With the advent of the smartphone and tablet computer, mobile banking has become the next step in the evolution of online banking. Many banks now allow customers to access their accounts, make transfers and payments, and conduct other transactions - all from their mobile devices.
But with these technological advancements come some challenges. Despite the many benefits of mobile banking, customers are still wary of electronic banking methods. As a result, many community banks are reluctant to fully plunge into the mobile arena.
Keep an eye on the prize
For customers, mobile banking offers convenience.
Another potential benefit is that mobile banking may appeal to customers who don’t use online banking and may not even have computers. To attract them, banks need to provide a mechanism for signing up without the need for an online banking account.
Don't confuse the terms
Don't confuse mobile banking with mobile payments. Although the terms are used interchangeably, mobile banking is relatively established while mobile payments are in their infancy. The latter allows customers to make point-of-sale or other payments using near-field communications (NFC) chips embedded in, or attached to, their mobile devices.
Mobile payments are being pushed by several companies – including Google, Facebook, and several credit card and cell service providers. The banking industry has been slower to embrace the technology, however, in part because the industry hasn’t developed a cohesive business model for implementing and monetizing mobile payments. But the future for mobile payments looks bright. Juniper Research forecasts that by 2015, the number of users will reach 2.5 billion and that the value of the mobile payments market will reach $670 billion.
Educate your customers
Customer fears about security are one of the biggest challenges for banks that wish to provide mobile services. According to Javelin Strategy & Research, the number of customers who view mobile banking as “unsafe” increased from 25% to 40% from 2009 to 2010.
To ease these concerns, banks must educate their customers about their role in security. The most sophisticated technology is useless if customers choose easily guessed passwords or access their accounts through unsecured Wi-Fi hotspots. Multiple-factor authentication (such as temporary codes sent via text message) can help, but it's also important for customers to protect themselves.
Customer education also can help build trust in mobile technology. For example, even though many people view mobile payment technology as unsafe, experts say that it's safer than credit cards because the data is encrypted.
Take a proactive approach
To prepare for an increasingly mobile world, conduct surveys or take other steps to understand what your customers want and expect from a mobile banking platform. It's also a good idea to educate management and staff about mobile platforms and services and to review and update your policies and procedures to keep pace with technological changes.
Make sure you work with reputable, experienced vendors. To minimize your risk, vet providers thoroughly and review contracts closely.
Develop a strategy
Mobile banking advancements continue being made. Some very large banks, for example, now permit remote deposit capture, which enables customers to scan checks using a device's built-in camera and deposit the funds wirelessly.
If you're taking a "wait and see" approach to mobile innovations, it's a good idea to begin thinking about mobile strategies now. Not only will this position your bank to take advantage of the technology, but it also should ensure that your infrastructure investments can support mobile banking down the road.
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