6: Mobile--The New Internet and Death of Cash?
Many content that mobile banking has not lived up to the hype. In spite of high adoption rates in specific locations such as Japan, Hong Kong, and Singapore (where land-line networks were non-existent or not dependable), it simply hasn't caught on in most major markets (EU and US), and many have dismissed it as a fad. However, with the emergence of "smart phones," the mobile channel should be reconsidered.
(EN: A note from personal experience - the attempt to push the mobile channel began as early as 2000 in the USA, and those that proclaimed it would be the next big thing seemed like idiots. I'd even say they were "rightly" dismissed, because it's taken a decade years for the technology to mature in capabilities and adoption rate, and dollars spent back then were utterly wasted, in that the technology today is so different that older applications are not infrastructure, but merely outdated, such that those who bought in early have no significant advantage over newcomers.)
From WAP to iPhone--The Emergence of Portable Banking
The author concedes that WAP (Wireless Access Protocol) was a "huge disappointment" - at a time when companies were touting mobile computing as a revolution, devices were primitive (a telephone keypad and two 15-character lines of text) and bandwidth was miserable.
However, times have changed: devices such as the iPhone and Droid provide a reasonably good level of presentation and interaction capabilities, and the 3G/4G wireless data networks provide sufficient bandwidth for information delivery, and there are signs that the consumer market is eager to adopt the mobile platform.
(EN: This seems a bit bold, but not altogether disputable. The author cites the popularity of text messaging as evidence, but I find that unconvincing: a text message is a close substitute for a phone call, so it's not a great leap forward. However, device adoption rate for more diverse uses, primarily entertainment, is remarkable - and while this may seem frivolous, most technology gains adoption for uses that are quite silly, and the more serious applications follow afterward.)
The author also cites the adoption curve for technology (the phone, television, VCR, and PC all started slow and gained steam later), along with Moore's law (in times of aggressive competition, technology gets twice as fast in half the time), as a basis for the notion that we will soon see much wider consumer adoption of wireless computing and that the device capabilities will continue to improve at an increased rate.
There can hardly be an argument against mobile technology today - while it's a decade later than any predicted, its promise of becoming a revolutionary medium is being rapidly fulfilled.
In terms of practical application, banks should pay close attention to six key areas: device hardware, device software, consumer needs, device interface, service integration, and revenue opportunities. Each will be discussed in a separate section.
Device Hardware
The author takes a walk through history - he evolution of the military field radio to the CB radio, to the "car phones" of the 1980's, to very clunk portable phones, to the pocket-sized models, to the contemporary smart phone (EN: I'm skipping the detail - it's a nice history lesson, but is overkill. The basic message is that modern devices are wonders of technology that evolved over a short period of time.) Germane to the present discussion, the first push for mobile computing came at a time when the device's capabilities were still too primitive to provide much value to the user.
Presently, the "smart phone" technology has significant capabilities and has gained a lot of acceptance in the marketplace, primarily as an entertainment device, secondly as a fashion accessory (a person who doesn't' have one isn't fashionable), and with mobile computing as a distant third.
It's also noted that the "smart phone" is a Swiss-army device. It began as a phone, added the capabilities of a PDA, then the capabilities of a music player, then a digital camera, and then a lightweight Web browser, then a videogame platform. The smart phone has replaced an array of portable personal electronics, consolidating them into a single device.
Arguably, more capabilities can be added in over time, but the larger question is the "how" - how the device will be used by the consumer, given its array of capabilities. Since the device has consolidated the known portable electronics, what remains is to discover new needs that customers will seek of their all-in-one portable electronic device.
The author mentions the trend of miniaturization, and implies that this may be nearing an end. Cell phones were becoming too small to be useful as a phone (difficult to use due to their small size), so it's arguable if there's much value in making them even smaller. Moreover, the added need for a keyboard and display that are large enough to use and see makes it unlikely that "small" will remain at the top of the engineering wish-list.
The author strays a bit from hardware to address networking - that the devices must work in any environment, and switch networks seamlessly to communicate with wide-area networks, local networks, and directly with other devices. He also strays into the area of customer-in-control, noting that the previous "potential" for the devices to be used in an invasive way (pummeling device users with location-based advertising) are not going to go over with consumers.
Software
Phone manufacturers' approach to software evolved from original systems that were proprietary and had no need to interoperate, much like the software in most consumer appliances. The notion of an OS that could be used on multiple devices came from the PDA market, where companies such as Palm sought to facilitate device upgrades by following the PC model of a standard OS that could drive a number of generations of device, enabling the user to carry forward their data (or more aptly, to prevent users to be reluctant to buy the latest model if it meant having to re-establish their personal data). It's also noted that manufacturers saw the proprietary OS as a method of customer retention - moving to another device meant losing personal data - or in some instances, such as iTunes, keeping the software proprietary is necessary to the company's revenue model.
Demand for a more open-standards approach to mobile phone software is in the interests of customers (to switch devices) and independent developers (to create applications that run on multiple phones), both of which are contrary to the interests of phone manufacturers (who want to discourage brand-switching and maintain tight control over software to ensure quality and profit). As such, the move to a more open source for mobile devices has gained little traction with device manufacturers.
The notion of open-source development is underway with Google, whose "Android" strategy is based on a common platform, but the top-selling mobile devices remain the BlackBerry and the iPhone, and the manufacturers of both devices have historically defended their control over the platform.
Most banks have avoided the mobile applications space, or have developed applications for a few specific platforms (Blackberry and iPhone) that have sufficient customer base to justify the cost of development. (EN: or, the banks use a "web site" designed for mobile phones rather than a device-specific application).
