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Is your institution integrating mobile apps to meet customer demand?


The use of tablets and smartphones is commonplace, and with each passing day, a greater percentage of the population expects to perform routine tasks through mobile apps. That expectation extends to banking, as many customers want to make financial transactions on the go with a mobile device. Many institutions are implementing new technology and gaining customers, but others do not understand the capabilities of banking apps, and that may impact revenue sooner rather than later.

In the past, the general public was slow to accept change, especially when it involved their finances. However, as technology becomes more pervasive, the general public is embracing apps that make everyday processes more convenient and efficient. Unfortunately, some executives don't realize how quickly change is accepted by their customer base and may face an uphill battle to match competitors' technology capabilities.

Financial institutions must know their technology and their customers. For instance, some institutions confuse Internet banking with mobile banking. Internet banking is a popular feature on computers, but mobile banking apps are much more effective for smartphones and tablets. The demographic that typically utilizes Internet banking is aging, while the mobile banking demographic is getting larger.

Some executives may think that mobile apps are a passing fad, but they are gaining acceptance at a rapid pace, and they are likely here to stay. Institutions must evaluate their mobile banking strategy and consider implementing the services below if they have not already introduced them. Chances are, competitors are offering these services, and as always, customers will eventually flow to the institution that makes banking more convenient. In the past, convenience meant extended or weekend hours, or number of ATMs. Today, that means embracing mobile banking.

The introduction of Apple Pay and comparable Android products are generating significant media attention; however, this article explores the potential functionality of mobile apps specific to individual institutions. The most popular features of today's mobile banking apps are mobile deposit capture, mobile bill pay, picture pay and person-to-person payments.

Mobile deposit capture – To make a deposit with a mobile device, a user enters a bank's mobile banking app, and selects "deposit check" or a similarly worded option. The better apps immediately activate the phone's camera, and as the user frames the check on the screen a picture is automatically taken. Some older apps give the user a box to fit the item in, and they must manually take the picture. The more-recent apps sense when it has an image that will work.

In either version, a user takes a picture of the front and the back of the check, and the app asks where the funds should be deposited from a list of accounts (if necessary). The application confirms the dollar amount and performs a match to verify it. If everything is accurate, the app automatically generates a text or an email detailing the deposit and including a verification number.

Mobile bill pay – Mobile bill pay functionality is very similar to Internet banking bill pay. A big difference with mobile bill pay is apps currently only let users pay one bill at a time. However, the process is fairly easy and efficient. The app generates a list of billers, and users select one, push a button and confirm the amount. The app details when funds will be transferred, and expedited payments may be available for an additional charge. When the payment is recorded, users can receive a confirmation text or email.

Picture pay – Users set up a picture pay profile with a list of billers. When they have a paper bill from a biller  in their profile, they enter the mobile banking app and select "picture pay" or a similarly worded option. These apps do not typically require the user to take a picture; they are smart enough to focus on the bill and automatically record the image. The app verifies the amount, and sometimes users must confirm the biller. Following the payment, the user receives a verification message.

At this time, picture pay is an emerging technology that banks are slowly adopting. However, those institutions that do offer it are experiencing double digit user growth on a month-to-month basis.

Person-to-person payments – Person-to-person payment capabilities are becoming very popular due to their versatility. Users can process payments with just a few clicks to almost anyone, such as friends, a babysitter or a gardener. Instead of writing a check, a user selects the payment option within the mobile banking app and enters an individual's email address and possibly a phone number.

The app will ask what account the user wants to use (if applicable) and confirms the amount, and a text or email is sent to the party receiving the funds. The payee must register and set up an account within the system, using their financial institution information and what account they want funds posted to. 

In future issues of FI insights, we will evaluate the risks of these mobile banking services; however, if the market is any indication, the benefits of offering these services outweigh the risks.

When implementing a mobile banking strategy, institutions must ensure apps are effective with both smartphones and tablets. The users for the two formats are different, as someone who uses a tablet is not likely to use a phone app. The two groups represent two varying demographics, as anyone Generation X or younger is typically a smartphone user, while tablet users are often Baby Boomers. Institutions don't want to ignore a demographic, as it could be costly.

Consumers demand enhanced mobility, and institutions must be forward thinking with mobile apps to capture the scope of potential customers. It is often difficult to target a widespread audience, but in this case, increased mobility is attractive to all demographics, and ultimately very profitable. As mentioned earlier, customers have new expectations, and they will gravitate to financial institutions that invest in technology and make banking more efficient and convenient.