The rise of mobile banking has opened a new path for financial institutions to improve their competitive position, enhance acquisition and loyalty and lower the cost to serve customers.

Most institutions have promoted this new channel primarily among current online banking customers, overlooking millions of possible users and reducing the potential return on their mobile banking investments.

Financial institutions that focus only on converting online customer into mobile customers will successfully drive adoption of mobile banking services, but will likely fail to substantially lower the cost to serve their customer base, a key component of return on investment in the mobile channel. In effect they are simply migrating transactions from one low-cost self-service platform (online) to another (mobile).

A more effective approach would be to implement a proactive channel-migration strategy aimed at converting offline customers to the mobile channel.

Findings from a recent survey conducted by Palmer Research in collaboration with Syniverse Technologies, Fiserv and M-Com suggest that financial institutions should pay more attention to this consumer segment as a target audience for mobile services, because they are not only frequent users of costly service channels, but have a high degree of interest in mobile banking.

Offline consumers are heavy users of multiple bank channels: Nearly two-thirds of those surveyed reported contacting their financial institution once a week or more through traditional bank channels. Nearly half of survey respondents use their bank's call center or interactive voice response to help manage their finances. These are among the costliest channels for the bank to support, with each call center transaction costing an average of $3.75 and each automated voice response system transactions costing an average of $1.25.

While mobile banking introduces some new operational costs, it is by far the least costly banking channel in place today, at an estimated $0.08 per transaction. If customers transferred even a relatively small percentage of their transactions from more costly channels to the low-cost mobile channel, institutions could achieve significant savings.

Awareness of mobile banking is already widespread among non-online-banking consumers, with 70% of survey respondents reporting knowing about the availability of mobile banking services. In addition, the research clearly shows these non-online-banking consumers are interested in mobile banking services. Sixty-percent of consumers reported interest in using at least one mobile banking service if offered during a typical month.

There was substantial interest in using the mobile channel to check account balances (46%), contact customer service (37%) and locate a nearby ATM or bank branch (30%).

The research also demonstrated that the type of mobile device a consumer uses is a good predictor of current and future mobile banking use, better than age, income or any other demographic variables.

There are a number of things financial institutions can do to make mobile banking a usable and attractive service among the non-online-banking segment of their customer base:

Offer comprehensive services. Institutions should offer a variety of services designed to appeal to different customer segments, including money transfers, fraud alerts, bill-payment reminders, mobile deposit, account balance threshold alerts, ATM and branch locators, click-to-call, click-to-wireless access protocol and loyalty program updates.

Improve marketing. Banks can do more to sharpen their marketing so their customers have a better understanding of mobile banking services, including what kind of financial information they can access and what specific transactions they can perform. Banks may be able to lower the cost to serve this expensive consumer segment by promoting mobile banking as a more convenient and easy alternative to using the branch, call center, IVR and ATM.

Promote text-message alerts. Since a majority of offline consumers report using text messaging, mobile banking alerts and short-message-service banking are a natural entry point for adoption among this customer segment — financial institutions should promote their mobile alert service to non-online-banking customers as a time-saving way to check balances and get other relevant information. These mobile alerts can result in average cost savings of $1 to $2 per transaction.

Enable offline enrollment. To lower the barriers to adoption among offline customers, institutions should consider allowing enrollment in mobile banking through the banking channel of choice — branch, mobile or contact center — rather than requiring enrollment in online banking to access the mobile channel.

Address security concerns. To allay consumers' security concerns, institutions should show consumers how easy it is to use mobile text alerts to validate transactions and monitor accounts for potential fraud. The constant contact enabled by mobile services empowers consumers to take control of their security, and should be promoted as a benefit.