What’s next to leave the branch?

By Deb Stewart

How long could you last without your smartphone? In Bank of America’s 2015 report “Trends in Consumer Mobility,” (44%) of respondents feel they couldn’t make it a day without their mobile device. About one in 10 (11%) say they would last less than an hour. With more than half of those (52%) checking their smart phone at least every 5 to 10 minutes.

This need for constant connectivity extends to mobile banking. Six of ten (57%) respondents have tried a mobile banking app, with 62% of those accessing it a few times a week or more. 20% check the app once a day or more! Half of these users consider either mobile or online to be their primary banking channel.

Less than one-quarter (23%) of respondents and just 6 percent of younger millennials (ages 18-24) complete the majority of their banking transactions at a bank branch. But despite this level of usage, the vast majority (83%) of respondents have also visited a bank branch within the past six months.

We’ve already seen the impact of this extensive adoption on branch transaction volume, with mobile deposit having the most dramatic impact. More than six in 10 (63%) respondents have used mobile check deposit, with older millennials (ages 25-34) the most likely to use it (72%). More than half (52%) of those ages 50+ have used it, up 15 percent from 2014.

So we know that fewer and fewer customers come into the branch to deposit a check or to check their balance or to see their recent transactions. But is there more to come? Are there other mobile capabilities in early adoption or on the horizon that may siphon off further transaction volume? We asked some experts in the mobile banking field that question and here’s what they said.

Commercial deposits

James DeBello is the CEO of Mitek. The company provides the remote imaging infrastructure for all of the top 50 banks, and over 5,050 other financial institutions (probably including yours). Banks using Mitek technology have transacted over one billion mobile deposits in the last six years. 60 million consumers are using the product. DeBelllo predicts that one of the next transaction type to move to mobile will be commercial deposits.

“In a recent study by the Federal Reserve they found that 20 billion checks are written annually in the US. Consumers only account for 1/3 of those checks, with businesses accounting for 2/3. What does that say? It says that remote deposit as it exists today has only scratched the surface,” says DeBello. “The next wave is in pilot at several financial institutions. Remote deposit for business allows multi-check capture. So rather than singularly snapping a check photo you can take multiple photos of the front and back of five or ten checks. A single deposit is made summing the total of the checks, providing the user with a summary of those checks as they would a deposit slip. Your accounts receivables clerk is saving time, you’re saving money on courier services and the money is in the bank faster. Bob Meara, senior analyst with Celent’s banking practice, estimates that over 60% of banks intend to implement commercial check deposits because customers are asking for it.”

Account openings

Robb Gaynor is the Chief Product Officer at Malauzai, working with over 420 banks ranging in size from $20 million to $11 billion in assets. 40%of the mobile customers at these banks are mobile only. He predicts that one of the next mobile features to impact branch usage will be in the area of account openings.

“With advances in image capture and ID verification it takes about five minutes to open an account on your smart phone. In the past there have been abandonment rates as high as 30-40% on mobile account openings as consumers quickly tired of entering information. Today we can capture a drivers license image and immediately begin the process of opening a personal line of credit, or credit card or even a savings account or CD,” says Gaynor.

“But today’s reality is that most accounts are still opened in the branch. And this same technology goes from a self-service model to an assisted self-service model. By giving branch associates access to the technology on iPads you have accomplished two things. You’ve significantly streamlined the process and enhanced the customer experience. And you’ve created a more holistic experience for the customer since what they do and see on mobile is the same as online is the same as their in-branch experience,” Gaynor continues.

P2P payments

Kwafo Ofori-Boateng is Global Director for Omnichannel, Mobile & Digital Solutions at IBM. He sees P2P payments as another area that could impact the branch by reducing the need for cash. “We have to acknowledge that P2P payments have been slow to take off principally due to the relative complexity and often the need to have both parties bank with the same institution. The expectation that the product would be used for day-to-day “I need to pay you back for lunch” types of exchanges has not borne out,” Ofori-Boateng says. And yet, the Bank of America Trends in Consumer Mobility Report found that 56% of respondents would consider paying someone using person-to-person payments via a mobile banking app indicating that the demand is there. Those most likely to be paid include household helpers (20%), friends (29%) and family (44%).

“P2P will continue to grow in usage as awareness and ease of use increases. The implication of this will be less demand for cash coming from both ATMs and branches. But in order for P2P usage to really accelerate, the process needs to become more familiar, more seamless. If consumers could simply touch phones (using NFC) and transfer money it would take off. Once a customer experiences that product it will become habit.  NFC has been around for several years and yet, it has only been with the integration into wallets, phones and biometric authentication have we started to see it become ubiquitous with Apple Pay and Android Pay.  The point is, it has to be easy and familiar to use.”

“Another interesting burgeoning phenomenon in this area is the proliferation of social media payment apps. While these are effective money transferring and peer-to-peer payment tools (and are familiar and easy to use) they tap into the consumers need to put some context around the transaction, effectively allowing them to tweet about what they spent money on, and effectively go viral with what would otherwise be staid transaction,” Ofori-Boateng continues.

What are implications to your branches?

Commercial deposits, account openings and P2P payments were identified as some areas to watch. Each of these may bring both risk and opportunity. A risk is further commoditization of the banking experience as the human element is removed. A further reduction in branch traffic presents even fewer opportunities to engage with customers face to face.

A significant opportunity lies in the potential to reduce expenses related to completing these transactions. We will also realize benefits as these mobile features are integrated into branch processes. Arming bankers with iPads to leverage the mobile app for account openings creates a significantly streamlined process for both the banker and the customer. It takes a significant step in creating a true omni-channel experience with branch, mobile and online experiences mirroring one another. And all of these changes have the potential to enhance the current customer experience.

Helping business customers to conduct their business more efficiently through remote deposit capture continues to build value in your relationships. And recognizing and enabling a growing consumer desire to minimize the use of cash is responding to change in a positive way.

Are these the next big things in mobile banking? Are there others? No one knows for sure. The only sure thing is that consumer expectations will continue to evolve and we will continue to evolve with them.

Deb Stewart of Charlotte, N.C., is an independent consultant working for the financial services industry. Email: [email protected].

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