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Retail Bankers - Wake up to the 21st Century!


James Gardner did a great post on his blog today that got me thinking.  Why is it so hard to get Mobile banking and social media on the minds of the top bankers today?

The iPad has sold over 1 million units in just over 1 month since its release, but this pales in comparison to the iPhone which has exceeded 100 million total units, with sales globally expected to reach 58 million this year alone. Considering that the iPhone has only recently been officially launched in Japan and China, we can expect the future of iPhone sales to be extremely robust. But this is only part of the smartphone revolution. Google’s Android operating system has been a huge success too. In Q1 of 2010 in the US market, Android-based phones actually outsold iPhones with 28 percent of the marketshare of smartphones going to Google’s platform. Blackberry still commands 36 percent of the US market due to its strong enterprise support.

Needless to say, smartphone sales globally are in bull market that Wall Street could only dream about.

So why is it that less than 2% of US banks have a dedicated mobile app or mini-browser based for banking for any of these platforms. That wasn’t a typo –less than 3% of US Banks currently have deployed a mobile banking app. Believe it or not! As the saying goes…

Bank of America has over 4 million users of their mobile banking platform available on iPhone, Blackberry and Android. They saw a 300 per cent increase in mobile banking usage from 2007 to 2008, and just in April of 2009 they had 2.2 million users – that has already ballooned to over 4 million. Given the slow start by most banks in the US on mobile, BofA claims they have 35 percent of all US mobile banking users. They’ve had more than 150,000 new deposit accounts opened just because of their support for mobile.

The list of major banks globally who still have no mobile support is beyond shocking. HSBC leads the pack of laggards, with no App support globally, nor a vocal strategy for when they’ll launch their mobile banking platforms. Capital One, BB&T follow HSBC’s lead in thinking mobile is perhaps much ado about nothing. For many of the US leading banks such as Suntrust, US Bank, and Chase, they only just launched their iPhone apps in the last quarter of 2009. So they weren’t exactly setting the pace either.

Canadian banks were even slower. Royal Bank of Canada, TD Bank, Bank of Montreal and Nova Scotia Bank only launched their iPhone apps in Q1 or Q2 of this year.  CIBC was the first bank to come to the party in Canada on the 2nd of February of this year. I fear that it really was a case of competitive pressure here where no one felt they had to move until the first bank had, and then it was a mad scramble to catch up.

So why the delay?

Is it Cost?

It shouldn’t be. The cost of developing an iPhone app from a credible developer is somewhere between US$12-80k. Given the take up of mobile app phones and smartphones this is a very small expenditure to prevent disenfranchising customers. Given BofA generated more than 150,000 new customers from their mobile banking forey, ROI is not at all hard to justify.

Is it technical/platform integration?

Given that every bank I know had to create a messaging layer to handle Internet Banking transactions and enquiries, and that this same messaging architecture can be used for m-banking app integration…no. This is not it.

Is it lack of customer support?

Nope,  not this either. Go to FirstDirect’s Interaction “Talking Point” portal. In questions relating to the bank’s performance more than 10% of responses in some instances related to the lack of iPhone App. Yet First Direct hasn’t announced when their App will be released as yet.

Is it security?

Due to the mobile SIM card features available within a mobile phone, security is actually better than through standard internet banking, and two-factor authentication and other such methods can still be applied.

So, what is it then?

Any retail banking organization that doesn’t yet have an iPhone app, a specialist m-portal for mini-browsers and support for Android and Blackberry platforms, is demonstrating they are not prepared for the customer of today.

The same thing is happening with social media. Most banks still insist on banning the use of Facebook, Twitter, blogs and YouTube within the confines of the bank.

It comes down to a simple quote from Einstein, “Problems cannot be solved by the same level of thinking that created them.” We can’t expect traditional managers of banks who have grown up on a staple of branch banking to embrace customer innovation in a multi-channel environment.

It’s time to inject new blood into management at a senior level. Banks need to start taking some risks – not prop trading. They need to start injecting new thinking into the boardroom from non-bankers, from Y-Gen and from customer experience advocates. If not, there will simply be left the haves and have nots.

