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A report from The Economist Intelligence Unit
How mobile is transforming retail bankingRedefining banking to survive and thrive in a digital world
© The Economist Intelligence Unit Limited 20141
How mobile is transforming retail banking
Preface 2
Introduction 4
Mobile, a big player in an “omnichannel” world 6
A new competitive landscape 9
Moving beyond transactions 12
Conclusion 14
Appendix: Executive survey results 15
Appendix: Consumer survey results 22
Contents
1
2
3
4
© The Economist Intelligence Unit Limited 20142
How mobile is transforming retail banking
Preface
Redefining banking to survive and thrive in a digital world explores how mobile technologies are transforming retail banking. While the rise of mobile computing will not eliminate web, physical and other paths to customers, people around the world are clearly embracing mobile—and banks need to do so as well. Indeed, if they fail to help shape the change, they risk being swept aside by newcomers who enable mobile-empowered consumers to reach their financial goals and dreams.
As the basis for this research, The Economist Intelligence Unit conducted two global surveys, sponsored by SAP. The first polled 111 retail-banking executives in June 2014 and the other polled 1,827 consumers in September 2014. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. The author was Dan Armstrong. Riva Richmond edited the report and Mike Kenny was responsible for the layout. We would like to thank all of the executives who participated, whether on record or anonymously, for their valuable insights.
Interviewees
Brad Jones, head of North Asia operations and Asia transformation at National Australia Bank
Ivan Mortimer-Schutts, East Asia-Pacific electronic and mobile banking specialist at the International Finance Corporation
Joshua Reich, chief executive of Simple
Jose Manuel Villas, head of the digital channel at Banco Bilbao Vizcaya Argentaria
Andres Wolberg-Stok, global head of emerging platforms and services at Citibank
© The Economist Intelligence Unit Limited 20143
How mobile is transforming retail banking
The Economist Intelligence Unit conducted two global surveys on mobile banking, sponsored by SAP: one of 111 banking executives in June 2014 and the other of 1,827 consumers in September 2014.
The executive survey. Nearly half (45%) of respondents served in the C-suite or board of directors, while 17% were at vice-president or director level or ran business units. Outside the “general management” category, the key functional areas were strategy and business development, finance and marketing and sales. The survey attracted executives at banks large and small. A quarter (24%) hailed from banks with assets greater than $100bn; two-thirds (66%) had more than 100,000 retail accounts. Half (50%) described their footprint as either global or multinational, while 18% described themselves as regional and 31% as national. About one-fifth (20%) of respondents came from North America, 23% from Asia and 18% from Latin America. EMEA accounted for 21% of respondents, with most (19%) from Middle and Eastern Europe (a designation covering the countries from Switzerland and Germany on the west to Russia on the east).
The consumer survey. Respondents to the consumer survey were from five regions and 48 countries. All currently use mobile devices and have bank accounts. About 13% of respondents were from the US, with 6% each from Brazil, Mexico, Canada, China, the UK and France; no other country accounted for more than 4%. Emerging markets were well-represented, with 19% of respondents hailing from the BRIC countries and another 48% from a more broadly defined group of emerging economies. About one-fifth (19%) came from North America, 19% from Latin America, 23% from EMEA, 26% from Asia-Pacific and 14% from Middle and Eastern Europe.
The median survey-taker was in the 41-to-50 age group; the average age was 45. Men outnumbered women by a ratio of 57:43. In terms of income, respondents exhibited a dumbbell pattern: the largest group made more than $125,000 per year (14%), while the second largest made less than $10,000 (9%) and the third largest between $10,000 and $15,000 (7%). The average annual income of respondents was approximately $57,000. Most have smartphones (86%) and almost half have tablets (47%). A significant portion also uses a feature phone (22%)—a basic phone for calls and texts, with simple games and Internet connectivity.
About the surveys
© The Economist Intelligence Unit Limited 20144
How mobile is transforming retail banking
Our grandfather’s retail bank was a columned building with tellers and velvet stanchions. Ours is fast becoming an icon among many on a tiny screen. The traditional bank represented solidity and permanence. The new bank is a portal into a dynamic new digital world.
As anyone who has witnessed rows of mesmerised commuters knows, mobile devices are becoming central to individuals’ interactions with each other and with businesses. Banking, like so many industries, has been swept up by the wave.
Both bankers and consumers expect the use of
mobile-banking technologies to grow rapidly, according to companion surveys of 111 bank executives and 1,827 consumers across five regions and 48 countries conducted by The Economist Intelligence Unit and sponsored by SAP.
Yet the surveys also show that, even as mobile interactions grow, other channels where consumers and banks connect will remain as important as ever. Many consumers still appreciate the feeling of stability that brick-and-mortar branches provide—and they will always need branches or ATMs to deposit and withdraw cash.
Branches, ATMs PC Call centre Mobile devices
Regional breakdowns on mobile channel use (% of executive respondents)
Now
In fiveyears
EMEA
Now
In fiveyears
North America
Now
In fiveyears
Middle and Eastern Europe
Now
In fiveyears
Latin America
Now
In fiveyears
Asia-Pacific
52
27
13
8
32
28
11
30
40
32
11
18
26
289
37
6024
88
38
26
10
26
67
18
69
46
21
6
27
53
20
12
14
35
26
8
31
Source: Economist Intelligence Unit survey, September 2014.
