With the doors opening to the digital world, a lot is being asked of banks in a short period of time. Most large banks have been agile in responding to technology-driven requests, pumping big money into online and mobile. Remote deposit of checks (RDC) has become standard on mobile apps and person-to-person (P2P) payment solutions are being piloted. However, many banks are still reluctant to move away from branch-centric operating models that have been in place, well, forever.
Banks that refute the need for a digital strategy will be caught flat-footed when their customers are confined to branch and ATM networks while peers enjoy onmichannel experiences. If banking is truly going branchless by the end of the decade as visionaries suggest, most banks have a ways to go in refining distribution channels and developing the necessary customer service infrastructure, particularly with regards to mobile.
Conveniently, the industry already has an instrument that can both mimic the branch and integrate with mobile: the ATM. As you might suspect, the ATM has a number of use cases in mobile, the most actionable relating to its grassroots function as a cash provider. By adding a prestaged cash withdrawal feature to mobile banking apps, consumers can elect to withdraw cash from a nearby ATM without ever having to swipe a debit card and enter a pin.
So, how does it work? A consumer ‘prestages’ a transaction by locating the nearest in-network ATM from her mobile banking app and electing an amount to withdrawal. Upon arrival at the ATM, a QR code or one-time token is used to authenticate her account and process the prestaged transaction. Taking this feature further, household breadwinners can even authorize access to funds by their children or spouse at specified ATMs.
Those that question the timely adoption of this technology should consider how quickly RDC was implemented by banks and subsequently embraced by the mass. ATM manufacturers, NCR and Diebold, have already begun developing smartphone-compatible ATMs that still offer legacy functions to users. This type of ATM redesign could become progressively routine as innovators talk up the prospect of cutting edge services like live chat with personal bankers, a feature that might first pilot in mobile.
Rolling out text-based mobile chat would provide consumers with timely access to account assistance and product insight. Most big banks have released web-based messaging portals and social media accounts, in addition to call centers, that are useful in their current state but lack real-time capabilities. It’s highly inconvenient to wait on a message back from a rep or to navigate through call menus just to have a basic inquiry answered. It may seem obvious but the time spent getting in touch with a rep should not exceed the time spent receiving their guidance.
The natural successor to text-based chat would be video-based chat, which could serve as an enhanced version of the current customer service phone call. As one who has never taken out a mortgage, I would find value in hearing about payment procedures and refinancing terms from a personal banker rather than gathering this information from the fine print of an electronic agreement. To optimize bankers’ capacity for managing product inquiries, customer service requests would ideally be directed to text-based chat.
With the ability for reps to screen share product information and conduct follow-up inquiries, live chat has the potential to displace a large portion of branch and call center interactions. Customers would be relieved of the commute to a branch, verification of personal information and sitting on-hold. There are obvious efficiency gains to the bank as reps field multiple text-based requests at one time. Better yet, banks can realize considerable savings in personnel and overhead expenses.
These cost savings are typically what banks use to measure return on their investments in mobile; rarely have banking apps been viewed as catalysts for top-line growth. This will soon change as banks pass on RDC and P2P processing costs to customers in the form of fees. However, mobile also offers opportunities for asset-side promotion, an untapped space for the industry at-large that has restricted information on loan and investment products to web, voice and physical channels.
For now, banks feel that the the mobile version of their website is more than sufficient for customers to retrieve detailed product information. This is to be expected as development and maintenance of apps are time consuming and expensive, forcing banks to first deliver priority deposit-side features. Additionally, the detailed and ever-changing nature of product information increases the complexity of content delivery on mobile apps.
Regardless, mobile will soon become the primary engagement channel for consumers and the app will be seen as an easier avenue to retrieve product information, just as has been the case with Amazon and StubHub. Unlike mobile webpages, apps can leverage push notifications and alerts as in-device marketing vehicles (though these should be used sparingly). US Bank may send an alert that educates customers with low checking account turnover on the bank’s portfolio of investment funds.
Use cases like the ones described above and innovation like PNC’s pop-up branch provide ways of bridging the brick-and-mortar present with the digital future. Of course, banks must weigh the branchless ideals of the consumer banking segment with the physical presence demands from some commercial and private banking customers. But let’s not forget that online banks like USAA and Ally have employed branchless business models for years with limited friction from their consumer bases.
If not already clear, the flight from branch banking and migration to mobile go hand-in-hand as a part of banks’ digital strategy. The fact that mobile has been adopted twice as fast as online at a number of banks should send a message to executives. Look for most big banks to continue their hybrid approach until neobanks like Moven and Simple begin to eat away at market share. As Gen Ys make up a larger portion of banks’ customer base, the disruption of mobile will only become more pronounced.