Banks that have profitable multi-channel customer relationships, and banks that don’t.


UPDATE - Response from @firstdirect

When I posted on my blog this morning US/UK time about mobile banking and the apparent reluctance of some banks to deploy iPhone Apps, etc I used the example of HSBC and First Direct's seeming tardiness on the App side. I have got used to the fact that most of the 'too big to fail' bankers are immune to suggestions on improving customer experience through social media these days, so I was pleasantly surprised to get a response from First Direct's team within just a couple of hours of my post.

This is the social media conversation working as intended and it is evidence of the fact that at least some within the retail banking fraternity are learning to listen. Mind you, First Direct's big brother - HSBC - is yet to respond to numerous posts that I've made about their recent performance from a customer perspective.

Here's what First Direct had to say:

"We can confirm that, whilst customers can’t download a first direct App from the Apple store, we do have a version of our internet banking site which can be more easily viewed on the iPhone. This site has been set up in such a way that, if you have an iPhone, you can add the page to your homepage and then quickly log in to your internet banking, visit or just touch the screen to give us a call on the customer number.

We do have plans to launch several iPhone Apps for our customers over the coming months ranging from an App for our customer recommendation site to our dedicated Banking App. We haven’t rushed into launching these Apps as we want to make sure we get it right first time rather than pushing something out that isn’t really ready."
@firstdirect, via Twitter

This is delightful stuff. Although I don't necessarily agree with the fact that @firstdirect hasn't got at least one iPhone app out today, they do have a workaround and are committed to solving this problem. They are aware of the problem and trying to address it in the short-term, and more permanently.

To be fair to FirstDirect, like the rest of the HSBC group, they are in the midst of the big OneHSBC platform roll-out. Given that any iPhone App is going to be needed to integrate with this new architecture, I can understand the internal justification for why the delay has occurred. However, that's not an excuse. What HSBC and FirstDirect should have made the decision to do last year is launch a "version 1" App until OneH was fully live. I think in this case the technical integration challenge and "pushing out something that isn't really ready" has hurt them.

Customers don't see a bank that is taking their time to get it right with their iPhone App. They just see a bank who doesn't have an iPhone app.

Well, to be fair to FirstDirect - they have their social media listening post working very well. Impressive! If this is indicative of their responsiveness to customer issues, then I have no doubt they'll get there.


The lack of an iPhone app reflects declining service levels

Comments: (12)

Paul Penrose
Paul Penrose - Finextra - London 11 May, 2010, 17:18Be the first to give this comment the thumbs up 0 likes

HSBC's response came through more formal channels. See here:

EX-Lloyds innovation boss chides HSBC over m-banking
John Dring
John Dring - Intel Network Services - Swindon 11 May, 2010, 21:56Be the first to give this comment the thumbs up 0 likes

The problem is not so much cost as revenue.  mBanking doesn't generate real cash and although you can claim customer sat and retention and even adds, the banks (and the mobile operators) are sceptical about how tangible those things are compared to the cost of implementing, operating and evolving the service.

Secondly, like all surveys, if you ask a customer if they want something, they will say yes. Whether they will actually use it and check their balance daily is another matter.  Banking is not daily like Facebook (unless you're a banker!).

I can get my PC/Browser Banking on my Google phone - a bit fiddly on a small screen, but at least its a familiar layout and I know where to look. An App would make it nicer, but I would't pay for it and I don't think it would tie me to my bank either.

Brett King
Brett King - Moven - New York 12 May, 2010, 01:14Be the first to give this comment the thumbs up 0 likes


I hear this all the time in respect to mobile. Let me give you two points to think about:

1. Are customers more or less likely to use mobile going forward - if more likely, then the longer you wait the more expensive implementation is likely to be, and the less customer satisfaction you will see, and

2. More importantly, you can't learn how to generate revenue from the platform if you aren't participating in the platform. This is about adjusting to consumer behavior and meeting needs, in order to get deeper relationships (read cross-sell/up-sell). 

