Banks Add Card Controls to Their Mobile Banking Apps

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When the president of City Bank Texas asked his IT team about adding a feature that would allow customers to temporarily disable their debit cards through its mobile banking app, senior vice president and chief technology officer Jim Simpson recalls outwardly smiling at him while inwardly thinking, "Is it even possible?"

But first, the bank wanted to figure out whether the feature would solve a customer pain point. "We listen to the call center first to [determine] how we build innovative solutions," Simpson says.

After getting positive feedback more than a year ago from the unit, the $2 billion-asset bank began working with its mobile banking provider, Malauzai Software, to bring a card control tool to life.

According to Simpson, the IT undertaking was rather simple, minus one end-user decision — to allow or not to allow a spouse to control another card on the account.

The bank floated the question to its operations team, whose vote was divided. Most of the men said they wanted control, while most of the women said, "Heck no," Simpson chuckles. "The most difficult part was solving that. Our solution allows you to only control the card assigned to you."

In January 2012, City Bank Texas released the consumer-facing feature to its 10,000 mobile users. Usage has been solid since deployment.

"We are seeing great numbers," says Simpson, who believes the utility of the feature as coming from the combination of near-real-time text message alerts within the card management tool. Even so, the duties of the bank's call center agents haven't gone away as customers have begun using it. Say a couple in California receives a near-real-time text message alert about a card getting swiped in North Carolina on Sunday evening. They might fire up the app, turn off the card because of the suspicious activity, and call in the case of fraud to the bank on Monday. "We are getting those kinds of case studies," Simpson says.

On/Off Buttons Are Coming
The feature is meant to benefit many types of customers. Some customers prefer to leave their plastic inactive until they are about to swipe. There are parents whose children temporarily hide their wallets under princess palaces. And there are twenty-somethings who throw back one too many dark-and-stormies and neglect to put their debit cards back in their wallets.

Detecting the varied consumer need for more card controls and the potential cost savings for the bank, several financial services companies have quietly launched the feature in recent months.

USAA, an innovation ringleader in the financial services industry, made a card on/off switch available to mobile members in October. Since debuting, it has become the most popular way USAA members temporarily block their debit cards. Media darling startup Simple added the feature in its mobile app in January, while Monitise, a mobile banking and payments provider, said it has deployed a similar capability many times for its clients. "Our experience is that most issuer processing systems don't enable this feature for temporary block/unblock and that is the only constraint that we have in delivering this capability," wrote Carl Tsukahara, chief marketing officer, in an email to BTN.

The concept of temporarily powering down debit cards through the mobile phone has been circulating for several years. Diebold, for example, began selling a card management feature to banks in August of 2011 as part of its MobiTransact mobile banking platform. The tool, called Card Command, lets consumers control their cards via their mobile devices. "Our customers have liked the feature and have incorporated it in a number of ways," says Devon Watson, senior director of software product management at Diebold. "It tends to be embedded with other solutions."

Diebold doesn't disclose customer counts.

This seemingly small mobile banking enhancement points to a much larger industry development: Finding ways to give consumers more control over their finances.

Indeed, empowering customers to take care of their financial to-do lists at any given time is an overall industry trend, says Armin Ajami, vice president and senior product manager of the digital channels group at Wells Fargo.

To that end, the first common set of mobile banking features centered on transactions — to find out whether a check cleared, for example — while card management will serve as the natural evolution of mobile banking apps. "It's really about control," says Ajami. "Customer expectations are sky high."

Beyond satisfying customers' demands, banks nationwide are trying to offset some call center traffic and fraud by empowering customers to manage their accounts more directly from a mobile app.

"It's a new idea for the banks," says Mary Monahan, executive vice president and research director of mobile at Javelin Strategy & Research. "The reality is consumers want to participate in watching over their accounts. …If banks can partner with their consumers, they will do better at keeping fraudsters out."

Potentially, banks deploying debit card controls could save consumers some grief, too. "Credit is borrowing from the bank [while] debit is the cash you put in there," says Monahan. "It makes you feel more victimized when the money you've sweated for is taken out of your account."

Not to mention debit cards have fewer protections than credit cards. Indeed, not every bank covers all debit liabilities for fraudulent transactions, and consumers often have to cough up out-of-pocket costs to resolve the fraud, such as paying for legal fees and postage, points out Monahan. Mobile debit card deactivation helps to reduce those consumer risks quicker.

That's not to say all customers will take advantage of the feature. "Not every customer wants it," Monahan says.

But some will. Though no direct numbers were shared, USAA and City Bank Texas both report strong usage of the mobile control feature.

To date, relatively few institutions have brought the capability to life.

"I haven't seen it take off as I expected," Stephen Greer, analyst at Celent, tells BTN. "I've heard some banks expressing interest."

The reticence is likely due to other pressing priorities, especially for smaller institutions. "Banks are still trying to figure out their mobile banking strategies," Greer says. "You have got to walk before you run."

Even those with the basics covered may decide to put the feature on their product pipeline's backburner. "It's a bit of an ancillary feature that would need to integrate into the backend," he says. Ultimately, Greer believes banks will take to including the feature because of the math. "It's more of a broader trend of getting people out of banks' more expensive channels like branches and call centers," says Greer.

In the interim, some smaller institutions have layered in the card switch, including a handful of Malauzai's clients. "It's not hard to roll out," says Robb Gaynor, Malauzai's founder and chief product officer. "The only complexity with the feature is whether it works with the core processor."

Indeed, the vendor has chosen to work directly with existing core processing interfaces in most rollout instances, while it's still in early day discussions with card processors.

As of mid-March, five banks were live with the debit card management feature, with five more in the vendor's near-term pipeline to hit and more expected to go live as Malauzai's core banking partner, Computer Services Inc., is enabling the feature.

Why do banks want to launch the feature? "There's the tactical answer," Gaynor says. "Banks get a lot of calls from customers to manage their debit cards." But offsetting some calls isn't the only motivation. The emergence of the card control feature helps train consumers for a digital wallet world, which is likely years away from becoming reality, argues Gaynor. In other words, the card on/off switch is yet another consumer training bra for mobile payments. "It's the beginning of an e-wallet strategy," Gaynor says.

Some banks want different flavors of the tool, depending on their appetite for risk. Certain banks, for example, don't want all of the card activity to shut down, such as automatic debit payments, when a consumer toggles off the card, while others may require a call to the call center to reactivate, adds Gaynor.

First Financial Bankshares was one of Malauzai's clients readying the functionality into its mobile banking app as of mid-March. "In our culture, we're trying to push customers toward self-service because it's a benefit to our bank customers and to us in terms of debit fraud," says Blake Snider, mobile and web development manager at the Abilene, Texas bank. "Customers can have more control over what's happening with the card."

The card deactivation switch is just the beginning of card management features coming to mobile apps. City Bank Texas, for one, already allows customers to block or unblock foreign transactions as well as increase their daily ATM limits from $380 up to $1,000 within a 24-hour period. The bank is seeing 7% month over month growth in total card feature usage, while more than 10% of its active mobile user base performs a card management function each month.

Looking ahead, City Bank Texas is readying the ability for customers to reorder checks within its mobile app. "Is that fireworks that will cause everybody to jump up and down? No. But I'm interested in helping my customers," says Simpson. To that end, the bank was also preparing to go live with Picture Pay, which lets customers complete payments using the camera embedded in a mobile device.

Like the deactivation switch, such deployments are designed to help the bank's staff focus on more complicated customer issues.

"We want our call center and customer support staff to spend time with people frustrated with an account," Simpson says.

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