Blog: Thinking Mobile First

By Mike Strange, Mitek Systems

Consumer expectations of mobile banking and prepaid are escalating rapidly, and the industry needs to respond aggressively, and think differently. Everyone knows consumer banking relationships are changing, driven by rising consumer expectations. As consumers demand more from their financial services providers, putting the mobile channel first in your strategy is key. An increasing number of consumers are thinking, and expecting, mobile first, caused by a convergence of the following trends:

1. Smartphone adoption

Much has been written on consumer usage of smart phones. The convenience and utility are compelling, driving massive adoption throughout the U.S. Among some demographics smartphone and tablet penetration is greater than 100 percent. Tablet sales soon will eclipse home PC sales. The trend to portability and always-connected expectations are obvious. When we consider tradeoffs, remember the myriad of studies that have shown that most consumers will choose convenience over security and ease-of-use over customer support.

2. Consumer choice = power

Mobile adoption is not entirely about convenience. In my opinion, consumers are flocking to smartphones because they provide control. Consumers can download applications, listen to music, browse the Web and, yes, place phone calls. They have many choices. For the financial services world, this means that power is shifting to the consumer. They expect constant access, a clean experience and access to all of the best features, period. Today, there are few capabilities that should not be available via mobile (cash access being the obvious one). As consumers have greater choice (including alternative banking products such as Bluebird, prepaid or GoBank), they will vote with their feet.

3. Differentiate through innovation

Financial services is not known as the hotbed of innovation. There are a variety of reasons, including regulation, but this defect in the industry results in inconsistent adoption of leading-edge capabilities such as mobile banking. Consumer expectations are

At the intersection of these trends lie an increasing number of consumers who think mobile first. But they are often frustrated by an industry that thinks mobile also. Let me explain.growing at a rapid pace, and the industry is not keeping up. This is particularly true for prepaid and alternative providers, who rely on self-service capabilities, including mobile features to serve their customers. As the gap widens, consumer choice will cause migration to products and services that answer the call. This is an opportunity.

In the past, consumers have viewed mobile banking as an extension of the relationship with their banks, or the card provided by a prepaid issuer). The mobile experience might be optimized to the device, but it often simply reinforces the value originated through other channels. When you open an account, the bank representative will likely say, “Would you like mobile banking also?” When you go online to register a prepaid card, you can “sign up” for mobile usage. The mobile-centric consumer sees his mobile phone as the primary way to do banking, not secondary. Mobile first. Not mobile also.

The numbers are growing, but the trend does not apply to all consumers. Many derive comfort from visiting a branch, going online, talking to a teller or speaking to a customer service representative on the phone. But, just as the ATM eventually reduced reliance on tellers, mobile banking is reducing the desirability of branches. Common features, such as mobile deposit, are setting the bar—you don’t need to visit a branch to deposit a check or pay a bill or transfer money. And, if the promise of digital currencies and mobile wallets proves out, we may soon be able to deposit checks, pay bills, withdraw funds and buy a shirt in under 60 seconds from our couches.

I think mobile first. When I look at my mobile device, I do not see a phone. I do not think of a calculator. Or camera. Or Facebook access. Or music. I see a device that serves my daily needs. I see a device I use to take care of my family. A growing population of consumers feel this way, and mobile banking needs to embrace this shift, and spread its wings into the new, and the innovative.

Mobile is unique. Devices have many capabilities not available through, say, online. Banks can interact with their consumers 20+ times per day—not once per week. This completely changes the way we need to think about delivering financial services. We need to be collaborative, simple, bite-sized, non-intrusive and trusted. We need to leverage the tools that these devices provide. Look at mobile deposit as a proxy—an indicator that mobile innovation will be received with open arms—and some consumers will even switch providers to get it. We need to start from the first interaction, from the first moment they walk into a branch or search “best card for me” on their mobile browsers.

The call to action for 2014: Design and launch the new mobile experience. Not based on the online experience, but based on a fundamental shift that many consumers expect—mobile first. As has been suggested, let’s skate to where the puck will be. Imagine a time when 99 percent of all accounts are opened via mobile, and, if available, we ask the consumer “Do you want branch access also?”

Mike Strange is the chief technology officer for Mitek Systems, where he leads the technological advancements of Mitek’s mobile imaging software solutions to serve both banked and underbanked consumers. Prior to joining Mitek, Mike was CTO of Green Dot Corp. He can be reached at [email protected].

If you’d like to comment on this blog post, please join the conversation on our Paybefore LinkedIn Group.