Banks who are sitting back are likely to be penalized in this regard. ROI is there - BofA, Jibun, Shinshei, etc have all shown it works. Rhetoric from bankers at this stage of the game on lack or ROI,etc tends to show a gross underestimation of changing consumer behavior as regards future revenue of the retail bank.


John Dring
John Dring - Intel Network Services - Swindon 12 May, 2010, 09:06Be the first to give this comment the thumbs up 0 likes

Brett, I agree with the principle entirely.  I implemented my first mBanking solution in 2001, when customers were asked and prepared to pay a small service charge.  But Banks and Mobile Operators have always dithered when it comes to partnerships and Banks in particular tended not to dabble directly with mobile for years (worried about security mainly) - culminating first in text banking services and eventually some WAP/App banking.

Your point is the best - you cannot win if you are not playing the game.  But too often the budget holder(business) think we cannot lose either.  It takes more than a few customer requests, it takes tangible evidence of damage to the bottom line.  I agree that it will help a lot to get some fresh thinking evangelists inside the business.

Mobiles and smartphones in particular (yes, brought into focus by the iPhone) are as important as your wallet, and could eventually replace it.  Now that the mobile internet is open, the banks can move ahead with mobile services - but I think its always the security fear and what they don't know that holds them back.


A Finextra member
A Finextra member 12 May, 2010, 09:30Be the first to give this comment the thumbs up 0 likes

It's not entirely clear at this point whether apps are the way to go (and the number of smartphone platforms is still increasing) or whether it's better to have standards-compliant web pages optimised for mobile browsers.

If apps do become the preferred method then there is an opportunity for someone to offload mobile app development and testing from the banks - they would need to have a pretty robust cross-platform toolkit.

That still leaves banks with the integration challenge. Bolt-ons to the ATM network don't cater for those products that aren't on that channel. And banks with 1st generation internet portals too closely coupled to the banking engine may be faced with either bespoke development, or a rushed upgrade.

So, it's easy to look from the customer point-of-view and say 'where's my iPhone app?'. Behind the scenes though, there's no easy answer. If there is, I'd love to hear about it!

Brett King
Brett King - Moven - New York 12 May, 2010, 09:44Be the first to give this comment the thumbs up 0 likes


Confusing yes? The fact is with Google making a play, the iPad's success, this space is getting more and more complex. Sitting back and waiting for a dominant platform or approach isn't going to work - there isn't going to be one. But customers will be mobile and expecting their bank to be there too.

This makes it difficult because actually what it means is that there is no one size fits all approach, and sitting back and waiting doesn't provide clarity. So banks need to be able to respond to the dominant platforms or approach in each market quite quickly to get the benefit of the initial momentum and learn from those interactions. This is tough if you are bankers and not software developers. So how do banks stay alive in such a challenging space?

The trick for banks is to open up development of these apps or m-portals to a developer community like Apple has with the iTunes platform. They can still control security, compliance and other such issues through clever core APIs and capability. The problem is to keep on top of consumer shifts, the typical bank approach of cautious investment slowly over 3-5 years simply won't cut it anymore. Customer behaviour is just changing too fast.

It's a tough world - but banks are going to have to live with it. If not, third-parties will start to come in and disenfranchise banks from customers because of their ability to create better engagements with the customer (e.g. PayPal, Square). In the end, I fear most banks will just end up being the 'wires' processing the back-end transactions, because they won't be able to innovate effectively enough to stay connected with their customer base who is increasingly more sophisticated in their utilization of tech and media.


A Finextra member
A Finextra member 12 May, 2010, 09:57Be the first to give this comment the thumbs up 0 likes

Brett -

So long as the hype is with apps, it fuels the perception that there is no dominant platform. Actually there is a dominant platform - the mobile browser. It's just not as sexy.

The suggestion of opening up mobile banking app development to all through open APIs is worth considering. However, you can't totally de-risk it through back-end development. That wouldn't stop a rogue app sending customer details to a fraudster from the client end, for example. Banks would at the very least have to test and certify any such app and it's not clear where liability would lie.

