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Many analysts are split over how quickly mobile technology will become more widely adopted. A new report suggests that as smartphones develop more multifaceted payment methods, more consumers are likely to accept mobile technology and electronic wallets as a primary payment system.
The study, conducted by Pew Internet, reveals Americans are becoming more comfortable using their smartphones for a variety of financial transactions. One in ten consumers have made charitable contributions with their smartphone, and more than one-third access online banking services through their mobile device, research found. Forty-six percent of current app users also buy new apps with their smartphones. Although several industry professionals agree that mobile banking is growing, some say that the use of mobile phones to make contactless payments may be stalled due to security concerns.
Although there was a sizable amount of excitement after the Google Wallet was unveiled, adoption has been slower than accepted. The device allows users to input their credit card and bank account information into their mobile device to make contactless payments at retail locations that are equipped with near-field communication technology. Isis, a new payment method that is expected to be introduced by Verizon, AT&T, T-Mobile, Visa, American Express, Discover and MasterCard, is expected to be received with similar hesitation.
Experts are split on the future of electronic wallets, with some saying consumers are ready for the switch and credit and debit cards may become obsolete. According to the study 65 percent agreed with the below statement:
“By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries.”
However, 33 percent said that security concerns have made consumers too distrustful of mobile devices and do not expect electronic payments to gain enough traction in the future to eliminate the need for credit and debit cards. Other analysts say that while security concerns are a real concern among Americans, adoption may also be slow because not enough consumers own smartphones as of yet, although this may change in the future.
Mobile banking is quickly becoming one of the features customers factor in when shopping for a new bank. Mobile banking platforms add a new layer of convenience for on-the-go consumers, allowing them to inquire into their balance and transfer funds. But the results of a new report show that a new mobile banking feature may be one of the most sought out benefits influencing consumers’ banking decisions.
According to a study conducted by global business advisory firm AlixPartners, 39 percent of respondents cited mobile offerings as an important reason for switching to a new bank. In addition, 32 percent of consumers who defected from their primary banks in 2011 and are already mobile banking customers said mobile offerings were a significant attribute versus 6 percent of non-users who switched to a new bank.
In addition, customers who switched banks for mobile platforms cited mobile remote deposit capture features as the leading mobile offering they were interested in. The survey shows the number of consumers who said the ability to remotely deposit a check played a central role in their decision to switch banks increased 22 percentage points to 65 percent, up from 43 percent who gave the same response during the second quarter of 2010.
“Moving forward, consumers’ mobile behavior and expectations will continue to rapidly evolve,” said AlixPartners financial services practice managing director Theresa Epperson. “Financial services providers need to recognize the growing importance of rapid development and deployment cycles for mobile offerings, in order to both keep pace with consumer expectations, as well as to maintain relevance with today’s consumers who have an insatiable appetite for mobile-oriented innovation.”
Mobile banking adoption is expected to increase from its current 15 percent of customers to roughly 50 percent by 2016, giving financial institutions the opportunity to capitalize off a growing market and affording consumers the chance to choose a bank that offers a wide variety of benefits and convenience.
“Clearly, these devices’ extraordinary value to consumers has raised the bar on what consumers expect from their financial services providers and placed greater importance on the role of mobile banking in bank selection,” said AlixPartners financial services practice managing director Bob Hedges. “Those financial services providers that focus on mobile offerings as competitive differentiators will be winners in the future.”
As electronic wallets become more widely adopted and convenient payment methods for consumers, many analysts are questioning whether traditional payment types will become obsolete in the future. And the experts say, “Not without more incentives.”
The development of new electronic wallets is in full swing, with Google already creating a mobile wallet last fall that uses near-field communications technology to allow users to make contactless payments. The Internet giant teamed up with Visa, MasterCard, American Express and Discover to make this product available to credit cardholders, and there are a variety of terminals across the country that are now equipped to handle this payment method, according to BankTech.com.
AT&T, T-Mobile and Verizon have also teamed up to form the electronic payments platform Isis, which is set to launch this summer and provide some competition to Google, the news source reports. Although consumers are likely to have more electronic wallet platforms to choose from, experts say that incentives, and not variety, will drive Americans’ adoption of mobile payment systems.
Kumail Tybegee, Infosys’ mobility and digital practice senior principal told BankTech that Americans are less likely to adopt these mobile platforms without incentives because their current payment methods work now.
“Our system is not broken,” Tybegee told the news source. “It works really well. I can take out a card, swipe it and in an instant can transmit funds to a merchant.”