Introduction1
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How mobile is transforming retail banking
Many like the larger screens that their home computers provide. Still, most also want the convenience of paying for items and handling transactions on their phones.
This “omnichannel” world is diverse. Consumers are not uniform in their banking preferences: retirees in Mallorca, millennials in Seattle and villagers in Peru will each be inclined to use a different mix of branches, ATMs and online and mobile services.
But consumers around the world are clearly embracing mobile as a vital channel—and banks need to be there. In the EIU’s executive survey, 82% of retail bankers agree or agree strongly that in the next five years mobile will become the number one channel for millennials and younger consumers—banks’ future customers.
“Seventy percent of the Spanish population owns a smartphone. It is clear that customers are increasingly moving to mobile,” says Jose Manuel Villa, head of digital channels at Banco Bilbao Vizcaya Argentaria (BBVA). “We need to enable distinctive digital platforms, and that requires a
substantial investment in both talent and technology.”
Moreover, mobile services could help make developing countries and the underbanked and unbanked more accessible and attractive markets to banks. In emerging markets, approximately 1.2bn mobile users will use mobile money accounts by 2015, up from a negligible number in 2010, according to Ovum, an IT and telecom research firm. A 2014 Federal Reserve study, “Consumers and Mobile Financial Services 2014”, found that the unbanked make heavy use of mobile phones and smartphones and that almost 40% of the underbanked use mobile transaction services at a relatively high rate.
Bankers must develop their “omnichannel” strategies and watch the mobile horizon closely. We do not yet know how profoundly mobile commerce will change consumer behaviour—or whether banks will help shape that change or be swept aside by newcomers with financial products that help mobile consumers reach their financial goals and dreams.
Will banks help shape change or be swept aside by newcomers with mobile products that help consumers reach their financial goals and dreams?
© The Economist Intelligence Unit Limited 20146
How mobile is transforming retail banking
Bankers and their customers agree on two things: Interaction via mobile devices will continue to grow quickly and traditional banking channels will not go away.
Tradition, inertia and screen size may largely explain why. Well over half (56%) of consumers who dislike mobile say that they simply prefer the PC and another 35% like ATMs better. About one-quarter of bank customers (26%) do not expect to visit branches less frequently, even if mobile banking improves. For now, almost all consumers need a branch sometimes—if only to get cash—and a few want a branch all the time.
Of course, these attitudes may well change as consumers gain familiarity with mobile services, electronic payments become more ubiquitous and apps become more intuitive. New technologies are emerging and digital commerce is growing in a world that is increasingly mobile. Retail financial services may not always live on a spectrum with mobile transactions on one end and traditional banking on the other. In a time of flux, new business models may emerge, and they may coexist with traditional models—or upend them.
Today’s bankers, most of whom have spent their careers in a world of branch banking, believe that branches will continue to be important. Three-quarters say branches are needed to facilitate conversations, engage customers and explain complex products. “There are things that happen in branches that are not immediately replaceable by remote approaches like online and mobile
banking,” says Andres Wolberg-Stok, global head of emerging platforms and services at Citibank.
This is also true in emerging markets, according to Brad Jones, Brad Jones, a specialist in mobile financial services in Southeast Asia who has worked with IFC, Visa and mobile payments provider WING Cambodia. “There will always be a need for the customer to be able to have some connection with the provider. Maybe it happens at the level of an agent who [visits homes and businesses with a mobile device and] is himself supported by a branch. Maybe it’s the ability to contact a call centre to address problems. The human channel engenders trust. Maybe your customer transacts through mobile primarily, but having a human to address issues such as fraud or security is critical.”
The multiplicity of channels persists because no channel is a perfect substitute for another. Accordingly, banks need to manage all channels to provide an optimal overall experience for the consumer. “Increasingly, users rightly expect to be able to do whatever they need to do on whichever device they happen to be using at that particular moment,” says Mr Wolberg-Stok.
Thus banks will have to invest significantly, not only in mobile systems but in integrating all their channels so customers can move seamlessly between them. Only 15% of respondents say that all channels are integrated now. But by 2019, three out of four banks expect to have achieved full integration.
Mobile does offer unique business value for both
Mobile, a big player in an “omnichannel” world2
❛❛ Users rightly expect to be able to do whatever they need to do on whichever device they happen to be using at that particular moment.❜❜Andres Wolberg-Stok, global head of emerging platforms and services at Citibank
© The Economist Intelligence Unit Limited 20147
How mobile is transforming retail banking
banks and customers, however. By pushing low-value transactions to mobile, banks can greatly improve efficiency and service, which can help them grow their businesses significantly without higher operating costs, Mr Jones says.
“Somebody who wants a savings account and needs to withdraw $10 doesn’t need to come to a branch. That’s like using a cannon to kill a fly,” says Ivan Mortimer-Schutts, an East Asia-Pacific electronic and mobile banking specialist at the International Finance Corporation (IFC), part of the World Bank. “It’s out of proportion these days, because there are other tools at our disposal.”
