Beyond

Mobile Banking

addressing tougher issues having to do with making the channel more useful

challenge. Banks want to differentiate mobile, while also keeping its development

in sync with the rest of the channels. Other debates are more philosophical.

“The issue you have to think about is mobile as a channel versus mobile as a

product,” said Brian Pearce, Head of the Retail Mobile Channel at Wells Fargo.

Whether a bank approaches mobile as a product or a channel may dictate how

it charges—or does not charge—for the services it delivers via mobile. Blake

Facer, Assistant Vice President at Zions Bancorp, argued that a business case

for mobile could be built around metrics such as retention and loyalty. Others

insisted that certain services, particularly remote deposit capture, warranted

a fee. “Being able to take a picture of your check, and save 30 to 45 minutes of

your day by not having to drive to the branch. Is that worthless? Is that worth at

least 99 cents to you—our customer?,” asked Alejandro Carrilles, Senior Vice

President and Director of Mobile Banking & Internet Strategies at BBVA.

Aside from the most basic issues around ROI and fees, banks are facing

challenges they may not have contemplated even just a few years ago—like how

to get a customer to “friend” them. Or how to deliver an irresistible offer in just

the right location at just the right time—without annoying customers. With all

the possibilities out there, banks are entering an age of great experimentation

in mobile. As Raghavendra Bhat, Director of Digital Strategy at Citibank N.A.,

put it, “It’s fall. Get up. Learn. Walk. And run. A lot of us are exploring what can

and cannot be done.”

An Advertorial Produced by SourceMedia Marketing Solutions Group American Banker Magazine

Penny CrosmanEditor in Chief, Bank Technology NewsSourceMedia

Alejandro CarrillesSVP & Director, Mobile Banking & Internet Strategies, BBVA

Blake FacerAVP, Zions Bancorp

Chris ChatenVP, Product Manager,JP Morgan Chase

Jason KammerVice President, Mobile Channel ManagerFifth Third Bank

Eric MacNicollDirector, Internet and Mobile Business Solutions Engineering, Desjardins Financial Group

Christopher PeperOnline Mobile Channel Manager,US Bank

Kristin RankinMobile Channel Manager,SunTrust Banks

Eric TailleferSenior Advisor,Desjardins Financial Group

Lee ChalkVice President,

Mobile Channel Manager,First Citizens Bank

David CohenExecutive Sales Director,

AT&T

Thomas FoleyDigital Strategies,

FNBO

Samir KoppikarSVP,

Citibank

Brian PearceHead of Retail Mobile Channel,

Wells Fargo

Pete PetersenVice President & Director,

Bankcard Business Integration,Fifth Third Bank

Scott ScogginsVP & Mobile Product Channel

Manager,SunTrust Banks

Raghavendra BhatDirector, Digital Strategy,

Citibank N.A.

Penny Crosman: What’s your biggest challenge?

Jason Kammer: I’m finding that the balance between the business case and being the leader of the pack is a challenge for us.

Kristin Rankin: My biggest question is native, hybrid, or otherwise?

Chris Chaten: One of my challenges is: How do you mobilize internal platforms to allow groups within your organization to develop applications?

Tom Foley: My biggest question is, what the government is going to potentially impose upon us that could throw us a curveball?

Brian Pearce: We’re trying to figure out how can we make the channel really be different? How can we leverage the power of the devices? We’ve been using the term “mobile unique.” Let’s do some things that are really about being mobile, and take advantage of those things that they are unique.

Blake Facer: We have spent a few years trying to reach market parity with our mobile offerings and I think we’re looking to some leap-frog opportunities. So, which future functionality and other choices should we make to help us get to that point?

Eric Taillefer: Our challenge is to find how the mobile channel is different.

Simar Koppikar: Our challenge would be the convergence of the mobile and mobile-payment space, and scaling what we do to all of franchises globally.

Raghavendra Bhat: For me, it’s more about partnerships and how partnerships evolve, because there are a lot of different players trying to do a lot of different things, and there is nothing that is proven in this space. It’s fall. Get up. Learn. Walk. And run. A lot of us are exploring what can and cannot be done.

Chris Peper: Our challenge is around mobile governance inside the enterprise. We face regulatory scrutiny, a lot of it particularly directed at mobile. What’s the best practice, in terms of how we bring all these different partners who are innovating in the mobile space together in a coherent way at the enterprise level and keep ourselves out of hot water.

