Lack of Trust Threatens the Mobile Channel
Taking their cues from popular consumer brands and digital upstarts, financial institutions are modernizing their websites, ATMs, and mobile apps in hopes of creating a better digital banking experience and, ultimately, attracting and retaining more customers.March 7
Bankers may gush all day about the mobile channel, but they have yet to offer the mobile product that has captured the love and loyalty of their customers.
Take the example of mobile wallets. Bankers who suggest that customers load personal financial information into a mobile wallet are finding near zero market acceptance.
The reason? Trust.
The overwhelming majority of bank customers simply don't trust mobile wallet or personal financial management applications to keep their information safe.
A 2013 survey by First Data quantified the public's reluctance to accept mobile wallets. Seventy-nine percent expressed concern about the security of payment data; 71% worried that their payment information might be compromised by a hacker; and 60% fretted about the consequences of losing their phones. That was before the recent Target breach.
Any banker can conduct his or her own ad hoc research by steering a conversation with 30-something professionals to mobile wallets. Ask about the convenience of aggregating rewards and points collected from various companies, and displaying those points as a percentage of airline tickets, groceries, restaurant meals and clothes available for purchase.
Most likely, your test subjects will like the idea of getting help to understand their finances. They usually find value in understanding if a retailer's offer is truly affordable, and if it makes better sense to do something else with the money like invest it or save for a major purchase identified as a financial goal.
Now suggest that all of this functionality can be accomplished using a mobile wallet. The initial excitement will wilt like a flower in the autumn's first frost. In my conversations, the subjects shook their heads, waved me off or asked me whimsically, Why would I want to make it even easier for a hacker to capture my information?
This pervasive distrust is a thorn in the side of financial technology innovators and bankers alike and has prevented mobile wallets from helping consumers manage their finances in real time a tool they desperately need!
Unfortunately incidents like the Target breach and the collapse of the world's largest Bitcoin exchange serve to reinforce the public's distrust. Does it matter that the Kaptoxa malware that infected Target's point-of-sale terminals didn't tap into Mobile or Internet transactions? Not a bit. Even as more and commerce is transacted electronically, there remains a subset of consumers who are uncomfortable using electronic channels and see them as vectors for future attacks.
Banks have an opportunity here to help their customers improve their management of mobile risk. Banks can insist on passwords, installing software updates and other best practices. Banks can also conduct training classes to instill best practices in mobile security.
At the same time, banks can show their customers how to set up the new mobile finance tools. Even the tech savvy Gens X and Y hardly know which parameters will help one customer save for college and another for a house. Classes like these can help cement a deep and rewarding relationship between the increasingly mobile customer and his/her bank.
The irony in all this is that the channel most frequently regarded as a branch-busting replacement for face-to-face relationships might become the avenue for closer ties and more meaningful in-branch interactions between customers and bankers.
Now that's a recipe for greater trust!
Robert Bessel is the public relations director at COCC, a client-owned core technology service for banks in the northeastern United States.