The author provides a few examples of mobile banking applications, which are fairly primitive: they enable users to view data (account balance, stock quotes, checks cleared) and perform very basic functions (move funds, pay bills, buy a stock) and are generally very lightweight and not particularly useful..
The author looks ahead to HTML5, an emerging Web technology that could be leveraged to make mobile Web applications more robust, implying that the reason the Mobile Web is so limited is that the technologies that make the Internet flexible (Flash, Silverlight, Java) are not supported by manufacturers, and that they would have to support HTML5.
(EN: two obvious errors here. First, mobile manufacturers don't have to support HTML5 - they may well reject it or provide limited support, as they have done with JavaScript. Second, it seems to be assumed that the lack of functionality on bank sites is a technical problem - but my sense is it's more in the nature of demand. The mobile platform simply isn't good for everything - simple transactions yes, but complex tasks such as applying for a mortgage or managing a stock portfolio are not things a person will do while waiting on line at the supermarket ... which may be a good segue to the next section.)
Consumer Needs
There is no single profile of needs or interests that will suit all customers, as there is a vast diversity of needs. However, the needs of customers can be considered on a continuum, from customers who wish to do very little online (notably, those who do not presently use banks, but might do so if mobile technology makes it simple) and those who would embrace mobile banking, to the exclusion of all other channels.
From here, the author goes on a bit of a ramble ... asserting that the channel is secure, suggesting that it would decrease ATM and call center traffic for simple transactions, noting that third-party applications will want to interface with bank accounts, some of the more popular applications on the iPhone, suggesting mobile apps will increase customer loyalty, citing that mobile apps are becoming more popular, etc.
The author refers to mobile payment technology as the "holy grail" of mobile banking and suggests they are "inevitable" and are already massively popular in Asia. Fundamentally, the physical payment card (credit or debit) can be replaced by a wireless funds transfer using a mobile device at a point of sale. The author describes several of the systems that either "beam" payment via Bluetooth, enable the customer to authorize payment by SMS, present a bar code that can be scanned, etc.
(EN: the fascination with mobile payments is a notion that I've seen in several sources, but none, including this one, provide anything but anecdotal evidence of their adoption and present statistics out of the context of total retail transactions. I've researched it on my own, and it seems that while there are a growing number of users and the gross number of transactions sounds impressive, phone payment is a tiny fraction of a percent of retail transactions. And so, while I share the fascination and think there may come a day when people are paying with mobile devices at the register, my sense is that the popularity and growth are grossly overstated by those who wish to cheer the technology along. It's a very small phenomenon, and is not likely to be coming soon - but it has great potential to eventually become a major payment method.)
The author also mentions the "great unbanked" - individuals who are currently on a cash-only basis and do not do business with banks - some of whom live in countries that lank an infrastructure of commercial banking and ATM networks. Individually, they don't have much in the way of assets, but as an aggregate group, they represent hundreds of billions of dollars, and have special needs (micro financing for small business, migrant workers sending money home). And since cell phones are widely used in developing countries (which lack an infrastructure even for land-based phones), mobile banking seems a natural solution.
(EN: No argument to this at all, but like mobile payments, it's more about culture than anything else. Banking is very much a European notion that is largely new to other cultures, many of which remain steadfast in their preference for cash and haven't even adopted checks or credit cards. Also, cell phone use in emerging economies is largely among the power elite, not the working classes who would benefit from mobile banking. So my sense is that the author is onto a good notion, but again is misinterpreting the data to make it seem like a better idea than it actually is.)
Interface
Simply stated, mobile devices have screens that are small, which varies from the 96x65 screen of a Nokia 6010 to the 480x320 screen of the iPhone, which is still very tiny compared to PC monitors (1024 x 768). As a result, it is not possible to show much content at a legible size, and even more difficult to make touch-screen interfaces that are usable.
The notion that a mobile device can access regular Web sites is misleading - at best, the user must "zoom" to a small portion of the screen and awkwardly scroll about to view the content of a Web page. And even then, readability will be poor and certain elements won't "work" because the cell phone OS does not support the underlying technologies.
The only remedy to this is to have a separate interaction design strategy for mobile content that considers the capabilities and limitations of the device, in and of itself - possibly multiple design strategies for multiple devices. But at the same time, there have to be certain elements in common among the various channels, to ensure that the customer has a consistent experience (regardless of whether it's the web site, an ATM, a kiosk, or the cell phone, there must be consistency of visual design, language, and capabilities).
The author provides a bit of information on how to go about designing the interface for a mobile site. (EN: it's a bit too superficial and random - not enough to do a good job of it, but perhaps enough to make a person think they can, which is dangerous, so I'm skipping those notes in favor of this: hire UX staff that is trained, or obtain training for the ones you have, in the mobile channel specifically.)
Of critical importance: break out of silos. While it's true of all channels that the customer doesn't care about your company's org chart, the mobile channel is much less forgiving, and a customer need fast access to needed information and transactions without having to navigate the corporate maze.
Opportunities
If done well, your mobile channel has the potential to be a "sticky" service that improves both customer loyalty and profitability. Currently, the customers who are keen on the mobile channel seek to use their device to do as much as possible, and will be disappointed if your services don't measure up to the competition's. Also, mobile banking is "by far" the channel with the lowest cost per transaction, averaging 8 cents versus $4 in he branch and $3.75 on the phone (EN: he omits the Web channel, which is probably about the same in terms of cost.)
The author then goes into a list of random facts that illustrate how the channel is being adopted overseas: mobile POS payment in Japan, significant adoption in South Africa, a bank in India opening a mobile channel, etc. (EN: none of which is an "opportunity," merely a fact about the adoption and use of the channel)