Eric MacNicoll: One of the biggest challenges is: How to be different from the banks in “Canada.” There are eight large banks and we offer all the same solutions and the same services. How can we offer a customer experience that is really different?

Alejandro Carrilles: One of the things that I think is interesting is trying to find a balance between the mobile channel and our multi-channel strategy. In a multi-channel strategy, you have to do things that will benefit all of your channels at the same time. But will all of that be useful in mobile? You have to balance those resources to see what is going to be the best mix, and in which order you release those features. It’s a tough choice. Sometimes you have to

wait until it becomes a priority for the rest of the channels. Sometimes you have to say, ‘Hey, this is only good for mobile, but we have to get it done.’ For example, mobile is the key beneficiary of mobile remote deposit capture. Online could use it, but it’s really not a game changer for online.

Lee Chalk: I’m really interested in seeing where mobile evolves on the small business and corporate side. What do those clients want? What do those solutions end up looking like? And what can they do in mobile compared to what they can do either through their bank or through their typical small business or corporate online portal?

Pete Peterson: I continue to be interested in how people think payments are going to be evolving.

Scott Scoggins: What I’m thinking about right now is; with all of this cool stuff that we can do with mobile, what do our SunTrust clients actually want? Now that most everybody has the core basics of mobile, what is it that our specific bank clients want and need?

Penny Crosman: What do you think about location-based services?

Alejandro Carrilles: We think that the next level of functionality is going to be contextual. If I know that you are at Best Buy, I can tell you, ‘Hey, get a $50 off coupon.’ I think it’s even more interesting if I can offer you a line of credit. So you can actually do a large purchase now that you’re there. Or say, ‘I saw that you’ve already gone three times this week to Best Buy. You’re looking for something, and most likely you’re looking for something big.’ So I think it’s a lot more interesting when you can have that intelligence behind the location services.

Scott Scoggins: How do you balance that with the principle of not distracting a client from their task at hand? It seems disruptive. I think that’s going to be a big challenge for the industry to figure out how to place those things that don’t disrupt their primary task.

Alejandro Carrilles: The privacy issue is involved as well. There are a lot of do-not-call type of regulations that we’re going to see very soon. You might see regulations come up in terms of who we can offer to and how we can offer. So there’s a chance for the industry to self-regulate, before we see regulations being clamped down on us.

“ We face regulatory scrutiny, a lot of it particularly directed at mobile.”

— Chris Peper

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“ How can we offer a customer experience that is really different?”

— Eric MacNicoll

“ I’m really interested in seeing where mobile evolves on the small business and corporate side.”

— Lee Chalk

Penny Crosman: What if you have the information, but you don’t store it? Do you think that would alleviate the regulatory concerns?

Simar Koppikar: Maybe to a certain extent. It depends not only on the conventional financial institutions. At least in the U.S., we have so many different institutions auditing us and providing oversight. But it’s the non-financial institutions and what they do with the information that might drive some of those regulations.

Tom Foley: The other part of the answer to that question is: How is the consumer going to react? They’re ultimately going to drive those congressmen and women to take action upon us. Personally, I would love to get relevant and timely offers. But that’s me. So how are the consumers going to respond to this? Are they ready to have us inviting ourselves into their private space?

Pete Peterson: From Fifth Third’s perspective, it’s about relevance within our footprint as well. The big-box offers are there. But what about differentiating those offers in Cincinnati, for example, or Chicago? Our primary focus right

now is how we can make location-based services more relevant. Because our customers may react a bit different than a Citi-type customer.

Alejandro Carrilles: That’s why it’s really important to take a step back. If you’re going to provide an offer, make it a really good message. I don’t want to bombard you five times about that $50 coupon. I want to give you a Godfather-type of offer—an offer you can’t refuse. When you make an offer that really hits a nerve, it gets people to react immediately. It’s almost like it’s reading your mind. “I’ve been looking at five different TVs. Wow. Now I don’t have to worry about how I’m going to pay for it. WOW! Now I can go out and get it, I don’t have to wait for a special.”

David Cohen: We are seeing a lot of interest around location in the context of preventing false positives. So, using the opt-in capability of location to prevent false positives and save the firm time, money, energy, and improve customer satisfaction.