Meanwhile, these routine, commodity mobile transactions and products like mobile wallets can become gateways to deeper relationships and the sale of higher-value-added services like loans. Indeed, mobile offers advantages that extend to higher-value transactions as well, including real-time alerts and seven-day-a-week, 24-hour-a-day customer service.
Loyalty—created or destroyed?Banking executives remain divided about whether mobile will affect customer loyalty. A plurality of 39% predicts it will increase attrition, with bankers in Asia-Pacific and Middle and Eastern Europe registering the most concern. But one-third of total
respondents (33%) say attrition will decline and the rest (28%) are not sure.
The first group of executives believes mobile will fray the bonds that bind them to customers. They think customer churn will rise because mobile will increase commoditisation (70%), reduce barriers to entry (63%) and make switching easier (74%). They also worry that a diminished human connection will hurt interaction and engagement.
The second group believes that if mobile helps them provide an easier, faster banking experience, customers will not want to leave (83%). These bankers tend to believe many customers prefer self-service and that allowing them to serve themselves at the time and place of their choosing will encourage them to stay and that mobile will reduce providers’ costs and, thus, lead to lower costs for customers.
But anytime, anywhere self-service is already becoming a basic—banks will have to offer more than account balances, transactions and bill payment, Mr Wolberg-Stok says. “If you can explore new types of services as well as providing more convenience, then you have a chance to leverage mobile to really create differentiation.”
For instance, Citi’s mobile “Snapshot” feature enables customers to view deposits, credit-card balances and recent transactions without having to
Source: Economist Intelligence Unit survey, September 2014.
How will the migration of customers to mobile banking affect customer attrition? (% of executive respondents)
Why will attrition decline? (% of respondents)
Attrition will decline Not sure Attrition will rise
33 28 39
Banks will have more ways to differentiate themselves
Banks will predict the customers likely to leave and make offers to keep them
Greater efficiency will allow banks to lower costs for customers
Many customers will prefer self-service over interacting with personnel
Banks will gain scope for personalisation
Banks will build loyalty with innovative features
Banking will become easier and faster
Why will attrition rise? (% of respondents)
Security concerns will rise
Human interaction will decrease
Barriers to market entry will fall, leading to more new providers
Basic banking services will become even more commoditised
Switching to new providers will become easier
36
47
53
56
61
61
83
30
37
63
70
74
❛❛ If you can explore new types of services as well as providing more convenience, then you have a chance to leverage mobile to really create differentiation.❜❜Andres Wolberg-Stok, global head of emerging platforms and services at Citibank
© The Economist Intelligence Unit Limited 20148
How mobile is transforming retail banking
log into their accounts. The app sends notifications when checks clear, balances fall below a set threshold and payments come due.
Many bankers see personalisation and innovation as important retention tools (61%). Simple, a digitally native and millennial-friendly US bank recently purchased by Spain’s BBVA, is so convinced of this it only accepts new account applications from prospective customers with smartphones. The bank lets customers customise their accounts with budgeting and goal-setting tools, “smart” transaction tagging, and instant account updates to their smartphones.
Simple’s mobile interface lets consumers name their goals—be it a “Paris vacation” or “buy a
house”—and save for them over time by subtracting from their “Safe to Spend” discretionary funds. “We see what customers are saving for. If they’re saving for a down payment on a house, we’d love to be there to underwrite that mortgage at some point in the future or to offer student loans or do a variety of other things on the credit side of the house,” says Joshua Reich, Simple’s CEO.
Two different world views, two different results; both are plausible and, in fact, both may come true. Some banks will use mobile to differentiate and get customers seeking more personal and comprehensive services. Others will provide generic solutions and retain customers satisfied with a commodity experience.
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How mobile is transforming retail banking
The mobile invasion is forcing banks to navigate a complicated world of new partnerships and rivalries. Transactions must be easy, convenient and relevant and take place securely on any device in any location. In response to these competitive mandates, an array of alliances is emerging among payment processors, financial institutions, mobile-network operators and retailers.
For example, under the Yaap partnership in Spain, Santander, Telefónica and LaCaixa have collaborated to create virtual showrooms for retailers and a payment service. Yaap is an open platform where any store, including small retailers with limited online presences, can reach hundreds of thousands of potential customers via a mobile app
with discounts, offers and loyalty programmes. Yaap Shopping aims to become Spain’s largest customer-loyalty network. A second service, Yaap Money, is a peer-to-peer-service that enables anyone to send funds from one mobile device to another.
To better understand the new competitive landscape, the EIU asked bankers to identify rivals and potential partners. It found that traditional rivals remain—large, established banks were clearly entities to be feared (83%)—while other types of companies occupy less clear ground.
Exactly half of retail bank executives see virtual banks, or banks that do not have physical branches, as rivals, while three in 10 view them as potential partners. Bankers are almost evenly
A new competitive landscape3
Primarily a potential partner Neither a rival nor partner Primarily a potential rival
Mobile phone providers
Social media firms (eg Facebook)
Big retailers (eg Walmart)
Internet retailers (eg Amazon)
Online payments firms (eg PayPal)
Personal financial management firms
Internet banks
Big retail banks
Many potential partners and a few big rivals(% of executive respondents)
Source: Economist Intelligence Unit survey, September 2014.
