So many banking conferences reinforce the same idea: banks must think differently about their businesses to stay on the industry's leading edge. That certainly was one of the takeaways from a recent conference on mobile banking. But so was this: in the near future, if not already, banks will have to think differently just to keep pace with the world around them.

"Facebook, Gmail, Twitter, and World of Warcraft all have multifactor authentication," said conference panelist Robert Lee, a business analyst at Intuit. "If you're a bank and still using challenge questions, I have to ask you, why is your security worse than an online video [game's]?"

Security, of course, is an ongoing concern for anyone involved in digital banking, and it was a big point of discussion at American Banker and Bank Technology News' seventh annual Mobile Banking & Commerce Summit. But an even more pronounced theme at the three-day event in Miami, held in early June, was around the banking industry's ability to innovate in ways large and small, in areas including biometrics, document imaging, virtual wallet development and social media integration.

Though the tone of the event generally was an optimistic one, there's no getting around the stark reality that community banks don't always have a spare $10 million or $15 million to revamp their core systems, or that banks with assets of $10 billion or more are often too weighed down by bureaucracy to innovate.

"Everybody really wants to do it, but this is one of the largest industries on the planet, and it's heavily regulated. So the deep fundamental change that is really needed doesn't happen overnight," said conference speaker Shamir Karkal, the 34-year-old co-founder and chief financial officer of Simple (formerly BankSimple).

But perhaps preparing to offer the exception that proves the rule, at least one community banker at the conference was rumored to have been talking to fellow attendees about having his institution develop its own customer-facing and back-end systems for mobile and online banking. That would be a huge leap forward for a class of banks that are heavily reliant on vendors to provide platforms, even though those platforms are usually two or three years behind what the executives actually want.

There also was chatter about more incremental changes taking place at banks and their suppliers. The week of the conference, software maker Mitek launched a new version of its Mobile Photo Bill Pay technology, which lets users capture information just by hovering their smartphones over a bill.

Meanwhile, Charaka Kithulegoda, chief information officer at ING Direct Canada and Bank Technology News' Mobile Banker of the Year, gave some updates on his latest projects, including a customer onboarding process that will use imaging technology to reduce by 80 percent the amount of data that new customers have to enter. ING Direct Canada also recently announced a social media login feature that allows the bank's 1.8 million digital customers to access their account information through Facebook—a move that U.S. bankers have been reluctant to make because of proposed regulation. ING Direct Canada also is working on a biometric pilot, using facial and voice recognition technology.

"Technology plays a huge role in our organization," Kithulegoda said at the conference.

But a lot of banks have been slow to adopt new technology because of the expense involved and the uncertainty regarding the potential payoff.

"I think the big thing everyone is looking for is revenue," said Theodore Iacobuzio, vice president in charge of global insights at MasterCard. "Banks have to get used to looking at this as a fixed cost."

Yet at some banks, mobile already is paying for itself, some speakers said.

"You don't have to look for ways to charge for services," said Andres Wolberg-Stok, Citigroup's global director of mobile and tablet banking. He said that mobile customers are more tightly tethered to their bank, and they have a tendency to refrain from using call centers and requesting paper statements, meaning they cost less to service.

Although it's existed in some form since 2007, mobile banking is still in its infancy. That's the sense even among bankers at the forefront of mobile developments. "It's not like we've invented mobile," said Neff Hudson, assistant vice president for emerging channels at USAA. Now, it's customers who have taken control of the mobile platform and are telling their banks what they want. "We're flying down the highway and hanging on to the edge of the car doors."

But even though consumers may be at the wheel, they still need a little help with navigation.

After doing some research in 2010 to discover why some customers had steered clear of digital channels, U.S. Bank realized that a portion of them had no idea the option even existed, while others just weren't comfortable with the technology or assumed there was an added cost involved.

Now the U.S. Bancorp subsidiary is equipping its branch staff with iPads and asking them to teach customers about how to access and use their bank accounts digitally, said Alison Thorud, multichannel digital product strategy manager for U.S. Bank. The Minneapolis-based bank also is looking at how it can make use of its customers' own devices. With so many people now entering branches carrying their own smartphones and tablets, Thorud said there's "a great opportunity" for bankers to directly help customers improve their experience, by showing them how to customize functions tied to their credit cards, for instance.

"Customers are looking for 'how-do-you-do-this'" experiences, Thorud said.

Another area ripe for incremental improvements in mobile banking: helping people control not just their financial experiences, but their actual finances. Wells Fargo, for example, recently started providing customers with low-balance alerts in real time. "We are layering in more advanced capabilities," said Armin Ajami, vice president and senior product manager at Wells Fargo.

To that end, Wells now allows mortgage customers to view their account activity via mobile, which marks a departure from the bank's earlier thinking that people would only do simple transactions through the channel. "Now, customers want to do everything on mobile," Ajami said.


Mary Wisniewski contributed to this report.

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