TORONTO–Banks are starting to notice that their online banking and mobile sites are not as good as customers expect.
“On balance, the customer experience presented in financial services tends to be less advanced than that of Amazon, Apple, Google and others,” Jeffery Yabuki, Fiserv Inc.’s chief executive, said during a Sept. 22 interview here at Sibos. “That’s why consumers tend to view banks’ websites as not good enough.”
This is beginning to change, as many banks, especially the largest ones, are making major investments in their mobile and online banking platforms, Yabuki said. At eight large U.S. banks, there are online banking revitalization projects going on that will end up costing upwards of $100 million apiece, he said
A similar shift is happening in mobile banking. Fiserv recently asked 1,000 clients whether they planned to make an incremental investment in mobile banking. Eighty percent said yes.
“They’re all trying to figure out how to optimize the mobile experience,” Yabuki said.
Eventually, mobile banking will look like an advanced version of online banking, combined with alerting capabilities and immediate overdraft protection, Yabuki suggested. “But that’s a long way off,” he said.
In mobile payments, alternative providers coming into the market, such as Google and Square, are creating a sense of urgency for banks, Yabuki said.
“Person-to-person payments are a launching point for more electronification of the customer relationship,” he said, noting they also could help banks raise revenue.
“In person-to-person payments, we think there could be a FedEx type of pricing model, not unlike ATM convenience fees,” Yabuki said. “When ATM fees first came out, people complained. Now we’re all used to them.”
Consumers might be willing to pay $1 for an immediate mobile funds transfer or 25 cents for the transaction to go through the next day. In such a model, the transaction might be free if processed the third day.
It is not unusual for consumers to pay for fast fund transfers, Yabuki said. “Western Union charges $20 to send $50,” he pointed out.
Fiserv is signing on 100 institutions per quarter to ZashPay, its person-to-person payments system. Eventually, Yabuki expects mobile bill payment and P2P payment technology to converge, giving consumers one platform from which they may make any type of payment from their phone.
Another emerging source of new revenue for banks are small, on-demand loans that help consumers avoid insufficient funds charges, Yabuki said. Fiserv has a product called Relationship Advance that provides for such small-dollar loans.
The service is similar to overdraft protection, but with a loan structure. “It’s an alternative to payday loans,” Yabuki explained. “But the median income among the users is higher than you would think.”
Fiserv also is working with Microsoft Corp. to develop new products that enable customers to serve themselves better within bank branches, such as by scanning their own checks or calling up their own investment data. This would not only make branches more efficient but also enable branch staff to have better discussions with customers, Yabuki said.
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