Community bankers nationwide view mobile banking as a must-have to meet both retail and commercial demand, according to Banc Investment Group.

Only 27 percent of community banks offer mobile banking services today, but many institutions are planning to offer or expand the service over the next year-and-a-half, according to new survey data from Banc Investment Group, the capital markets division of Pacific Coast Bankers’ Bancshares.

“Community banks are now focused on providing this capability to clients and will be instituting programs to provide this service over the next 18 months if they don’t have mobile banking already,” said Chris Nichols, CEO of Banc Investment Group, San Francisco. “Mobile banking allows customers to be more intimate with their bank.

“The rise of smartphones, in particular, has created this ‘always on, always available’ connection to their bank,” he said. “PeoplesBank of Massachusetts is an example of a bank that does mobile banking right.”

Pacific Coast Bankers’ Bancshares, or PCBB, is the holding company for Pacific Coast Bankers’ Bank and Banc Investment Group LLC, its capital markets group.

PCBB’s products and services include loan participations, cash management, international payments, federal funds, capital markets products, consulting services and bank organizational support.

Mobile banking demand growing
Eighty-nine percent of the community bankers polled in a nationwide survey said they are considering some form of enhancement to their existing platform.

That includes 54 percent looking to design a mobile application for a smartphone, such as an iPhone, and 35 percent planning to add some type of functionality to their existing platform.

At the same time, 9 percent of bankers said they were going to change their provider, and 4 percent were discontinuing the service altogether.

For community bankers, mobile banking is a way to get closer to the customer in an efficient manner, like ATMs and home banking.

Banc Investment Group’s survey data clearly indicates that many community banks are actively looking to make buying decisions over the next 18 months.

Banks realize that while human interaction is important, customers also want to handle their banking needs wherever and whenever they would like.

Of the 21 mobile banking companies identified by community bankers in the survey, 36 percent are using Fiserv, 24 percent Jack Henry, 16 percent FIS/Metavante and 10 percent ClairMail.

A total of 70 percent said they would recommend their mobile banking partner to another bank.

Banc Investment Group collected the data from two Web-based surveys during the first quarter that received responses from 687 community bankers from across the country.

When asked about what new initiatives banks were undertaking for the rest of 2010, 44 percent of banks said they were interested in purchasing or upgrading their mobile banking platform—the most of any other product category.

After mobile banking, 22 percent said they were interested in purchasing or upgrading an online cash management or customer relationship management platforms.

Twenty percent said they were planning to buy or upgrade enterprise risk management, loan origination or online banking capabilities.

Mr. Nichols said banks that already have a mobile platform have a temporary competitive advantage that will narrow as more banks offer the service.

For mobile banking providers, the time is right to capitalize on a market that is moving from the early-adopter phase to mass-market penetration.

Mobile banking has about a 16 percent penetration as of the end of 2009, according to Banc Investment Group.

Mr. Nichols predicts that this should go to about a 25 percent penetration by the end of 2010 with more smartphones based on Google’s Android operating system, Apple’s iPad and the next-generation iPhone.

“Community banks have strong interest in bringing the branch to their customers,” Mr. Nichols said. “While many have robust online banking and bill-pay applications, mobile banking applications is the next frontier.

“While basic banking is presently available at about 20 percent of community banks, the coming years we will see community bank’s mobile platform expand into person-to-person pay, electronic authorizations, rewards tracking, ability to handle foreign currency, remote deposit capture and check imaging, credit line management and problem resolution,” he said.