71 14 16
60 25 15
54 20 26
51 24 25
46 12 42
41 24 35
30 19 50
12 5 83
© The Economist Intelligence Unit Limited 201410
How mobile is transforming retail banking
divided on the threat from digital-payments companies like PayPal and firms that advise on personal financial management; a similar split exists for personal financial advisers.
The rest of the world is rich with potential partners: Mobile-phone companies (71%), social-media firms (60%), large brick-and-mortar retailers (54%) and Internet retailers (51%) are viewed primarily as potential partners.
This view, however, is less accepted in Europe, the Middle East and Africa (EMEA), where 65% view virtual banks as significant rivals, 61% worry about payments services and 48% see retailers as future competitors. Some 17% disagreed with the statement “Our customers trust us with their money more than they would trust an Internet company,” more than triple the percentage in the Americas. However, 68% of EMEA respondents view
social-media companies as potential partners.To fully realise the full potential of mobile to
empower customers, banks will need to ally themselves with other members of the mobile and retail ecosystem. These partnerships must be much more than marketing initiatives; to have real business impact, they will have to be ambitious efforts to create and offer open platforms, as Yaap is attempting to do, where data are integrated and user experiences are seamless—and customers get something new that is of real value.
Mobile employeesAs mobile capabilities for customers gain currency, banks are likely to see the virtues of also providing bank employees with more mobile capabilities—to operate smarter, drum up new business and compete in the marketplace.
EMEA
Asia
MEE
Latin America
North America
Percentage of bankers who disagree with the statement:“Our customers trust us with their money more than they would trust an internet company.” (% of executive respondents)
Source: Economist Intelligence Unit survey, September 2014.
17
16
10
5
5
Internet-only banks
Online payments services (eg, PayPal)
Large retailers (eg, Walmart, Tesco)
Personal financial management companies
Mobile phone service providers
EMEA banks are most likely to see threats to their franchises To what extent do you see these entities as potential rivals?(% of executive respondents)
Source: Economist Intelligence Unit survey, September 2014.
65
61
48
39
22
As banks become more virtual, mobile and focused on customer experience, how will the roles of employees at your bank change over the next five years (% of executive respondents)
Real-time mobile will help them identify opportunities, cut risk and improve services
They will speed up approvals and processing
They will go to customers rather than customers coming to the bank
Source: Economist Intelligence Unit survey, September 2014.
84
69
50
An array of alliances is emerging among payment processors, financial institutions, mobile-network operators and retailers.
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How mobile is transforming retail banking
A large majority of bankers believe that mobile services can help employees identify opportunities, reduce risk and improve service. Seven out of 10 (69%) think mobile for employees will help speed up approvals and processing. And half see bankers going to customers rather than customers coming to the bank—a trend that is already in full swing in emerging markets, where banks are enlisting local agents and arming them with tablets to support rural customers.
So far, however, banks have not focused as sharply on mobile capabilities for employees as they have on capabilities for customers. While half of survey respondents say they are above-average in developing mobile capabilities for customers, only one-third say that about their capabilities for executives and one-quarter indicate such about capabilities for employees in the back office. Customers come first, executives second, the front office third and the back office last.
Well below average for the industry
Below average Average Above average Well above average for the industry
Online capabilities for customers
Mobile capabilities for customers
Mobile capabilities for managers and executives to aid service-related decision-making
Mobile capabilities for customer-facing branch employees
Mobile capabilities for customer-facing employees who visit customer locations
Mobile capabilities for back-office employees to aid service performance
In your effort to improve online and mobile experiences for customers, how would you rate your organisation on the quality of these operational elements? (% of executive respondents)
Source: Economist Intelligence Unit survey, September 2014.
5 14 32 36 14
6 21 32 32 9
8 20 38 27 7
9 21 41 24 5
6 25 39 25 5
12 23 41 21 5
Customers come first, executives second, the front office third and the back office last.
© The Economist Intelligence Unit Limited 201412
How mobile is transforming retail banking
For customers to embrace mobile fully, banks must offer a more compelling experience, which means going beyond the basics.
The bar is high. Seven out of 10 (69%) retail bankers say that consumers expect banks to provide the same quality of experience big Internet companies provide. The nightmare scenario for banks is the spectre of distintermediation at the hands of the “mobile wallet disruptors”—Google, Facebook, Amazon, Apple and PayPal—whose reach into the consumer market dwarfs that of even the largest banks.
Sensing the danger, banks are planning to significantly expand mobile capabilities for customers over the next five years.
A large majority currently offer the basics: mobile access and management of accounts, information about products and bank and ATM locations, and alerts, transfers and payments.
Banks in the Asia-Pacific region are furthest ahead; those in Middle and Eastern Europe are furthest behind.
But five years from now, the emphasis will shift to more advanced features like spending analyses and wealth-management capabilities (78%), opening new accounts (76%), personalised offers (75%) and mobile wallets (74%). Again, Asia-Pacific is in the lead and Middle and Eastern Europe lag.
