The Vast Mobile Opportunity: Do Bankers Really Get It?

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Mark Jamison only sounds like a scientist from an asteroid movie, warning people to prepare for the full impact of what lies ahead.

Jamison's passion is innovation, particularly when it reflects the potential of vast new frontiers of data and mobile technology to change everything from shopping to financial management.

"Our industry is under attack; there's a number of new competitors out there," said Jamison, a Capital One vice president who runs that bank's innovation lab, which is designed to spot the intersection of new tech and emerging business opportunity.

Speaking at the Mobile Banking and Commerce Summit in San Francisco, Jamison said the encroachment of nimble upstarts such as ISIS, Google Wallet and Facebook — all firms that hope to mine new data analytics and mobile to revolutionize payments, location-based product marketing and the digital shopping experience — will force banks to up their game in mobile tech.

The emergence of these competitors comes as banks are at an inflection point in mobile. The first wave of investment has created initial adoption in the channel; mobile banking scores high in most surveys that track how people use general mobile technology. But that same general mobile technology is developing quickly and is increasingly melding with social networking and alternative data sourcing. As a result, banks are now faced with challenges to traditional business models, data management, product design and their relationships with technology firms.

"None of the other channels has gone away. Mobile hasn't replaced any channel," said Neff Hudson, assistant vice president of emerging channels at USAA, in an interview Monday. Hudson said that's contributing to an investment "fatigue" that has set in among the banking community following vast earlier outlays to develop mobile capabilities. "It's a dangerous time to have investment fatigue, particularly with well-funded tech companies entering the space as competitors as opposed to playing a partnership role," he said, noting that USAA is developing new uses of web video for face to face service, mobile person to person payments, and expanded use of mobile for insurance claims.

Jamison and other execs such as Alejandro Carriles, senior vice president and director of mobile banking and Internet strategy for BBVA Compass, and USAA's Hudson, all said there's room to grow in mobile strategy, use of data to develop mobile services, and the understanding of how consumers use different tech devices. Not to mention, improving banks' image among consumers through the use of mobility, and even in the actual design of new apps.

"Tablets are different than smartphones. Tablets are not large-screen smartphones," said Carriles.

During a session, Carriles demonstrated BBVA's new iPad app, which includes personal financial management tools that allow consumers to track personal cash flow as payments and other transactions are executed. He also lamented prevailing tablet design in banking, which he says still relies heavily on smartphone apps.

During his presentation, he showed a tablet app from an unnamed bank that had plenty of information and functionality, yet only took up about 20% of the screen. "I can't believe how many people are developing tablets that are a large-screen version of a smartphone app. No, no, no. It's not the same, I don't want to do a financial analysis of my life on a smartphone," said Carriles. He was nodding to the tablet's use as a venue for deeper study of personal financial health, as opposed to the on-the-fly transaction use case for smartphones.

Jamison criticized shortfalls in data use and how banks are developing apps. Noting the success of open development models, he contended banks should use that concept to expand services available on mobile devices.

"IOS is just a platform, Facebook is just a platform. Financial institutions should think of themselves as a platform, and other industries can operate on top of this platform," he said. "… As financial institutions we have so many capabilities. We can build off of the financial services platform. Somebody's going to figure that out, and they are going to win."

Regarding data, Jamison said that while banks accumulate lots of it, it pales in comparison to the unstructured data being generated by social-networking alternative-data producers such as Facebook, Foursquare and Klout, a company that measures a person's social media influence. Jamison said that while Capital One, for example, accumulates a vast amount of structured data through its transaction processing, more data via alternative sources will be produced in 2012 than in all other prior years combined. "You have to rethink access to data," Jamison said.

Hudson, whose bank heavily uses mobile and other remote channels to serve a largely military customer base, also said mobile can play a role in fostering a more positive image among consumers through the delivery of more information and added transparency. Referencing a recent Leo Burnett study that found people view financial services transactions as a "burden" or "routine" activity instead of "fun" or "passionate," Hudson said mobile, social networking and other digital channels can be used to engage customers more personally. He noted Citigroup Managing Director of Internet and Mobile Tracey Weber, who mentioned the bank's role as a venue to help people during her speech Monday while being honored as Bank Technology News' Mobile Banker of the Year.

"You want to communicate to people that you are helping them with their dreams, helping them take care of their money," he said. "And you are embracing transparency because it's the right thing to do."

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