Kristin Rankin: At SunTrust, our anti-money laundering group is very concerned about mobile. To get them to understand that it’s actually considered

safer in many aspects has been a challenge. Location could further that opportunity. You could take advantage of it on the back end, too, from a monitoring perspective.

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“ I want to give you a Godfather-type of offer—an offer you can’t refuse.”

— Alejandro Carrilles

“ Our primary focus right now is how we can make location-based services more relevant.”

— Pete Peterson

David Cohen: Opt-in is so important. The consumer has to take ownership of participating in this. And there has to be value. If there’s no value in it for them, they’re going to shut it down very quickly. But if you take what you know about them and make it relevant—the context of location with their identity—then there may be more opportunity to market to them in an appropriate way. It’s definitely more art than science in getting the right balance.

Raghavendra Bhat: You experiment, experiment, experiment. It’s about getting that support. There are a lot of experimentations happening across the board. And a lot of it will be driven by consumer security, as well.

Jason Kammer: We don’t know what that next thing is going to be. And we have to be able to provide a platform that we can just simply plug that in, or allow the customer to plug that in, if that’s what they choose to have. As long as they’re coming to our mobile platform, that’s what’s important to us.

Penny Crosman: How do you get more out of mobile, so you can report a return on investment to your board and your bosses?

Raghavendra Bhat: Even companies like Facebook are finding hard to monetize how things are going to be on a mobile device. For the financial services industry, I think it’s more about providing our service to our customers to make sure that they get what they want to get. And it really depends on the device they are using. So, if you are using a mobile phone, it’s, ‘I want to get something and I want to get it done now, because I forgot to pay my bills.’

If you’re on an iPad, it’s, ‘I need to do a lot more research.’ Context awareness is very, very important.

Scott Scoggins: You have one shot at mobile. If you put a mobile app out there that doesn’t work well, it’s not like you fix it as you go along. Secondly, the way to promote cross-sell is to get other people’s friends and family to do it for you. The power of social media is not getting an ad on Facebook or Twitter, it’s getting those people to tell their friends that your bank is the best place to get a credit card or the best place to get a savings account. If we can get that going, then it sells itself.

Penny Crosman: How do you get people to ‘friend’ their bank?

Raghavendra Bhat: I think the answer is giving people what they want. Like the Google example, right? Everyone had a search engine. But why did Google succeed over everyone else? It

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“ It’s getting those people to tell their friends that your bank is the best place to get a credit card or the best place to get a savings account.”

— Scott Scoggins

“ I think it’s more about providing our service to our customers to make sure that they get what they want to get.”

— Raghavendra Bhat

was because it was simple and easy to use. The iPhone is a great example, too. Before the app store, it was just another phone. But the ecosystem that was created by Apple really changed the dynamics of how we interact.

Kristin Rankin: It’s also the core competency of your organization. If service is the organizational core competency, whether you’re going to the branch or the call center, then you probably want to highlight that in your mobile offering, as well, and inhabit that space. If it’s innovation of a technology, then you’re probably going to be a leader in that space.

Alejandro Carrilles: One more thing about the ROI. I don’t understand the process of how we create something valuable, and give it away for free. Being able to take a picture of your check, and save 30 to 45 minutes of your day by not having to drive to the branch. Is that worthless? Is that worth at least 99 cents to you--our customer? Being able to submit a payment that if I don’t send right now, I will be charged a $35 dollar late fee on my credit card. But I can do it on my mobile phone and get it done right now. Is that worth something for the customer? So, I think we really should say, ‘Hey, there are some valuable things that we’re doing.’ We don’t expect to get the rest of the things in our life for free. As an industry, we should say, ‘What’s of value?’ and act upon it. Otherwise we’re going to end up going the same route as the free checking accounts.

Blake Facer: When speaking about mobile ROI, there are different approaches to take. It’s not simply a revenue model; there are retention models, acquisition models. Our mobile clients, on average, are certainly more profitable, they have more products, they’re more loyal, and they’ve been with the bank longer. So a business case can be built around those metrics, just as well as revenue.

Pete Peterson: We’re looking at it that way, but we’re also debating the monetized aspect of it. The issue now is: I can’t go out for free today and then start charging people in two years. It’s a delicate balance. Should it be fee-based? Should we charge for remote deposit capture because it’s a convenience thing? I have no issue with that. Charge me 50 cents. It’ll be easier for me than to drive to a branch and deposit a paper check. But average consumer is very fee-adverse. They don’t expect to pay for anything. They expect it to be free no matter how good it is at the end of the day. It’s hard to correlate that with spending so much on a cup of coffee at Starbucks.