So, I still think there is an opportunity for some clever developer to open a one-stop-shop for mobile banking app development.


Brett King
Brett King - Moven - New York 12 May, 2010, 10:23Be the first to give this comment the thumbs up 0 likes


Fair enough. I'll back your mini-browser play with one proviso - HTML 5 needs to be the underpinning tech - so it provides the required usability. The remaining issue is multiple size screens, different standards, differing network connectivity, etc.

Given the iPad's recent success, I'm not sure we're done with Apps just yet. Think also of the issue of extending user experience. Widgets, Applets, use of Avatars, etc - Cloud computing aside, these are all potential extensions on to the desktop, tablet-top, device-landscape.

The key is - improving customer interactions. At this point I just don't see banks invested in THAT.


A Finextra member
A Finextra member 12 May, 2010, 10:50Be the first to give this comment the thumbs up 0 likes

'The key is - improving customer interactions. At this point I just don't see banks invested in THAT.' Totally agree - even when the strategists have all the new toys to play with, they somehow think the customers aren't ready. Maybe we all need a Listening Post

A Finextra member
A Finextra member 12 May, 2010, 23:24Be the first to give this comment the thumbs up 0 likes

The first point I would make is that "Apps" for the iPhone only mean anything to the few iphone users (<100m/4billion).  Back in the days when I was trying to drag the music industry into the 21st century the entertainment companies weren't interested in catering for the ~5% of Mac users even though the execs themselves were often Mac users -they couldn't justify the cost of catering for that 5%. Far less than 5% of phones are Macs.  Are we here to bank or just make the iphone seem sexier for Jobs?

Banks, despite a desire to be seen as such -are not expert at designing or implementing  easy to use secure software.  Haven't seen anything yet anyway.

l believe that one system of "banking" for mobiles will dominate.

The issue is what the customer sees "mobile banking" as, or more importantly what they want from mobile banking.

 I have always believed that they want balances and the ability to ditch the cards. (and the documentation, Hoo-Haa and peripheral devices we actually are expected to use in the real world).

Perhaps focusing on that first?

A simple to use ubiquitous system which works on any phone you carry for checking balances, making purchases and payments and 'activating'  services/products.

It will happen because that is also where the profits are - the purchases - but who knows?  Banks may be content to be Visa/MC agents...

I note that Visa is promoting using their debit card on the web because outside Oz few use direct debit payments for web purchases and perhaps other customers prefer to risk money that is theirs rather than credit funds.

I have once been wrong. Gordon lost the U.K election - but there wasn't even an iphone app for his gob.  Sorry Gordon - you should have listened eh? But then again perhaps you are the real winner after all. Time will tell.

Brett King
Brett King - Moven - New York 13 May, 2010, 12:56Be the first to give this comment the thumbs up 0 likes


Read Chapter 1 of BANK 2.0 where I talk about the three phases of disruption to retail banking. Mobile represents two of those phase shifts and the third is what you are discussing here - payments modality.

The banks will become the wires - the phone the customer engagement device. Unless banks have their products, messages and service capabilities tied to mobility - they will lose out to software developers, handset manufacturers and others who understand customer interactions better.


A Finextra member
A Finextra member 21 May, 2010, 04:43Be the first to give this comment the thumbs up 0 likes

Interesting.. But in India, things are done a little differently and SMS based mobile alerts are in operation for about a decade and is very popular now and extensively used..The banks probably realised that doing transactions over mobile may yet not happen in large scale.. but the information service through push and pull SMS would be a clear winner.. And that is what happened.. Most of the bank in India offer SMS based pull and push services for balances and transaction details...

When it comes to txns,  I think, with the kind of technology advances we see in the communication space, there may not be any need for a separate mobile commerce or mobile application.. The internet would be available on mobile - and so would be the internet applications. Therefore, I can understand some of the banks thinking that why invest on a thing that may not last...

Brett King

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