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Will mobile phones replace the local bank branch and tellers?

March 8, 2010

mobile-bankingA recent study from the Gartner Group shows that 59 percent of United States banks will be ramping up their mobile banking services within the next two years.

The number of banks offering mobile services more than doubled in 2009. So far in 2010, Wells Fargo has made text banking available to all customers, including those who have not yet enrolled in online banking.

Everyone seems to be embracing the trend – 75 percent of respondents would use mobile banking services if offered, according to a 2008 survey from Fiserv Electronic Banking Services.

Will mobile phones become the new bank branch, and in the process, transform the fortunes of 3 billion-plus mobile subscribers who do not have bank accounts?

Abraham Punnoose, vice president of marketing and business development at Roamware commented on this growing trend and whether mobile devices will one day completely replace the local branch. Here is what he said:

Will the mobile phone one day replace the local branch and tellers?
Mobile phones may not replace branches and tellers, but certainly it would enable a large number of transactions from the phone including moving funds from one account to another, administering fixed deposits, requests for check books, third party payments including utility payments, fund transfers across banks, transaction history views and even managing linked equity accounts.

The prime drivers for banks is reduction of customer service and branch infrastructure costs and for the end users it’s the convenience of mobility offering of banking service enabling them to literally bank while on the move.

Banks will continue to push given that it directly translates to saving in service costs but they are increasingly having to provide assurance to end users about security and most banking customers would prefer to use a banking application provided by their bank only as they see a co-relation of safety when the application is issued and has the seal of approval from their bank.

Why is mobile banking a growing trend? What should we expect in 2010?
The U.S. today has over 250 million mobile subscribers, an estimated 50 million households bank online and the projections of “Online Banking Report” predicts 18 million mobile banking users by 2011.

One of the key challenges in the growth of mobile banking within the banked communities is general apathy wherein online banking customers do not see an urgency factor in needing to transact over the phone and would rather wait to transact online as and when they have access to the PC either in the office or at home.

Going forward we would see banks going beyond marketing/ persuasion to almost incentivizing customers to use mobile banking given the operational savings associated with this channel.

The other key trend in mobile banking point towards the adoption and roll out of transformational banking which is primarily targeted at banking the unbanked and underbanked and regulation is turning tide across a range of markets to support this initiative given the enormous societal advantages associated with financial and economic inclusion of hundreds of millions of unbanked mobile users globally.

What are some safety precautions being taken to prevent mobile banking fraud?
There are a range of security measures that have now become standards in the mobile banking community.

Taking into account the “mobility” of the cell phone and its vulnerability of being lost or stolen or stolen, research has shown that mobile banking may relatively safer than online banking.

Given that malware and viruses specifically targeting mobile devices are not as rampant as is the case of the online community.

Unlike PC’s, mobile phones use a range of operating systems, which make them much more difficult to target with password-stealing malware and hacks.

Because of the diversity of platforms, most security specialists are of the view that fraudsters stand to gain a lot more by creating a single virus for millions of Windows users, than making one that is directed solely at a single cell phone brand and model and the platforms are stacking up as the device industry hots up.

Security firm Sophos in its annual report thread categorized the risk of a mobile device getting infected with viruses as “tiny” in comparison to a PC.

What is it going to take to get consumers comfortable with conducting transactions and such on their mobile phones?
In my opinion – the fundamental catalyst for consumers to adopt mobile banking would be simplicity of applications and comfort related to security aspects of the phone.

The other positive way of tempting customers to begin using mobile banking is to provide new services not available with traditional branch or online banking channels.

One of the innovative services offered by Roamware to its banking customers base is an option of cardless ATM withdrawal.

This particular service enables customers to facilitate ATM withdrawals without a card or alternatively provide a cash withdrawal offer to friends and family who may not have an ATM card.

An example would be a parent who wishes to give a $100 to one of their kids while working in the office wherein they could very easily process a cardless cash transaction wherein a pin code associated with the kid’s mobile phone is transmitted to the kid’s phone via a text message.

The kid can now walk into a designated ATM and key in his/her mobile number and the pin code and avail of the intended cash withdrawal. This example could be extended across long distances, for instances kids in college or cash transfers across cities between family members.

To summarize while the user interface simplicity, penetration of smart phones and overall marketing is important, there is a need to build innovative and high value USP’s that would incentivize traditional online branch banking customers to experiment with mobile banking.

As in any marketing strategy pull is better than push, and banks need to partner with application providers in paving the way for the mobile banking generation.

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Giselle Tsirulnik is senior editor at Mobile Commerce Daily and Mobile Marketer. Reach her at

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