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BirdsEye View

  New technologies present an interesting dilemma to management.  It’s near impossible to know which one(s) will prevail, and yet one can’t sit on the sidelines and wait until the dust clears and a winner is announced.

The most jarring development is the apparent change of consumer behavior.  Over many decades, banking hadn’t changed much, and neither had our consumers.  The past five years have presented a different picture.  The stunning growth of smartphone and tablet ownership (from 17% to 65% of the population) has had a profound impact on how consumers behave and what they expect from their bank.  The mobile device has become integral to daily lives, and that relationship continues to evolve.  

I myself read my news and email on it, get my music on it, communicate with my family on it, and pass the time during my intensely boring workouts on it.  I realize I’m not statistically significant, but I’m not alone.  For example over half of phone owners use it for messaging, and over 40% access the internet through it and check email. Not surprisingly, consumers look for additional ways to use the phone to make their lives easier, and payments are an obvious choice.  Consequently, “mobile money” transactions have been growing rapidly (from 28% (4Q11) to 44% (4Q14) of respondents to BAI’s Payments Connect survey, March 2015, said they used the phone as a payments mechanism at least once).  People under 34 years of age have adopted this functionality even more intensely, and 2/3rd of them use their smartphone to make all sorts of payments.

Think about your own purchasing habits. You research the possible purchases for features and functionality, check out prices and availability, and then buy.  Much of this cycle can now be done, and IS done, on the phone.  Amazon offers the ultimate phone shopping experience.  I’ll never forget standing in a book store (yes, one of the last standing) with Dick, and stopping him from buying a book before we checked the price on Amazon.  Amazon was 1/3rd cheaper, and we didn’t have to carry the book with us.  It showed up at the house.  How convenient!

Digital devices are now widely used by consumers to perform all purchasing functions, from research and coupon features to pricing and rewards.  The use of digital devices for shopping now drives the convergence of shopping and payments, and we can’t sit this development out.

The first imperative is to take guesswork out of the equation.  Not all parts of the country are the same, and adoption curves vary widely.  Find out what your own customers are actually doing with mobile devices.  Through a disciplined approach to monitoring customer behavior changes, banks can gain unique insights toward evolving their digital solutions in a more customized fashion that fits their current and target customer bases perfectly.

Mobile has been with us for some time now, and we can draw some lessons from it.  We now know that mobile solutions are table-stakes, and perceived innovation in the space does move market share.  The good news is, that while technology is very important, so is brand, and it should be leveraged through your technology solutions, not apart from it.  PayPal has done a tremendous job of leveraging their brand, and their market share has increased meaningfully. Banks have declined meaningfully during the same period (4Q11-4Q14), and others, including Apple, Google etc., are on the rise.

The opportunity banks can capitalize upon is providing the context and the brand strength to support their mobile solution.  Mobile is best received when used in familiar contexts.  For example, using mobile to protect my family (pay down debt; put your alarm company app on it; consolidate credit card debt; choose and pay for health insurance) or to manage my daily life (buy groceries through the phone; sharing meal costs with friends; opening a credit card and placing it in your mobile wallet; watch Netflix and buy music on iTunes).  

I posit that banks are missing a significant marketing opportunity by not tying their brand and mobile solution to these daily life events and decisions.  They also have not made good use of iconization to extend and solidify their brand (check out, for example, Zen Banx’ mobile app; the icon itself is appealing, not to mention the app).

When all is said and done, banking needs to move from transaction processing to value-add services.  It’s a theme I have been raising for several years.  Mobility can facilitate our added-value solutions by understanding the stages of consumer purchasing (awareness and research; information gathering; purchasing; loyalty and rewards post-transaction) and offering added value in the mobile solution for each stage.  Transaction processing yields transaction mortuaries.  Thriving requires added content and dimension to customer interaction through all channels, not just face-to-face.  It offers an excellent opportunity for brand building and leverage – we should all take advantage of it.