactions but also in a variety of day-to-day transactions.
But here’s the irony: Even as mobility opens up opportunities for banks to get closer to the customer, it is also doing the same for new entrants, who are slowly but surely taking control of the front-end relationship. Research says that banks are the most vulnerable to disruption, and the disruptors are not other banks, but technology companies. Our own study confirms that banks share this view. This year, they upgraded the threat from companies like Apple, Facebook and Google to a little over 5 on the 7-point scale.
Mobile technology is at the epicenter of this disruption, transferring as it does, more power to end-users. The next generation of banking customers has high expectations from banking, spilling over from their experience with digitally progressed verticals, such as retailing or telecom. They will take their business to the providers that fulfill their expectations of what banking should be: seamless, convenient, personalized, and needless to say, completely digital. Increasingly, those providers will be niche players with mobile and mobile-only offerings – think payments, P2P and small business loans, and even deposits – that will disintermediate and disengage traditional banks from their customers.
New designs on mobility. Mobility developments are unfolding at such a pace and scale that banks will need new thinking and tactics to deal with their opportunities and threats. At some level they will have to shed their second nature, which is cautious, considered and incremental, in favor of a bolder, more imaginative approach.
Also, banks must view mobility not just from a technology perspective, although that is useful, but rather, from the more important one of end-user need. Hence, we believe that banks’ future approach to mobility should be based on new concepts, such as design thinking, which aims to give users what they desire in a technically feasible and commercially viable manner. At Infosys we have already moved ahead in this direction by entering into a partnership with Stanford University to run a course in design thinking for our employees and workshops for our clients.
Design thinking takes a systematic and people-centric approach to understanding problems clearly before looking for solutions. It does this by combining three key elements: consumer need, technological capability and business imperative. We think of these three stages as the establishment of desirability, feasibility and viability respectively.
Although design thinking is still to take hold in banking mobility, we see a strong case for its adoption. Consider, for example, enterprise mobility. Organizations are often stumped at the starting gate by their lack of understanding of the goals of enterprise mobility, and also its strategy and implementation. This drives a vicious cycle where the lack of direction results in “great apps” but very few success stories and, therefore, very little understanding of what works and doesn’t.
Design thinking can help because it focuses on getting to the root of the problem. It would start by understanding the varied needs of stakeholders. And from there, you look at holistically managing the mobile lifecycle in its entirety – from ideation and assessment to design, prototyping and rollout – all the while staying focused on solving the core problem of user need, in a way that is feasible for technology and viable for business.
A major advantage of design thinking is that it enables quick prototyping, allowing banks to assess the success or failure of a concept early in the innovation cycle, and take a winning idea to market with agility. For banks, whose future will be greatly determined by how far and fast they leverage mobile technologies and innovations, the value of such an approach cannot be overestimated.
Mr. Reh is senior vice president and global head for Bangalore-based Infosys Finacle. He can be reached at Michael.Reh@infosys.com.