Brian Pearce: The issue you have to think about is mobile as a channel versus mobile as a product. Mobile’s really a channel, right? So you can’t really productize mobile. Now, there are products on the mobile channel that may be of value, like emergency

payments. U.S. Bank is actually charging 50 cents for deposits. So it is possible to have products. But what we do as a bank, the way we make money is by people depositing funds with us, right? And we lend it out at X%, right? We’re a bank—we do banking products. Mobile’s a channel for us. So it’s not always about actual revenue online, but about building a relationship and having a multi-channel experience with customers. Certainly you could drive individual pieces of revenue out of emergency payments.

Chris Peper: One thing we haven’t done a very good job of, as an industry, is to explain how we’re sharing value with the customer in the case of something like remote deposit capture. We feel like we have been very successful with the deposit capture product. But I will tell you that the number-one complaint on the app store about our mobile banking product is, ‘Why are you charging us a fee to accept my money?’ Clearly, if

you think about it from a purely logical perspective, the gas to drive even a mile and half to the bank costs you more than that 50 cents, right? I think we have to get smarter about how we position the sharing of that value that we create with these products.

Alejandro Carrilles: I have two words for all of those who think that mobile banking should be free: Angry Birds. You can get a free Angry Birds that does the basics. But you can have a paid version of Angry Birds that does a lot more.

Chris Chaten: The equivalent is going to be the interest that we can get on transactions. In the P2P space, it’s tougher if you’re settling a bill to have a percentage taken out. Who pays for that? Is it the payer or the receiver of the money? You could hold those funds for a couple of days. Interest rates right now don’t do a ton for that business case, but it more jibes with the relationship that most banks have with their consumers, which is in charging them hard dollars for normal banking transactions. It’s allowing the bank to recoup some of that investment, but also allowing the transaction from a consumer’s perspective to settle how they would expect it to. As you move up to the small business, commercial and corporate space, you can begin to charge more like you would for a traditional product. One, because there’s lower risk—once you move up to a corporate space, they know their processes and they know the value that’s being extracted.

Brian Pearce: Is anybody selling anything via mobile?

Simar Koppikar: Not a lot of anecdotal evidence that we can share, because nobody actually wants to go pecking through an application process.

Raghavendra Bhat: There are a lot of different ways you can look at this. This new company, which has two

products, can take the radio stream, look at your driver’s license, capture all the data, and in the near foreseeable future match the face on the driver’s license to the person who’s conducting that transaction. Now, will that work, will that not work? There are a lot of different things happening in that space, so we’ll probably have to wait and watch—try, try, and try again—to see when you can do this.

Chris Chaten: We’ve actually been fairly active in the acquisition space at U.S. Bank. We have the REI Visa app that allows customers to do a full application, get approval and instant line access. So I think you’ll see us follow that model more frequently. We’re at the stage right now where we have a little bit of leeway to try and experiment with some of these things before customer expectations are formed. We have that window of opportunity to do some early experimentation without bruising our reputation.

Brian Pearce: The use case that folks want to get on and off their mobile devices really quickly I think is shifting. If you’re looking for that big screen TV, you actually started on Google. You didn’t walk into Best Buy. You started out on Google looking for TVs. You’ve

been on your phone, you’ve been on the tablet, and you’re on the train and you’re looking up all this stuff well before going into Best Buy.

David Cohen: Actually, the data supports that going into the Best Buy is the shopping, and then you come back online to do your purchase.

Brian Pearce: So people are beginning to research financial products, too, that same way. We’re trying to figure out what’s there and how do you offer that?

Right now, there appear to be more questions than answers when it comes to planning for the future of mobile. Some questions are simple: What services do consumers want from mobile? How should they be delivered? Can they carry a fee? Others are more complicated: What will the ecosystem for mobile payments look like? How will consumers react to mobile geo-location? Sooner or later, mobile will be routine. But until then, bankers and their vendors will need to continue collaborating. ■

“ If service is the organizational core competency, whether you’re going to the branch or the call center, then you probably want to highlight that in your mobile offering, as well, and inhabit that space.”

— Kristin Rankin

“ It’s not simply a revenue model; there are retention models, acquisition models.”

— Blake Facer

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