MIAMI-At the recent Mobile Banking Summit here, a question bankers raised several times was: How do we make money from this channel?
Mobile app development projects can cost $1 million to $5 million, and often boards and executive committees want to see some kind of return on investment before approving such projects.
The obvious answer is fees. Some in the industry feel it's reputationally risky to charge fees for mobile banking services. Some believe mobile banking initiatives pay for themselves because the channel is much lower cost than branches.
"You don't need to start charging fees in order to monetize mobile," said Andres Wolberg-Stok, global mobile and tablet banking director, Citi Consumer Banking. "Our data shows customers who adopt mobile banking increase their balances on deposit, decrease their attrition and see their overall profitability rise very clearly. Compared over time to other customers who had identical profiles but did not go mobile when they did, they become more profitable."
Yet evidence is starting to mount that retail banking fees, so unpopular in areas like checking accounts, may be palatable for mobile banking services. U.S. Bank has been charging 50 cents per mobile check deposit since 2010 and the bank has said its adoption numbers are strong.
A Gradual Move
Regions Bank, a $120-billion bank in Birmingham, Ala., is gradually monetizing many of its mobile banking services.
Like U.S. Bank, Regions charges for remote deposit capture. "It's a clear value-added service," said Stephen Lamar, senior vice president of e-business product and channel management. "Most of our product roadmap for mobile is monetized, and will continue to be. We're getting quickly to the point where it's not just a lower-cost channel, but a channel we're looking to make overall profitable."
Regions lets its prepaid customers load funds onto their cards through the mobile channel, by selecting from a range of funds- availability options. The funds can be available immediately for $5, overnight for $3, or after the standard processing time for 50 cents. The immediate-availability option is provided through a branch check-cashing relationship Regions has with Chexar.
"As a bank we've been focusing on our underbanked customers-we focus on check cashing and prepaid cards," Lamar said.
The bank has seen a gradual increase in prepaid customers using mobile banking, according to Greg Melville, product owner-mobile products and payments. "I expect that to continue to grow."
