The Future is Now: Mobile and the Social Banking Branch

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A recent report shared that 173 million Americans own smart phones, and CNN reported that mobile apps overtook desktop usage for the first time ever in February 2014. While mobile adoption rates continue to grow amongst consumers, a recent study by Capgemini found that financial institutions are relatively slow to adopt mobile banking capabilities – much to the chagrin of their customer base. So what can banks do to increase customer satisfaction and expand on their mobile offerings?

Current Trends in Mobile Banking and Social Media

To better understand the future of mobile banking, let’s take a look at what’s currently being offered. Many big-name banks, like Chase, Wells Fargo, and Bank of America, allow you to check your account balance, transfer funds from one account to another (including sending money to friends and family) and deposit checks right from your phone. Some mobile apps offer the ability for customers to opt-in to push notifications, so they can be alerted if an account balance is running low or a payment is coming up.

But while banks are starting to spend more time and attention on social media as a means for communicating with current and potential customers, the Capgemini study found that customer satisfaction is on the decline for financial services, and will continue to dwindle if banks don’t take heed and work to expand their mobile capabilities and social media integration. The US has been lagging behind other countries, some of which have already adopted social media banking functionality.

DenizBank in Turkey leads the pack in social media integration; as early as 2012, they created a “Facebook banking branch” app, which allows customers on Facebook access to their accounts. Users can monitor their deposit and credit accounts, transfer money, and receive customer service with the “Customers First” application. DenizBank reports that 10% of their online customer base is using the Facebook branch, with 150,000 people using the app within the first two weeks.

More recently, Finxextra.com reports that Kenya’s National Industrial Credit (NIC) Bank is queuing up a platform called NIC KONNECT, which is designed to allow customers to view their balances and make payments via WhatsApp, Facebook and Twitter. There are also plans for merchant payments, check ordering, and branch/ATM locators.

And then there’s Apple Pay, perhaps the biggest non-bank threat to banks when it comes to disrupting the online financial services market. A white paper published by The Clearing House in August 2015 called out Apple Pay, along with Paypal, Square, and several other “alternative payment providers” and suggested both closer scrutiny and tightened regulations. The group is most concerned with consumer data breaches, and recommends specific guidance to regulate banking apps, including:

  • Revising FTC GLBA Safeguards Rules to define and include banking apps, or creating a rule that specifically addresses apps.
  • Having the CFPB issue rules regarding apps for lenders, and/or including apps in current CFPB regulations, thereby giving that group jurisdiction over financial institutions that use them.
  • Enforcing existing regulations regarding apps, including the FTC GLBA Safeguard Rules. They also suggest oversight by the Financial Crimes Enforcement Network, which would hold financial institutions using apps to report suspicious activity to the government.

As a technology friendly generation, Gen Y is currently driving these future experiences. We can only presume that Generation Z – those born between 1994 and 2010, and who have been brought up with social media — will expect even more access, immediacy, and security from their bank’s mobile offerings. It is this fine line between consumer expectation and data security that financial institutions must toe.

While younger generations are eagerly pushing for more mobile banking services, older generations are somewhat wary of using their phones and tablets for any financially related activities due to potential security risks. Their fears are not completely unfounded; it’s important to relay the proactive security measures banks are taking to keep all mobile banking as secure as possible. An article by securityintelligence.com suggests:

3 questions to ask when planning a mobile strategy:

1)   Can a mobile device be secured? This includes company devices as well as personal. Will the device be managed via SaaS or on premise by the IT department?

2)   Can the mobile app be secured? Both purchased and apps developed in-house should be able to pass security and tamper risk tests.

3)   Can transactions be secured? Customer, partner, and employee data must be secured against account breaches, identity theft, and mobile fraud, amongst others.

While it’s critical to know that the future of mobile banking is NOW, financial institutions should not panic. The road to success begins with one step, and in this case, that step is social media. Build social media communities, listen to customer sentiment, and master the tools. At that point, it’s possible to build an integrated mobile banking strategy that incorporates security, consumer satisfaction, and competitive advantage for your organization.

What do you think? Are mobile and social banking integration on your organization’s list of to-do’s, or is it too risky? Leave a comment on our Facebook page!

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