Latin American banks are most likely to see themselves as becoming a hub for services beyond traditional banking, for example, legal advice and insurance. Within the next five years, 85% of Latin American respondents expect to offer nontraditional services, compared with about 59% for all other regions.
The strategy looks wise. According to the EIU survey, large numbers of consumers want help from
Moving beyond transactions4
In which areas of money management could you most improve, and in which would you most like help from your bank (% of consumer respondents)
Managing it
Spending it
Earning it
Saving it
Investing it
Areas for improvement Areas wanting help from banks
Source: Economist Intelligence Unit survey, September 2014.
72 43
64 44
58 53
55 61
50 75
74 4468 4559 5455 6050 75
© The Economist Intelligence Unit Limited 201413
How mobile is transforming retail banking
their banks to manage, spend, earn, save and invest their money.
In general, however, the more they think they need improvement, the less they think their banks can help; the less they think they need improvement, the more they think their banks can help. For instance, 72% of consumers rank “managing money” as an area where they could most improve, but only 43% think their banks can help them manage their money better. Likewise, 64% cite spending as a key area of improvement, but only 44% say their banks can help.
Consumers believe that banks can be most helpful to them in saving and investing: 61% say banks could help them save better, while three-quarters say banks could help them invest more wisely. But fewer consumers think they need help in this area.
Mobile offers a way to change consumer views about banks’ inability to help them with spending and budgeting decisions. Consumers are joined to
their mobile devices as they spend money out in the world—and popular nonbank financial applications, such as Mint and Level Money, focus on these areas where many consumers see banks falling short.
The good news is that large numbers of consumers are open to getting help with their personal finances from their banks. This suggests that a lot of opportunity exists for innovative services—mobile and otherwise.
Simple has a feature called “block card” that helps its customers enforce personal limits on their spending.
“Usually you want zero friction; when you’re buying coffee in the morning, want to give your order and spend the money instantly,” says Mr Reich. “But if you’re trying to control your spending, you may want friction. You may want to set limits at certain times of day, with certain merchants or for spending over a certain dollar amount.”
Many consumers are open to getting help with their personal finances from their banks. This suggests that a lot of opportunity exists for innovative services—mobile and otherwise.
© The Economist Intelligence Unit Limited 201414
How mobile is transforming retail banking
Mobile is quickly becoming a vital banking channel, but even banks that have developed addictive mobile experiences cannot afford to neglect other channels.
A few banks have pursued a model based on digital and call-centre services and partnered with ATM networks to provide cash. But that is not an option for most banks—and it is not necessarily good business. The face-to-face conversations with agents, whether in branches or at businesses and homes, provide value for customers and more fee income for banks.
“The idea of ‘omnichannel’ is that you need to employ absolutely every available channel in your package,” says Mr Wolberg-Stok of Citi. “You need to make sure that customers can reach you on the channel of their choice at any given time.”
Mobile may also offer important new business opportunities. For a large segment of the population, mobile will become the platform of choice for personal financial management. The
Apple and Android app stores are already packed with mobile apps for record-keeping, budgeting, financial education and decision-making. But few of these services are offered by financial institutions.
“Banks and their regulators are going to have to embrace technology-driven innovation. Otherwise it will simply happen by stealth, driven by players outside the industry,” wrote Peter Sands, chief executive of Standard Charted, in the Financial Times in 2013. “Too much of the debate about banking is about not repeating the mistakes of the past. We risk missing the opportunity to make banks much better in the future.”
If the violent shocks to the retail and publishing industries have anything to teach us, it is that disruption can happen much faster than we expect—especially when the product can be easily digitised. Few things are more easily digitised than money. Banking’s mobile revolution may be closer than we think.
Conclusion
❛❛ Banks and their regulators are going to have to embrace technology-driven innovation. Otherwise it will simply happen by stealth, driven by players outside the industry.❜❜Peter Sands, chief executive of Standard Charted
© The Economist Intelligence Unit Limited 201415
How mobile is transforming retail banking
Appendix: Executive survey results
Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses.
