Posted by John Rovito, May 17, 2011
Much has been written on mobile banking, but little about return on investment. Most observers take the position that over time, the winds of change will make mobile banking a standard application that every retail operation will need to offer. Analysts thus focus on products and technologies, particularly security, as well as industry trends that will speed adoption by the financial institutions.
But what about ROI? Mobile banking has the potential to become so much more than simply a defensive tactic to forestall customer attrition. Done properly, mobile banking can be a dynamic sales and marketing tool that gives a financial institution the ability to build loyalty and cross-sell products while directly impacting the bottom line: a revenue generator rather than an expense.
The Benefits of Mobile Marketing for Banks
1. Mobile is Ubiquitous
Today we live in a digitally-connected, always-on society. In the U.S. mobile phone penetration is approaching nearly 90 percent, with individuals of virtually every age connected to a mobile phone throughout the waking day, 7 days a week. At the same time, mobile tablet devices are fast replacing netbooks and in many cases desktop computers and laptops due to their ease of use and convenience. A mobile device has literally become the one accessory we cannot do without, our constant link to friends, family, business colleagues, customers and anyone else we need to reach out to. Banks can now leverage this ubiquity to continually communicate with their customers, anytime and anywhere, in a focused and unobtrusive manner.
2. Mobile is Targeted
Unlike advertising, social media or public relations, mobile is a one-to-one channel that enables a financial institution to target and interact directly with its customers. Mobile also allows bank marketers to track a campaign or individual promotion including delivery, response, and conversion rates with the ability to continually refine and enhance messaging and results. A powerful yet underutilized component of customer targeting is SMS text messages about new financial products and services, as well as alerts for events such as overdrawn accounts or suspicious account activity.
According to Nielsen, people between the ages of 12-17 send and receive more than 3,300 text messages per month. Those between the ages of 18-25 send and receive approximately 1,800 text messages monthly, and the 25-35 age group sends and receives 600, while 35-45 year-olds are at around 300. In total, more than 75 billion texts are sent each month in the United States.
Neilson reports that on average, 95 percent of those messages are opened and read by the recipient within 5 minutes of receiving it. Recent research by the Direct Marketing Association suggests that direct response rates for SMS text messages can be anywhere between 26 percent and 51 percent, significantly higher than those achieved through telemarketing, email and direct mail.
3. Mobile is Cost-Effective
Mobile marketing runs the gamut from simple SMS text messages to digital ads, video and other media. All of these are relatively inexpensive for a financial institution to produce and deliver, especially when compared to traditional media such a print, direct mail and broadcast. This cost differential enables mobile marketers to significantly increase both the reach and efficiency of their campaigns and still stay within their allotted budget.
4. Mobile is Engaging
Today’s mobile consumer has become spoiled; they expect a financial institution to provide them with all the multi-media bells and whistles they get from publishers, retailers, and news organizations. The rise of HTML5 and mobile apps enable a bank’s marketing department to provide consumers with this kind of experience. Bank’s can now place their mobile apps in both the Apple and Android App Stores, inviting customers to download them onto their smartphones or Tablet PCs free of charge. Because a mobile app is native to the device onto which it has been downloaded, it is able to support far more functionality than a website accessed via the Internet or a mobile browser. The experience can be both interactive and immersive, resulting in increased loyalty and usage.
5. Mobile is Interactive
A mobile ad, message or video is able to include a variety of interactive Calls-to-Action, everything from a simple press of a button to receive a coupon to a speed-dial request that enables the consumer to instantly speak to a customer service representative. No other channel gives a marketer this many interactive options all of which can have a direct and immediate impact on ROI.
6. Mobile is Viral
Because nearly everyone has a mobile phone, mobile has become a fast and easy way to share information. Mobile users very often forward useful or important messages to friends or colleagues both within their company and across their social media groups. Since the forwarding feature of mobile phones is compliant with anti-spam guidelines, it has very high potential of driving viral marketing.
Mobile as a Banking Revenue Generator
comScore’s quarterly Mobile Financial Advisor Report reveals that nearly 30 million Americans accessed a financial services account via their mobile device in Q4 2010. “The ubiquitous nature of mobile devices affords financial brands an important channel to reach and engage,” says Sara Lenart, comScore Vice President. “As brands vie for customer loyalty in today’s competitive landscape, marketers will need to focus on continually improving the mobile customer experience while adjusting to consumer needs as they access their financial information.”
Once a customer signs up, the bank has a direct line to them via the mobile channel. In addition to implementing a “pull strategy” whereby customers can access (pull) their account information from a bank’s core processing system, a financial institution should also be able to “push” an array of marketing and promotional campaigns directly to the consumer via a mobile device with the objective of increasing both revenues and profitability.
