Sunday, January 12, 2014

It's Time to Reinvent Mobile Banking


It's time to shut down the mobile banking operations at most banks. I say this after watching the development of mobile banking sites worldwide and realizing that most traditional banks don't understand the needs of the consumers they serve or the competition they face.

Mobile banking should not be a delivery channel for branch-based banking. It should be a contextual experience, with a clean design, simple interface and engaging platform to manage money. Unfortunately, most mobile banking sites look like miniaturized online banking websites. This is a problem as we try to serve Customer 3.0.

Last week, AXA Banque in France launched a new 'mobile-first' offering called Soon (website translated to English). Similar to other pure-play mobile banks worldwide like Moven, Simple, GoBank, FidorHello, etc., Soon was initially introduced using a registration/invite model to allow for orderly scalability. Not a bank as such, Soon is a set of services accessible via a mobile application and backed by AXA Bank.

In an exclusive interview with RaphaĆ«l Krivine, head of direct banking for AXA Banque, "We started to engage with users in mid-2013, presenting the concept of the offer and the main functionalities to get feedback and comments (especially via our introduction video). It was very useful for us to validate the overall concept and to finalize developments in the right direction." He continued, "The offer is now available for the people who registered last year as a way to thank them for having been supportive from the very beginning.

Unlike virtually all traditional mobile banking sites, Soon (and the neo-banks mentioned above) rethinks the way mobile banking is done by designing a bank for the smartphone as opposed to simply providing access to banking products through a mobile device. This was done at AXA by creating an entirely different brand and mobile platform within the bank. This allowed for an alternative digital infrastructure, a lean start-up mode, open architecture and the ability to view banking from the customer's (as opposed to the bank's) perspective.

With a significantly lower cost structure, the emergence of pure-play mobile banks feels like a similar trend in the 1990s when direct online banks were in vogue. Some of these banks still exist such as First Direct and ING overseas and Capital One 360 (originally ING Direct US), USAAAlly and Discover Bank in the U.S.

While many traditional banks have imitated some of the direct bank advantages, deposits at the top four direct banks have grown at three times the industry average according to TNS Global. Interestingly, while once having a pricing advantage compared to traditional banks, consumers also rate these direct organizations as 'more convenient' than traditional bricks and mortar banks.

The question is, will traditional banks ever fully embrace the process of managing money through mobile as opposed to simply providing mobile access to accounts? Will they lose the 'convenience advantage' with the mobile channel also?

Subscribe to Bank Marketing Strategies

The Soon Difference

As with other pure-play mobile banks, Soon provides an entirely different user experience than traditional mobile banking. You can see it immediately in the simplicity of the design, the ease of interaction and the approach of the application. In fact, you can see it on the mobile banking sign-in page where the interaction is personalized (can even be seen in the French version).

"Soon has got the same mindset as Moven, GoBank or Simple because it aims to totally change the way to do banking, with a strong focus on UX," said Krivine in our interview. "Unlike some of the new mobile banks in the U.S., however, Soon is launched by an existing bank, with the strength of existing business processes and potential access to our wide range of products (i.e loans, mortgage)."

Comparison between sign-in page of Soon and Wells Fargo

Opening an account is as simple as snapping a picture. No more long forms or extended account opening process. With Soon, a new customer simply takes a picture of their identification, proof of residence (a bill sent to their home) and a evidentiary signature and the account is opened. Opening of associated savings account and a credit card is just as easy.

Once an account is opened, the experience leverages many of the unique benefits of a pure-play mobile application. If the customer wants to save for a project or future expenditure, Soon uses a 'nudge' behavioral science approach, which encourages a customer to behave responsibly with encouragement provided along the way. Not only does the application help a customer save, but it looks at future planned expenses and upcoming revenue to determine if a current purchase should be made.

The dynamic vision of providing a projection of purchasing power in real time is similar to the GoBank 'fortune teller' and Simple's Safe-to-Spend features and very unlike a traditional mobile banking application that simply shows balances based on cleared items. An analogy would be the difference between looking out a front window to the future as opposed to the rearview mirror.

As opposed to simply a current balance, Soon provides a Safe-to-Spend value

Each transaction or project can be associated with a document or an image for better record-keeping and security. The simplicity of using the photo capability on a mobile phone adds to the convenience. Moreover, each purchase can also be associated with a comment, geolocation or even a 'mood' (smiley face or frown). Unlike many mobile banking applications, the Soon mobile app allows a customer to find previous expenses using natural language search.