Branches, ATMs PC Call centre Mobile devices
How do customers primarily conduct transactions at your bank? Provide percentage estimates so that each column adds up to 100%(% respondents)
NowFive yearsfrom now
54
24
10
12
30
9
26
35
Are these four channels managed separately in your organisation—each in its own silo—or are they integrated? Select one in each column.(% respondents)
Each of the four channels is managed separately
Some are integrated, but not all
All four channels are integrated (ie, we have “omnichannel” capabilities)
NowFive yearsfrom now
30
55
15
75
18
7
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How mobile is transforming retail banking
It is the top priority
It is one of its major priorities
It is not a major priority
It is not considered important
How does online and mobile banking rank in terms of strategic priorities for your organisation? (% respondents)
24
67
8
1
Cost-cutting opportunities
Competitive differentiation
Keeping up with competition
Maintaining customer satisfaction
Other
Why is online and mobile a high priority? Select the top two. (% respondents)
38
51
39
52
2
Well below average for the industry
Below average Average Above average Well above average for the industry
Online capabilities for customers
Mobile capabilities for customers
Mobile capabilities for customer-facing branch employees
Mobile capabilities for customer-facing employees who visit customer locations
Mobile capabilities for back-office employees to aid service performance
Mobile capabilities for managers and executives to aid service-related decision-making
In your effort to improve online and mobile experiences for customers, how would you rate your organisation on the quality of these operational elements? (% respondents)
5 14 32 36 14
6 21 32 32 9
9 21 41 24 5
6 25 39 25 5
12 23 41 21 5
8 20 38 27 7
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How mobile is transforming retail banking
Which mobile features can your customers use now, and which do you expect to support five years from now? (% respondents)
Access and manage accounts (eg, savings, transactional, credit, loans)
Find information on products, services and branch and ATM locations
Make transfers, payments and deposits
Receive alerts
Open new accounts
Apply for loans or credit
Access advanced services (eg, financial-management tools, wealth-management services, spending analyses)
Make and manage investments
Access and manage mobile wallets
Receive personalised products and services (eg, based on profile, history, location, circumstances)
Use advanced security features (eg, biometrics, two-factor authentication)
Access non-traditional services (eg, legal, insurance)
Now Five years from now
91 52
85 54
72 61
83 52
27 76
28 75
20 77
32 70
31 73
19 74
32 66
13 63
How have the rise of online and mobile services affected your bank’s overall servicing costs in the last five years? How will they affect them in the next five years? (% respondents)
Significant increase
Moderate increase
No change
Moderate decrease
Significant decrease
Don’t know
Last five years Next five years
17 30
46 24
15 7
16 13
4 22
1 4
Low-income consumers in developed countries
Low-income consumers in middle-income countries
Low-income consumers in developing countries
Young consumers in developed countries
Young consumers in middle-income countries
Young consumers in developing countries
Which of the following customer segments will retail banks become more adept at serving due to declining costs? Select all that apply. (% respondents)
43
57
51
68
65
51
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How mobile is transforming retail banking
They will go to customers rather than customers coming to the bank
They will speed up approvals and processing
They will be supported by real-time mobile information that helps them identify opportunities, reduce risk and improve service
Other
As banks become increasingly virtual, mobile and focused on customer experience, how will the roles of employees at your bank change over the next five years? Select all that apply. (% respondents)
50
70
84
6
Net interest income
Customer fees and commissions
Third-party fees, commissions and advertising revenue
Dividends on minority interest
Traditional service offerings
Non-traditional service offerings (eg, legal, insurance)
How do you expect the transition to service delivery through mobile and other digital screens to affect your bank’s revenue from the following sources over the next five years? Select one in each row.(% respondents)
Revenue will rise Revenue will fall No change/impact
57 10 33
50 34 16
54 18 29
24 16 60
32 49 19
46 15 39
57 10 33 50 34 16 54 18 29 24 16 60 32 49 19 46 15 39
Large, established retail banks
Internet-only banks
Mobile phone service providers
Large retailers (eg, Walmart, Tesco)
Social media companies (eg, Facebook)
Internet retailers (eg, Amazon)
Online payments services (eg, PayPal)
Personal financial management companies
Other
Which of the following types of entities do you see as potential rivals and which as potential partners to your bank’s retail franchise? Select one in each row.(% respondents)
Primarily a potential rival Primarily a potential partner Neither a rival nor partner
83 12 5 50 30 19 16 71 14 26 54 20 15 60 25 25 51 24 42 46 12 35 41 24 20 20 60
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How mobile is transforming retail banking
Attrition will rise
Attrition will decline
Not sure
How do you believe customer attrition will be affected by the migration of customers to mobile banking? (% respondents)
39
33
28
Switching to new providers will become easier
Basic banking services will become even more commoditised
Barriers to market entry will fall, leading to more new providers
Human interaction will decrease
Security concerns will increase
Other
Why do you believe attrition will rise? Select all that apply(% respondents)
74
70
63
37
30
2
Banking will become easier and faster
“Banks will gain scope for personalisation using customer data”
