Banks have long deployed new customer channels without retiring old ones. We've added ATMs, help desks, interactive voice response phone systems, online banking, and self-service kiosks, but the branch has remained at the center of customer relationships throughout these evolutions.
Today, mobile banking is the channel that competes most with the branch for consumers' attentions. But unlike previous newcomers, mobile is driving a structural shift away from branch-centric banking and toward mobile-centric banking.
We have heard warnings about the end of branches before. ATMs were supposed to herald the death of the branch as did online banking, and it never happened. But this is different. While banks have always focused on moving activities from the branch to these new, more efficient channels, this is the first instance of a channel technology that is capable of making the branch itself more efficient.
The implications of mobile-centric banking are significant. In this model, the smartphone is still a delivery channel, but also takes on the role of "traffic cop", managing and extending the capabilities of other channels. We see early signs of this happening today.
Self-service vendors like NCR Corp. are making big plays into interactive video banking. Current generations of this technology automate teller transactions in-branch, but it is just a matter of time before interactive video is leveraged remotely for customer-facing meetings. Picture video discussions between customers and brokerage, lending, and sales experts conducted via smartphones and tablets.
One of the most critical branch functionsnew account applicationsis finally transitioning to mobile in a big way. Bottomline's Andera business unit, a leader in online account opening, claims that nearly a quarter of their applications are now mobilewith the added advantage of being paperless due to the smartphone camera.
Withdrawing cash at retailers using one's debit card is now commonplace, but depositing cash at those same retailers is on the horizon. Companies like Fuze Network are enabling remote cash deposits where one swipes a debit card and hands cash to the cashier, who moves money into the account through a network credit transaction. Combined with mobile check deposits, this remote cash deposit service severs a critical tie with the branch.
As these and other capabilities mature and gain acceptance, the branch will no longer be at the center of the banking experience. This means the branch can finally evolve to its next life focusing on personalized, in-depth interactions with customers. Staff will be freed not only from transactions but also information dispensing and general coordination; today's "universal banker" concept will prove to have been transitional as branch staff move upstream in expertise.
Mobile services will make branch staff powerful agents for the bank. They can work with consumers in person or via video conference to complete new-product applications on mobile devices. Mobile technology will also provide smart personal financial management services and make product recommendations while allowing consumers and investment professionals to quickly connect and interact through text, voice, and video.
Loan officers will text or call a consumer regarding a missing signature on a lending document, then provide the consumer with a secure app for signing on their smartphone or tablet.
Does this sound far-fetched? According to Javelin Strategy & Research, mobile banking adoption has a compound annual growth rate of over 20%even outpacing smartphone adoptionand more than half of mobile phone owners will be mobile banking users by 2016. Nearly a third (31%) access mobile banking at least once a day or more. Each visit is an opportunity to touch the customer, influence their choices, and strengthen the brand connection.
Additionally, smartphone capabilities are only beginning to be exploited. Facial and voice recognition, interactive video, advanced image processing, beacons, and interactive voice response, combined with cloud-powered artificial intelligence and 24/7 convenience, make mobile-centric banking inevitable.
For now, the transition is incomplete, but bankers can make the mental shift and begin positioning their institutions for a mobile-centric future.
First, banks should take note of the fact that mobile developers are moving away from monolithic apps to smaller software components that provide flexible and interlinked sets of capabilities such as transactions, scheduling, social media and e-commerce. Scrutinize your mobile vendors' latest technology and consider whether they can bring leverage to your other channels.
Second, get interactive video on your mobile roadmap for both smartphones and tablets. Consider virtualizing the help desk as a way to ease the bank and customers into video meetings.
Lastly, bypass that teller software platform refresh or if necessary, consider renting a cloud-based teller system. This may seem radical, but why lobotomize your teller system and processes when customers are clearly moving to other transaction channels?
The transition to mobile-centric banking will be complex and expensive, but the outcome will be worth it. Whereas some people argue that reduced in-person interactions will cause banks to lose their grip on customers, the reality is that mobile channels can actually help banks strengthen these bonds. Utilizing mobile-centric banking, financial institutions will provide consumers with day-by-day and even moment-by-moment guidance through their financial lives.
Glen Fossella is a technology industry executive with a background in payments and branch automation. Follow him on Twitter @glenfossella.