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To Succeed in Mobile Banking, Avoid Either/Or Mindset

Conversations about banking bring to mind William Faulkner's famously complex run-on sentences: "It's not this … or this … but that … and this."

While such wordplay is frustrating to those who prefer their banking simpler than their literature, it's sometimes necessary in a world where technology changes rapidly but old habits die hard.

Take Google's recent decision to pair a plastic debit card with its mobile wallet. This reinforced a point I made on Brett King's Breaking Banks podcast in October: Banks shouldn't feel forced to place all their bets on one platform or another. In the near term, successful future models of banking will be hybrids.

Google isn't the first company to use a more traditional payment method as a point of entry for a less tested one. American Express has paired a prepaid card with its digital payments platform since Serve rolled out in March 2011. (Amex, in fact, describes Serve as a "full service reloadable prepaid account" on its website. The mobile component is more of a secondary selling point, insinuated more by the site's pictures than its actual copy.) The prepaid Serve card, incidentally, can also be used to power Isis' mobile wallet.

These pairings seem counterintuitive. Mobile payments, by definition, should be more mobile-y, no? But there are a few straightforward, practical reasons that make these savvy business decisions.

For starters, existing mobile solutions are clunky and far from ubiquitous. They also have yet to make actual wallets obsolete. Isis, for instance, can't store your driver's license; Google Wallet doesn't recognize insurance cards. And, until smartphone batteries can get through longer periods of time without dying – or, as my colleague Bailey Reutzel of PaymentsSource suggested, cities add universal charging stations – users will still have to keep some sort of plastic on hand.

Pairing a mobile platform with a plastic card ensures that a company's (or its partner's) payment method is the one early adopters use while the rest of the world catches up. It also opens a door for consumers who want to try mobile payments, but aren't ready to give up on the magnetic stripe. I believe this group encompasses more people than financial firms may think, but a widespread desire to go mobile wouldn't be a death knell for traditional banking.

Research indicates that certain demographics, particularly low-income individuals, still consider close, personal relationships integral to meeting their financial needs. Survey after survey has shown that most customers want access to a bank branch. Amex added old-school paper checks to its other checking alternative, Bluebird, because there's still a need for them in this country.

It's hard to imagine that checks, along with cash and plastic cards, won't ultimately disappear, thanks to Androids and iPhones. Mobile, not necessarily the be-all-and-end for banking, is certainly part of the future of money.

On Breaking Banks, I mentioned that my cousin's twin children know how to work an iPad. They have no absolutely no idea what a credit card is or, more pointedly, why they should miss having one. But these kids are three years old, more than a decade away from being able to sign up for their own bank accounts and in no way, shape or form representative of today's accountholders.

Customer 3.0, for better or worse, still exists mostly in our imagination. Instead of committing to predictions with no clear due date, banks should focus on designing products that appeal to a diverse set of needs and migrate customers onto promising new platforms.

Jeanine Skowronski is the deputy editor of BankThink. You can contact her at or follow her at Twitter @JeanineSko.


(2) Comments



Comments (2)
I don't believe that banks "hope that every new payment mechanism and delivery channel will replace everything that has come before." It's more accurate to say that if a new payment mechanism or delivery channel threatens to replace traditional banking services; banks want to remain competitive by innovating in their current channels or offering something new. As Jeanine points out, there doesn't have to be a replacement and hybrids are more realistic. Financial institutions can take a tip from the food service industry, where it is becoming more common to find ordering apps that allow customers to skip lines and ease the payments process as well as gather valuable data to make relevant offers. This customer data is used to pair and up-sell food products and send targeted promotions. The same techniques apply in banking. Pairing a payments or banking app with a more traditional service, like a pre-paid card, makes sound business sense especially if it meets customer demands. You can still go to a restaurant or bank; there are simply innovations that eliminate pain points in the customer experience.
Posted by Karen Gordon | Monday, December 09 2013 at 12:54PM ET
Banks continue to hope that every new payment mechanism and delivery channel will replace everything that has come before. They consistently ignore the fact that consumers consider all payment and delivery options as incremental, NOT substitutes. Particularly amusing is their nonsensical blather about mobile wallets replacing analogue wallets. Such a fantasy could only exist in a world where power is never interrupted, batteries never die and a mobile phone dropped from shoulder height onto a sidewalk continues to function as well as a plastic card at point-of-sale.
Posted by jim_wells | Sunday, December 01 2013 at 7:23PM ET
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