He notes that in order for widespread adoption to occur, developers, small businesses and other service providers will need to provide benefits to consumers, such as tying electronic wallet purchases to loyalty or rewards programs, offering discounts and even using them as e-tickets for sporting and entertainment events.
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In preparation for this year’s Fiserv Forum client conference, I sat down with Nicole Fields, Social Media Manager for Fiserv, to discuss the growing trend of social media in the financial industry. Check out my interview below, and visit their blog for more.
Social media remains one of the hottest topics in financial services — and it’s not likely to go away anytime soon. Financial institutions of all sizes are grappling with why, how and where to get started in social media. At the Fiserv Forum client conference later this month, a panel of our clients will share their experiences integrating social media into their overall business strategy.
(You can follow all the conversations at conference by searching the #FiservForum hashtag on Twitter or like Fiserv on Facebook for regular updates.)
Matt Wilcox, Zions Bancorpation One of the featured panelists is Matt Wilcox, Director of eBusiness Strategy at Zions Bancorporation. Salt Lake City-based Zions Bank is well positioned to offer guidance on social media. The bank’s social platforms are a place to share content and initiate discussions around issues, products and services. Matt leads a team of employees who assist with strategic development, content creation, real-time monitoring as well as reporting on metrics and analytics.
In advance of the conference panel, I recently caught up with Matt and asked him a few questions about Zions Bank’s experiences in getting started and maintaining an active social media presence.
Zions Bank got started fairly early in social media. How did your activities evolve? Were there any major obstacles you had to overcome?
Our initial strategies were built around the question, “Why would you want to be friends with your bank?” We didn’t necessarily want our fans and followers to see us as simply their bank, but more of a go-to resource for some of the most important aspects in their daily lives. We provide content that’s relevant to our target audience—we encourage engagement by offering personality behind our brand. We don’t push product—instead we provide valuable financial info and tips, offer giveaways and promotions, and request regular feedback and insights from our clients.
One of the challenges we have faced is figuring out how to accurately measure the ROI of social media. We knew we wouldn’t see results overnight and although we can utilize metrics such as relationships saved, costs deflected from call centers, accounts opened, etc., these numbers aren’t immediately apparent. We learned to watch for increases in brand awareness and how our customers were engaging with us in the social media space. It’s a shift from ROI to ROE (Return on Engagement), which we had to explain to executive management, meanwhile determining how to adjust our reporting accordingly.
Social media is unique in that it allows customers the opportunity to provide feedback directly to you in an open forum for the entire world to see. Some customers resort to Facebook or Twitter to vent frustrations—how do you handle negative comments?
You can’t be afraid of losing control of your brand messaging. I’ve met so many executives and management teams that worry about potentially negative comments targeted at their brands. I can guarantee that you’ll have people tweet complaints about your products or services, or talk about the bad customer service they received at your store on your Facebook wall. But wouldn’t it be worse if they weren’t talking about you at all?
The key is to handle negative chatter in a timely, personable manner. Most of the time, customers just want to be heard, and social media allows them the opportunity. Reach out to frustrated customers and find out how you can help. Many times you can remedy the situation just by offering assistance and letting them know you’re listening.
Social media has a number of evangelists and almost as many skeptics. How would you make the case that social media is important to financial services and worth the time and effort for financial marketers?
I can’t really emphasize this enough: There’s no reason that a business or brand should not be using social media. It allows for a deeper engagement with current and prospective clients, much more so than a piece of direct mail or email blast. It offers alternate customer service portals, provides a sense of transparency for your brand—which is what consumers want—and allows businesses to leverage consumer insights for things like product development and testing. Bottom line, it’s allowing you to reach an exponentially larger audience for much less money.
What’s your advice to other financial institutions that are interested in social media but not sure how to get started?
It’s critical to your future success to get key management and stakeholders informed and engaged at an early stage—especially in a regulated industry such as banking and finance. You will need their sponsorship and support in order to develop long-term strategies. Once you have executive buy-in, you can work on developing a strategy to use as a sort of safety net. Such a strategy can provide the framework for logistical workflow, keeping you focused while helping you to achieve your objectives.
Don’t be hesitant to dive in head first. Just be sure you’re providing the type of content that caters to your specific audience. Develop initial acquisition campaigns to draw fans and followers in. But remember, once you’ve built your fan base, you have to give them a reason to stay: Become a valuable, relevant resource for them and they’ll, in turn, be your biggest brand advocates.
Zions Bank Gets Social
Twitter: @ZionsBank
Twitter: @AskZionsBank
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