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?
For HSBC's FirstDirect - the lack of an iPhone app reflects declining service levels for mobile savvy customers
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 site's like HSBC 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.