Aite Group’s analysis of mobile-banking-consumer behaviors points out that banks will have to make significant investments to improve or develop their mobile marketing capabilities. The shift in consumer attention toward the mobile channel means that a bank’s rationale for investing in mobile banking will ultimately come from successful mobile marketing. “Financial institutions that currently provide mobile banking services offer basic functionalities like balance-checking and funds transfers,” says Ron Shelvin, Senior Analyst with Aite. “The internal struggle has been how to justify investments in this channel and what types of services to deploy next. Based on consumer behavior, mobile marketing functionality can provide the justification for and the answer behind what to deploy.”
The idea of mobile as a bank revenue generator is also supported by a recent study commissioned by Accenture. According to the study, banks that enable their customers to use a mobile device to check balances, transfer money, pay bills, or manage their personal finances can achieve returns on investment as high as 300 percent. “Bank customers want greater control over managing their finances and prefer to bank in ways that fit their lifestyles,” says Andy Zimmerman, director, mobility services, Accenture. “Technology is enabling customers to move beyond simple account notifications sent by text message from their banks to more sophisticated interactive applications.”
The Apple iPad is Ideal for Mobile Bank Marketing
When it comes to driving mobile acceptance, nothing is more sophisticated and interactive than the Apple iPad. Gartner Group reports that Apple sold nearly 15 million iPads in 2010 with a 127% increase projected for 2011. Data from the Pew Internet & American Life Project reveals that iPad ownership is significantly higher among affluent adults falling into the 30-54 year-old demographic. According to Yahoo, finance is one of the top areas of iPad usage.
The Apple iPad enables the consumer to fully experience the power of mobile banking apps, both in portrait and landscape mode. The 9.7 inch multi-touch screen is an expansive leap beyond the constraints of a smartphone’s limited viewing area. And, with the advent of 4G broadband networks, the mobile banking customer can now use the iPad to access the same kind of high-definition, multi-media content previously reserved for desktop, high-speed Internet connections.
The Mobile Marketing Dashboard
For mobile banking, the implications are significant. Because the iPad offers them greater power, functionality and viewing space, bank marketing professionals are no longer limited to simple SMS texts alerts over the mobile channel. Instead, they can now deliver long-form text promotions, rich media ads, even video. By accessing data from their core processing systems, bank marketers can target consumers by demographics, geography or income with detailed reports and analytics helping to further refine individual campaigns.
How is this accomplished? By utilizing a closed-loop mobile marketing dashboard that seamlessly integrates with a promotional menu bar which appears on all screens of the financial institution’s mobile banking app. Content can include Newsletters, Ads, Rewards Programs, Mobile Commerce and more. Headlines, messaging, and links that are input into the mobile dashboard by the bank’s marketing team are immediately reflected on the app’s interactive promotional menu. Content is focused and unobtrusive, and can be continuously updated based on consumer interest and response.
Video Can be a Key Component of Mobile Bank Marketing
Current research shows that today’s mobile banking customer feels financially illiterate. Two years of Recession have made them more concerned than ever about managing their money but also fearful that they just don’t have the financial acumen to make the right decisions. They are therefore looking to their financial institution to educate them toward the right decision.
Video and the iPad are a perfect combination for educating today’s mobile banking customer. Streaming is fast, clarity is exceptional, and the large mobile screen delivers both focus and retention. Topics are also endless as are the associated products and services that the financial institution can offer. Examples of financial videos that can be delivered via the iPad range from: How to Save for Your Child’s College Education … to … Ten Things You Need to Know as a First Time Home Buyer … to … Why to Convert to a Roth IRA. Calls-to-Action can be embedded into each video and include hyperlinks that enable the consumer to request additional information (on the iPhone, speed dials can also be set up that connect the consumer directly with a customer service rep). The number of times a particular video is played can be tracked with reports generated for further analysis. Apple’s AirPlay feature even enables the consumer to quickly stream the video from the iPad (or iPhone or iPod Touch) to an Apple TV.
Tapping Into a Cultural Trend
The success of the iPad has spawned a host of competitors including the Motorola Xoom and RIM Playbook. To date, neither these nor any other challenger has captured the public’s imagination with Apple continuing to own the lion’s share of the tablet market. That’s because unlike other tablet devices, the Apple iPad is considered cool and fashionable, a cultural icon with tens of thousands of brand ambassadors. By integrating the iPad with a mobile marketing dashboard, financial institutions can tap into this cultural trend and become an integral part of the way we live and work today.