Banks will be able to build loyalty by providing innovative features
Many customers will prefer self-service over interacting with personnel
Greater efficiency will allow banks to lower costs for customers
Banks will get better at predicting which customers are likely to leave and making offers to get them to stay
Banks will have more ways to differentiate themselves
Other
Why do you believe attrition will decline? Select all that apply(% respondents)
83
61
61
56
53
47
36
8
© The Economist Intelligence Unit Limited 201420
How mobile is transforming retail banking
Disagree strongly Disagree Neither agree nor disagree
Agree Agree strongly
The wealthier the customer, the less likely he or she is to be an active user of mobile banking
The poorer the customer, the more likely he or she is to be an active user of mobile banking
Mobile will be the number one channel for millennial (and younger) customers
Branches are necessary to facilitate conversations, personally engage customers and provide the best venue for explaining complex products to customers
We are very good at using mobile customer transaction data to develop promotions and targeted offerings
Consumers expect banks to offer the same personalisation and ease of use as large Internet companies
The more widely adopted mobile banking becomes, the harder it will be to get earnings from float
Mobile and online banking capabilities are not the reason why most of our customers choose us
Our customers trust us with their money more than they would trust an Internet company
In your effort to improve online and mobile experiences for customers, how would you rate your organisation on the quality of these operational elements? (% respondents)
17 44 17 20 2
8 39 20 25 7
1 7 10 51 31
5 9 12 53 21
5 29 28 32 6
8 22 47 22
3 17 36 33 12
3 17 23 48 9
2 9 11 42 36
Under $500m
$500m-$1bn
$1bn-$5bn
$5bn-$10bn
$10bn-$25bn
$25bn-$50bn
$50bn-$100bn
Over $100bn
What is the value of your organisation’s total global assets in US dollars? (% respondents)
14
7
10
12
15
5
13
24
Board member
CEO/President/Managing director
CFO/Treasurer/Comptroller
CIO/Technology director
CMO/Marketing director
Other C-level executive
SVP/VP/Director
Head of Business Unit
Head of Department
Manager
Which of the following best describes your title? (% respondents)
2
14
7
5
5
11
20
7
15
13
© The Economist Intelligence Unit Limited 201421
How mobile is transforming retail banking
Customer service
Finance
General management
Human resources
Information and research
IT
Legal
Marketing and sales
Risk
R&D
Strategy and business development
Other
What are your main functional roles? Select no more than three. (% respondents)
15
27
32
2
5
7
3
24
23
4
40
7
Asia
EMEA
North America
MEE
Latin America
In which region are you based?(% respondents)
23
21
20
19
18
Retail banking
What is your primary industry?(% respondents)
100
Yes
Are you familiar with mobile technology trends in retail banking?(% respondents)
100
United States
India, Mexico, Singapore
Poland, United Kingdom
Brazil, Italy
Austria, Canada, Germany
China, Spain, Switzerland
Argentina, Australia, Colombia, France, Middle East and North Africa, Russia
Africa, Indonesia, Japan
In which country/region are you personally based? (% respondents)
16
8
7
6
4
3
2
1
Under 5,000
5,000 to 10,000
10,000 to 20,000
20,000 to 40,000
40,000 to 70,000
70,000 to 100,000
Over 100,000
Approximately how many retail accounts does your bank have? (% respondents)
7
4
7
5
6
5
66
Global
Multinational
National
Regional
Other
Which of the following best describes the geographic scope of your bank?(% respondents)
18
32
31
18
2
© The Economist Intelligence Unit Limited 201422
How mobile is transforming retail banking
Appendix:Consumersurvey results
Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses.
Under 21
21 to 25
26 to 30
31 to 35
36 to 40
41 to 50
51 to 60
61 to 70
Over 70
How old are you? (% respondents)
0
5
10
13
13
24
18
14
2
Male
Female
Are you male or female? (% respondents)
57
43
© The Economist Intelligence Unit Limited 201423
How mobile is transforming retail banking
Under $10,000$10,000 to $15,000$15,001 to $20,000$20,001 to $25,000$25,001 to $30,000$30,001 to $35,000$35,001 to $40,000$40,001 to $45,000$45,001 to $50,000$50,001 to $60,000$60,001 to $65,000$65,001 to $70,000$70,001 to $80,000$80,001 to $90,000
$90,001 to $100,000$100,001 to $125,000
Over $125,000
What is your annual income in US dollars? (% respondents)
9
7
6
5
6
5
5
5
4
6
4
3
4
3
4
7
14
The percentage of transactions I conduct now
The percentage of transactions I expect to conduct five years from now
If you use a bank, how do you primarily conduct transactions currently? How do you expect toconduct transactions in the future? Provide percentage estimates so that each column adds up to 100%.(% respondents) Branches, ATMs PC (eg, website) Call centre Mobile device(s)
36 46 4 15
28 44 3 25
I can bank any time I want
I can bank any place I want
I do not have to wait for service (eg, on a line or on hold)
Mobile banking provides easy access to my account records
I do not want to travel to a branch
I prefer self-service to interacting with bank employees
My bank does not have a nearby or convenient branch
Digital is the only way my bank does business
Mobile banking is more secure
Other
What are your primary reasons for using mobile banking?Please select the top three. (% respondents)
77
54
36
36
33
19
12
3
3
2
© The Economist Intelligence Unit Limited 201424
How mobile is transforming retail banking
I prefer to use my PC
I do not trust the security of mobile banking
I prefer to use the ATM
I do not like to use my phone in public (eg, for security reasons)
I prefer to use a bank branch
My mobile phone is not capable
I prefer interacting with bank employees
My phone is too hard to use
My bank does not offer mobile banking
Other
Why don’t you use mobile banking?Please select the top three. (% respondents)
57
43
35
27
24
10
8
6
3
4
Yes
No
If you could bank using your mobile device easily and safely, would you visit a branch less often? (% respondents)
