Are the banks missing a trick?

Consumers are driving technology adoption in the financial services industry like never before. Indeed, as the popularity of smartphones and tablets grows, consumer demand for information and services via the mobile channel is rising somewhat faster than banks can keep pace with.

Much of the innovation in mobile transactional services at present is coming from outside the banking industry, ironically. For example, in Kenya Safaricom has taken the initiative with M-Pesa, the mobile money transfer solution, while elsewhere in the world Starbucks has rolled out 2D barcodes enabling customers to pay with their mobile phones. There is also a lot of industry noise from leading telecoms providers in the UK and US over who will take a share in the mobile financial services revenue opportunity. These telcos and retailers are clearly leading the way in providing innovative services that allow consumers to better manage their finances, which their customers are welcoming with open arms.

So why are the banks being slow to respond to this competition? Security is still an issue with many banks worried about the reputational risk of financial data being intercepted via the mobile channel. However, the perception that consumers’ concerns about fraud are preventing them from utilising mobile banking services is misplaced. These fears are increasingly dissipating, especially amongst the younger generation, with many mobile users actively looking for online and mobile content from their banks before it is published.  In fact, one of our clients has already seen a three-fold increase in traffic from customers’ iPhones to their banking website in the last six months, which is now accounting for around five per cent of total traffic.

The array of mobile devices on the market presents an exciting new channel for banks to capitalise on. There are those outside the banking space who have realised this and are leveraging the channel to its full potential to offer new and appealing services. I think we are truly at a tipping point where the financial services industry must capitalise on the opportunity before other entrants run away with the lion’s share of the mobile banking market?