According to the International Association for Wireless Communications, 270 million Americans subscribed to a wireless service such as cell phone, pager, global positioning system or WiFi by the end of 2008, which is roughly 89 percent of the U.S. population. Just nine years ago, fewer than 40 percent of Americans had a wireless device. Likewise, ABI Research reports that there were an estimated 3.1 million mobile banking customers in the U.S. last year, a nearly eight-fold increase from 2007. That number is expected to more than double to 7 million by the end of this year.
“There are two huge benefits (to a mobile banking solution): retention and account holder acquisition.” Delivering Value recently spoke with Andy Lapp, director of product marketing for Harland Financial Solutions’ Integrated Solutions Group, and Jason Marshall, director of product development for Harland Financial Solutions’ Electronic Banking Business, about the opportunities and challenges awaiting financial institutions that decide to take the plunge into the burgeoning mobile banking market.
DV: If a bank or credit union wants to set up a mobile banking solution, what specific steps should be taken?
Mobile Banking at a Glance
There are various ways to deliver mobile banking to your account holders. You can offer one or several in combination.
Mobile website: A website designed for mobile devices, which is formatted for small screens and compatible with various mobile device browsers. It can come with as few as three pages: a home page, a branch/ATM locator page and a Contact Us page.
Mobile banking: A solution that provides account holders a way to view and conduct banking transactions — such as transfers or bill pay — over an online, secure banking platform designed for mobile devices.
Voice-activated banking: The use of integrated voice response (IVR), whereby an account holder can dictate banking commands verbally, is on the rise. Most activity conducted on a mobile device is still via the voice channel.
Short Message Service (SMS) banking: The use of text messages to send data to and from a mobile device. Although supported by nearly all cell phones, capabilities are limited, and it can be more complicated and expensive to set up and support.
Cavion® Mobile Banking
Harland Financial Solutions offers two well-established, cutting-edge solutions to help your financial institution more efficiently communicate with account holders via a mobile banking platform.
Cavion® Mobile Website Hosting
Cavion® Mobile Banking Professional is a secure, web-based mobile banking solution that enables you to enhance your mobile website by offering account access to your account holders — such as balances, transfers and bill pay — via a mobile device. It requires no application downloads, set-up or special hardware, and it does not rely on ATM networks, thereby eliminating costly fees for the financial institution.
For more information about mobile banking and to learn how to implement it in your institution, call 1.800.815.5592 or visit
Andy: The first step is research, so that you accurately target the demographic you want to reach. It’s the younger generation, Gen-X and Gen-Y, who are much more apt to do mobile banking versus the older baby boomers. If you are trying to attract younger account holders, you would want to consider establishing a mobile website presence. Having a mobile website enables an institution to stick a toe in the water, so to speak. It's not a huge expense, and it's a good way to gauge whether this is something that will take off. Once you have a mobile website presence with the basic information — where your branches and ATMs are located, and your institution’s phone number — then you can
add a link to mobile banking, which will enable account holders to conduct banking transactions with their mobile device
Jason: Hosting a mobile website simply means the large graphics and Java scripts have been removed to simplify the interface and make it easy to read on a small screen. The features we host on mobile websites are pretty simple, as Andy noted. You have ATM locations, branch locations and a phone number for customer support. A link to mobile internet banking would be the obvious next step.
Andy: Additionally, the institution should have a solid plan in place to launch this offering to its account holders. As with any new product or service, it's only as good as the adoption rate, which is based on how well the institution communicates to its end users. What’s important here is ensuring easy access and knowledge. For example, talk about your new mobile banking platform on your home page. Make sure that a link for easy sign-up, and staff who are educated and can help first-time users get registered and learn how to use it, are available and easily accessible.
DV: What challenges might a financial institution face in setting up a mobile banking platform?
Andy: The biggest challenge is lack of knowledge about the mobile space, as it’s a fairly new technology and can get somewhat confusing very quickly. Part of our job is helping the institution understand the technology and what method would work best for it. Another roadblock is not assessing if there's interest from the institution's account holder base.
Jason: The knowledge gap on this topic is huge. When I go into a community institution, whether a credit union or a bank, many of them have no idea what a mobile strategy is, or even how to start defining one. We’ve been able to really help our clients out in this area by offering to educate their management teams.
DV: What benefits does having a mobile banking solution offer financial institutions?
Andy: There are two huge benefits: retention and account holder acquisition. As I mentioned earlier, a mobile banking platform is going to attract younger account holders, and it's another way to engage and retain current account holders. Surveys have shown that nine out of 10 people age 18 to 29 send and receive text messages, so mobile banking is a great way to reach a younger demographic.
Jason: Hosting a mobile website and offering mobile internet banking are relatively inexpensive solutions, and they are powerful tools to attract the next generation of profitable account holders.
Andy: Bottom line, mobile banking helps financial institutions remain competitive and increases accessibility for account holders.
DV: What factors should an institution consider in deciding whether to offer just a mobile web presence or if it should also offer mobile internet banking?
Andy: The size of the financial institution is very important. Because a simple mobile website is less expensive to support than full mobile banking, it’s ideal for smaller institutions or those with a more limited budget. It can try out the site and see what kind of adoption rate it gets. We’re finding that the midsize and larger institutions with larger budgets are opting for a package deal — both a mobile website and mobile banking — and launching both together.
Jason: Mobile internet banking is a nice add-on to the mobile website and is a fairly low-cost entry into the market. Short Message Service (SMS) texting-based mobile banking is certainly another option, though it tends to be a bit more costly and difficult to support.
DV: What are the most popular banking transactions for account holders using a mobile device?
Jason: Viewing account balance is number one, viewing account history is number two and making account transfers is a distant number three.
Andy: Locating branches and ATMs is another popular function. But by far, what account holders cite most is the convenience of being able to access their account any time, any place.
DV: In general, what is the interest level of financial institutions in offering a mobile banking solution for their account holders?
Andy: Very big. This is probably the hottest software product on the market today.
Jason: Bottom line, it’s not a matter of if a financial institution should do mobile banking. It’s a question of when and how.
In August, USAA, a Harland Clarke client, began offering qualifying account holders the ability to deposit checks wirelessly, using an iPhone. Called Deposit@Mobile, this unique feature lets members snap a photo of the front and back of a check and wirelessly send the image to USAA, where the transaction is completed. The service is available on the USAA Mobile App for the iPhone. As of August, the app had been downloaded 150,000 times.
The service, which generated a fair bit of media buzz when it was launched, is proving to be very popular. According to online news sources MocoNews.Net and MobileBurn.com, USAA reported that in the first three days, the app had processed $1.5 million in deposits. While only some 14 percent of USAA’s members were using a cell phone for account access at the time the service was introduced, according to The New York Times, one can imagine the great growth potential of mobile check deposit as mobile banking increases in popularity.