74
26
I have used my mobile device to do this
I have not used my mobile device to do this but would be willing to
I have not used my mobile device to do this and would not be willing to
Don’t know
Access and manage accounts (eg, savings, transactional, credit, loans)
Find information on products, services and branch and ATM locations
Make transfers, payments and deposits
Receive alerts
Open new accounts
Apply for loans or credit
Access advanced services (eg, financial-management tools, wealth-management services, spending analyses)
Make and manage investments
Access and manage “mobile wallets” (ie, digital versions of wallets containing items like credit cards, coupons, tickets, membership cards that are accessed via smartphones)
Receive personalised products and services (eg, based on profile, history, location, circumstances)
Use advanced security features (eg, biometrics, two-factor authentication)
Access non-traditional services (eg, legal, insurance)
Which mobile banking features have you used? Which would you use if they were available? (% respondents)Mobile feature
54 21 21 4
50 28 17 5
48 25 23 4
52 27 15 5
11 38 42 8
11 38 44 8
16 40 34 10
19 37 35 9
20 42 28 9
16 41 33 10
16 46 26 12
12 42 33 13
© The Economist Intelligence Unit Limited 201425
How mobile is transforming retail banking
Strongly agree Somewhat agree Neither agree nor disagree
Somewhat disagree Strongly disagree
I trust my bank to keep my accounts secure
I trust my bank to keep my personal data secure
I trust my bank and would be reluctant to switch to another bank
How would you rate your level of trust in your primary bank to provide online and mobile services?Please select a response on a scale from “Strongly agree” to “strongly disagree” in each row. (% respondents)
41 43 12 3 2
36 43 13 5 2
27 36 29 6 3
Tracking, alerts and analysis about where and how I spend money
Personalised information to provide me with more valuable banking services
Advice related to financial products (eg, mortgages, credit cards, insurance, investments, credit scores, legal services and real estate)
A “mobile wallet” that lets me easily manage bank and loyalty accounts (ie, digital versions of wallets containing items like credit cards, coupons, tickets, membership cards that are accessed via smartphones)
Travel services, including currency conversion
Personalised suggestions on how to get more value from my spending
Personalised suggestions on how I can better manage my money
Customer service via Facebook or other social media
Access to legal, tax or other professional non-banking services
Which of the following online and/or mobile banking features do you use?Please select all that apply. (% respondents)
57
49
31
30
29
19
19
11
11
Highly valuable Somewhat valuable Minimally valuable Not valuable at all I have not used this feature
Personalised information to provide me with more valuable banking services
Tracking, alerts and analysis about where and how I spend money
Personalised suggestions on how to get more value from my spending
Personalised suggestions on how I can better manage my money
Advice related to financial products (eg, mortgages, credit cards, insurance, investments, credit scores, legal services and real estate)
Customer service via Facebook or other social media
A “mobile wallet” that lets me easily manage bank and loyalty accounts (ie, digital versions of wallets containing items like credit cards, coupons, tickets, membership cards that are accessed via smartphones)
Access to legal, tax or other professional non-banking services
Travel services, including currency conversion
How valuable are these features to you?Please select one in each row.(% respondents)
45 41 9 2 2
53 38 8 1 1
48 34 15 2 2
43 42 11 3 1
34 49 11 3 2
36 36 18 8 2
55 34 8 2 1
41 42 10 4 4
39 41 15 2 3
© The Economist Intelligence Unit Limited 201426
How mobile is transforming retail banking
How does your bank protect your account from unauthorised access through your mobile device?What authorisation features would you like to have that you do not have currently?Please select all that apply in each column. (% respondents)
Username and password
Questions that only I can answer
Voice authentication
Fingerprint scan
One-time code sent via text message
Encryption
Other
Security features I have now Security features I would like to have
94 6
78 22
11 89
9 91
63 37
49 51
45 55
In which areas of money management could you most improve, and in which would you most like help from your bank?Please select the top two in each column. (% respondents)
Managing it (eg, budgeting, planning, paying bills)
Spending it (eg, making wise purchases)
Earning it
Saving it
Investing it (eg, making money with money)
Areas in which I could most improve Areas in which I would most like help from my bank
72 43
64 44
58 53
55 61
50 75
© The Economist Intelligence Unit Limited 201427
How mobile is transforming retail banking
US
Brazil, Canada, China, France, Japan, Mexico, UK
Australia, Germany, India
Africa, Argentina, Colombia, Indonesia, Middle East/North Africa,Russia, Singapore, Switzerland
Austria, Czech Republic, Poland, Spain
Italy
In what country do you live? (% respondents)
13
6
4
3
2
1
Feature phone (ie, a basic phone for calls and texts, sometimes with simple games and Internet capabilities)
Smartphone (eg, iPhone, Android, Windows Phone, BlackBerry)
Tablet
I do not use a mobile device
What kind of mobile device do you use?Please select all that apply. (% respondents)
22
86
47
0
Yes
No
Do you use a bank to handle personal financial matters? (Note: A bank would provide you with a savings and/or checking account.)(% respondents)
100
0
Yes
No
Do you have one or more insurance policies (eg, health, life, disability, auto, renters, homeowners)?(% respondents)
100
0
Asia-Pacific
EMEA
Latin America
North America
MEE
Embedded Data Field: Region(% respondents)
26
23
19
19
14
© The Economist Intelligence Unit Limited 201428
How mobile is transforming retail banking
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