Top 5 Mobile Banking Considerations

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1 A WHITE PAPER BY CRI SOLUTIONS Top 5 Mobile Banking Considerations By: Corey DeJong

2 1.Your Competition Pool Just Got A Lot Bigger STAY RELEVANT Reports show 40% of Americans have not stepped through the doors of a bank or credit union within the last six months (*Forbes). This may seem like good news. With a larger number of you customers going to their mobile device to do their banking, banks no longer have to bear the expense for physical space. But the fact remains that many users aren t just going to their traditional banks mobile app, they re going elsewhere finding mobile financial wellness platforms that allow them to budget, bank, pay, and crowd-fund, all without leaving their homes. In other words, banks are no longer the only game in town when it comes to financial management. There are lots of other companies that save, lend, and invest faster, easier, and cheaper than the former financial giants. Your mobile application needs to be a one stop shop for your customers or you risk losing margin on that customer or the customer altogether. Some bankers and analysts think that Google, Facebook, Amazon or the like will not fully enter a highly regulated, low-margin business such as banking. I disagree. What is more, I think banks that are not prepared for such competition face certain death - Francisco Gonzalez Chairman & CEO - BBVA Is technology a supporting element of banking, or is it what we sell now? - Catherine Bessant CTO - Bank of America 2. New Experiences New Functionality I remember the first time I deposited a check from my cell phone. The instant gratification and realization that now I can spend my lunch hour hitting the gym rather than running to the bank was exhilarating! I was unaware how much more I d soon be able to do. The freedom to create user experiences that make customers lives easier is out there. You can do more than just eliminate the need to deposit a paycheck or send in a mortgage payment. You can offer opportunities for crowd-sourced investments, the chance to refinance or borrow the chance to purchase a home or car, entirely via the phone! In effect, mobile banking is empowering users not just to bank but to completely rethink their financial wellbeing. They re encouraging them to be active participants in their financial lives.*

3 3. Slow Identity Verification Processes Drive Abandonment! Banks are smart to take strides to incorporate features that make mobile banking customers feel secure. In particular, a study by Javelin** found that customers consider biometrics to be the most secure and effective way to keep their accounts safe. Security measures such as fingerprint scanning may prove beneficial at lowering concerns about online security. However, security measures need to be as efficient as they are effective. Speed is important: waiting for identity verification was found to be the second-most common cause of abandonment (20%), next to general processes (such as loading time) taking too long (36%). It is in the best interest of banks to take into consideration the needs and expectations of mobile banking customers. This is particularly true for millennials in the mobile arena: last year alone, 49% of new financial accounts were opened by millennials. But, the Javelin report found that the user experience for mobile banking asks too much of millennials; 43 percent have abandoned mobile banking activities versus only 25 percent of Gen Xers and only 13 percent of Baby Boomers. Overall, the highest source of complaint across generations of mobile banking users was that the process took too long (36 percent) or they could not remember their password (28 percent).** ACTIVE METHODS OF BIOMETRIC AUTHENTICATION VOICE FACIAL FINGERPRINT IRIS

4 4. Focus on your most profitable customers Are you aware of which customers generate you the most profit? Research by Javelin Strategy & Research discovered that your most profitable account holders are the very same ones that are the most active on mobile banking. This group of customers can and will define your mobile strategy for you. Todd Britson, Director of Solutions at CRi, says that this group of customers has been found, through multiple UX studies, to be the group that is wanting the newest technology in their applications. They are also the first to jump ship for another bank if your technology isn t good enough. You simply cannot ignore this customer segment. For your institution to thrive you have to focus on the group that brings you the most profits. According to a study by Fiserv only 1-2 percent of bank s customers usually account for almost all its profitability. This digitally savvy group makes up most of this 1-2 percent, where some of your other customers make you no profits or end up costing you money. What does this customer segment want from you? It s simple, simplify their lives by providing the best mobile banking experience. If you can achieve this for them they will be able to get their financial lives in order, save money, originate quality loans, and ultimately make you money. 1-2% of banks customers account for almost all profitability Your most profitable customers are proven to be the group that is wanting the newest technology in their applications. They are also the first to jump ship for another bank if your technology isn t good enough. - Todd Britson Director of Solutions at CRi

5 Key statistics on how the millenial generation values financial technology. Derived from the Accenture report The Digital Disruption in Banking. 72% of millenials would be likely to bank with non-financial services companies with which they do business (like Google or Amazon), compared to 27% for those over % would consider using a branchless experience, compared to 16% of those over 55 67% are interested in their bank providing tools and services which help them create and monitor a budget, compared to 31% for those over Don t leave out the Millennials The overlap between your most profitable customer segment and millenials is huge. Guess what, that overlap is only going to build and grow as time passes. You already know that this generation is your future market share, and because of recent history of bail-outs and bank failures they are more than skeptical about banks. A three-year study on millenials from Viacom shows exactly how millenials feel about banks. For starters, millenials want third party innovators like Google and Amazon to lead the industry. In addition, millenials admit that they d rather visit the dentist before listening to what their banks have to say, and they list all of the biggest banks in their ten least loved brands. Now, we can t just stop there. Perplexing as it may be, big banks is where millenials put their money in an overwhelming manner. Mobile banking customers continue to flock to JPMorgan Chase, a growth attributed to the bank s focus on customer loyalty, Marianne Lake, Chief Financial Officer for the bank, said on 4/13/2018, Digital customers are more loyal, they spend more money, make higher deposits and investments, during the bank s Q1 18 earnings call. - Marianne Lake CFO - JPMorgan Chase You have to be asking yourself, why! The truth is that with this generation, convenience trumps everything. What is more convenient than being able to carry your bank in your pocket. Sources *Forbes - Top 5 Digital Transformation Trends In Financial Services **Javelin Research - surveyed 2,000 U.S.-based banking customers. Specifically, the study explored the mobile account opening process and possible sources of friction or abandonment and how perceptions differ among generations. ***Accenture - The Digital Disruption in Banking Client Resources, Inc. (402) Omaha Tower, Suite South 72nd Street Omaha, NE 68124