Transactions can be associated with pictures, comments and even emotions

Similar to Bluebird from American Express, Soon provides its customers with both a checkbook and Visa card (debit) with an NFC functionality. P2P transfers between individuals can be done via PayPal automatically within the application for ease of payment (a partnership avoided by almost all U.S. banks).

P2P is made easy with the PayPal integration

Customer support is one area I believe Soon falls a bit short from a mobile app perspective. Soon will provide support via advisors 24/6 by chat and 24/7 by email, but will not support calls or live chat (like Amazon's Mayday).

Mobile-First Target Audience

As with most pure-play mobile banks, Soon is targeting smartphone users, (which is to say nearly everybody as the smartphone market continues to expand rapidly). There may be a challenge for Soon, however, since recent research suggests that the French seem to still be attached to the proximity of their physical bank, even if the general craze for online and mobile seems to increase.

The benefit of being a division of AXA is clear in the Soon offer. "We expect our first customers to be among the digital natives, because they are used to do anything with their smartphone, including banking," stated Krivine. "Nevertheless, we know that especially for the young people, it is very important to receive advice and support (for instance for loans), so Soon customers will benefit from the expertise of AXA branches (our core business model relies on insurance tied agents that choose to diversify their business with banking in order to develop customer loyalty). This is a fall-back option, but customers will have an option to go to a branch (using Soon apps that will integrate geolocalisation to find an agent)."

The Reinvention of Mobile Banking

Customer's behaviors are changing as they become more comfortable with the web and mobile devices. They are looking for simplicity, availability, real-time insight, contextual engagement and the ability to leverage social networks and enjoy gamification. They expect far greater transparency with the type of personalization they receive as they interact with other industries.

Smartphones provide the technology and contextualization never before available. These devices open the door to a completely new way to manage money on the go. Instead of providing mobile access to an array of branch-based banking services, there is the potential to provide advice and real-time financial insight.

Soon is not the first, but it is the latest in a string of mobile banking offerings where the design, functionality and customer experience is central to the offering. The question is whether traditional banks globally will embrace the potential of the mobile device to deliver much more than just balances and a narrow span of capabilities.

Best selling author, speaker and founder of Moven, Brett King wonders if traditional banks can meet this challenge. "US Banks are avoiding the digital trend worryingly. We have the BIG banks who are too big and too fragmented to come up with a pure-play digital brand that might cannibalize their main brands. We have regional players who are too traditional in their approach. And we have smaller players who might be too small to think they can do this." "The U.S. right now is really slipping behind the Asia Pacific region and much of the rest of the world in terms of industry-wide innovation."

With regard to the introduction of another mobile-first offering, King adds, "It is great to see that organizations like AXA are embracing digital engagement of customers. I think Soon is another great example of why simple, easy to use user experience is still a strong differentiator in retail banking today. While some might think that is a competitor to Moven, the reality is that we are part of an exclusive new club of disruptors creating an entirely new category of banking experience. We stick together, because it is the other banks who still insist on account opening in a branch, or think that mobile is about putting internet banking on a smaller screen who are the guys we're trying to unseat."

Marketing Opportunity

Marketing needs a seat at the mobile banking design table. You need to have input as to whether your organization is going to continue to deliver mobile banking as an access tool or a money management tool. 

In the meantime, it is marketing's responsibility to promote mobile banking sign-up and usage whenever (and wherever) possible. Mobile banking customers are more engaged, own more services and are more loyal than customers without mobile banking.

Additional Resources

Direct Banks and the Future of Consumer Banking - TNS Global (Apr. 2013)

Banking in a Digital World - AT Kearney (Aug 2013)

1 comment:

  1. Jim, Thought provoking piece but still misses the potential of the large banks to use enriched data to create new services that would be difficult/impossible for smaller banks unless a cross-bank alliance is created. Payments as a platform and payment data as an asset to be enriched have the opportunity for customer to think of their bank very differently. Big data has changed the way we seek, and harness information. Nothing in this piece really goes beyond the manage spending approaches of a predictive pfm that that average consumer is not excited by, We need people to look forward to using their mobile banking connected application.. not just bearing it.. How do we re-think, and design think the possibilities like apple.. to have people find surprise and delight in the services a bank offers? Great piece to get the conversation restarted!