In Mobile-Online Banking Match Up, No O.K. Corral Shootout Foreseen
Call mobile banking vs. online banking the face-off that isn’t. That is the word from IT experts as they forecast how, and with what, we will conduct our financial transactions in 2012. And for those who had been wondering if they could downplay, maybe even terminate, online banking as more people adopt smartphones, the sharp answer is, don’t even think about that.
“Mobile and online will complement each other,” said Shari Storm, a senior vice president at Verity Credit Union, the $367 million credit union based in Seattle.
At the $4.2 billion Bethpage FCU across the country in Bethpage, N.Y., Jim Breen, a senior vice president, said much of the same: “Members will use both, online is not going away.”
Numbers continue to show mounting consumer interest in mobile banking, but the same research underlines a persistent worry about security that hinders wider adoption. Case in point is recent research from KPMG that found 33% of U.S. consumers have conducted financial transactions on a mobile device, according to Mitch Siegel, a principal in KPMG’s financial services practice. That number is sharply up from 19% in KPMG’s research a year ago and up from 9% in the 2008 research. Nevertheless, the same research, noted Siegel, indicated that 57% said they prefer to use a computer or a branch, and 39% cited worries about security as a mobile banking deterrent.
But a core KPMG belief, shared by many in the industry, is that security fears about mobile will recede as familiarity grows, just as what happened with online banking. “Security concerns will lesson as people see the convenience of mobile banking,” said Siegel.
When that occurs, “we’ll see increased load, heightened demand, for both online and mobile,” said Mark Schwanhausser, an analyst at research outfit Javelin. But, he added, “We don’t see one winning over the other. In our view, mobile and online are two different channels that let people do more things.”
The emerging reality, paradoxical as it may seem, is “that both mobile and online will win. But for different things,” said Ray Strecker, an executive with IT consulting firm Virtusa.
“We are seeing a slow but steady adoption of mobile,” agreed Ileen Pinhasi, an executive with payments provider ACI Worldwide. “But this is not at the expense of online. It’s an additional service.”
“There are some things that don’t make sense to do on a mobile device. People will do them online,” added Pinhasi.
Obvious, for instance, are anything that involves substantial data entry. Barely anybody would volunteer to fill out a mortgage application using the tiny screen and cramped keyboard of mobiles.
As for mobile, “people use it for immediate information, [like] what’s my balance,” said Storm, who elaborated that at Verity, members’ usage of mobile so far has skewed toward grabbing quick answers to important questions in the moment. She added, “People will use whatever is easiest for them at the time. A lot of members will use mobile and online and their branch.”
“Just as branches have not disappeared, we won’t see online banking disappearing,” said Anthony Genovese, an executive with Compass Plus, a developer of payments software. “There are things better done at a desktop, and others at a mobile phone.”
At bottom, too, the online vs. mobile faceoff is impossible. Technically, the two channels have much in common, so much that there would be little incentive to turn off online anyway. “The plumbing supporting the channels are very much the same,” said Genovese.
“The mobile app, in most cases, is built on top of the online,” added Pinhasi. That is, in most installations, mobile draws on the real-time data generated for online and, in effect, simply displays it in a different format.
As persuasive as that is, there nonetheless are some partisans who point out that the power of mobile banking is just now beginning to be tapped. Jim DeBello, CEO of Mitek Solutions, a mobile imaging developer, said that the camera built into most cell phones opens up a range of possibilities, from remote-deposit capture–now showing up an innovative financial institutions where the camera captures the image of the check and triggers the deposit–through bill pay where a bill from a specified payee is imaged via the camera and intelligent software extracts the payment info and populates a payment. That latter is only now in testing but, said DeBello, he expects it to roll out quickly. “You don’t want to type stuff on a small keyboard.”
“These are the killer apps,” said DeBello, “remote deposit and bill pay. That is what will tip this to mobile.”
Phones also provide location services, like knowing where the nearest ATM or branch is, for example. Another plus is the ability to receive SMS alerts, warning about anything from late bills to money transfers. Add it up and a lot of ability is built into a smartphone and these are abilities that cannot be matched by a desktop computer.
So maybe the scale is tipping in favor of mobile. Breen also pointed out that maybe it is about to be lights out for desktop computers but not for online banking. “People aren’t buying desktops for home use. We expect to see much more banking done on tablet computers.” Many experts agree, the boom in tablet computers–about 50 million iPads have sold in about the two years the device has been on the market and another 10 million Android tablets have also been bought–is coming at the expense of declining desktop and laptop sales and that trend eventually has to show up in how people access financial services. At Bethpage, Breen is readying the institution for much more access by tablets and that prediction is echoed at many other credit unions.
So, who does that leave in the lead? Most credit unions just have accepted that, going forward, it’s a world of multiple channels. “Members will use everything you offer,” said Storm.