Say you are a marine deployed in Afghanistan and need to get funds to the U.S. double-time. Instead of mailing your paycheck out of a war-wracked country across the globe with no certainty when the deposit would arrive, you just take out your iPhone, snap a photo of both sides of the check, confirm the details, and the funds are in your account at home.
There is a mobile application for that, and USAA Federal Savings Bank, which primarily serves individuals in the military and their families, is using it to provide another way to support needed services to some of its extensive customer base serving in the armed forces.
In some key respects, this new mobile-banking service might be the harbinger of a revolution in banking.
Making remote check deposits using mobile phones is clever enough, but USAA generally makes such funds available almost as soon as it receives the transaction. Moreover, users originally had to do a USAA login, and then enter their PIN to originate the deposit. By March of this year, USAA realized that by adding the image capture to confirming the phone number, it could eliminate the need for the log-in and create one of the most secure transactions in banking.
So except for dispensing cash, USAA’s entire smartphone application package not only takes mobile banking to the next level–better than online banking, in the view of many–it effectively puts an ATM in a customer’s pocket.
Before the snickering starts, consider research Mercatus LLC released in December in a report commissioned by Visa Inc. Its survey found that nearly one-third of consumers either were using mobile financial services, or they were considering doing so in the next year. By 2014, more consumers will access their accounts through mobile devices than through the Internet, Mercatus predicted.
The implications of this are simple, and perhaps obvious: What if mobile transacting, as many of us believe, can make all remote transacting safer? And what if mobile applications can enable digital consumers to move fully into a low-cost, self-servicing mode?
Mobile banking vendor MBox estimates the average mobile-banking transaction (balance check, deposit and payment clearing, account transfer, etc.) costs a bank about 8 cents versus an average of $1.75 per call-in interactive voice response and $3.75 for call-center sessions.
What if full-service mobile transacting dramatically reduces the foot traffic in the branches, putting the business justification for consolidation within reach? Bank branches have seriously overrun marketplace needs, and one-to-one personalization of marketing messages and promotions to location-aware, real-time devices such as mobile phones makes account maintenance and cross-selling much more effective than teller or floor-staff exchanges.
And what if the convenience and instant gratification of purchasing by mobile phone provides the long-sought-after replacement of cash and check transactions? In a digital era where the mobile device becomes the hub of social interconnectivity and commercial interrelationships, why carry around dirty, dangerous currency and a bunch of dumb, fraud-laden and unconnected magnetic stripe payment and loyalty cards?
Meanwhile, a host of financial “self-help” applications and personal financial management programs have spawned, giving mobile transactors unprecedented and much needed account-management and spending controls. As these financial applications proliferate and interconnectivity explodes into new transactional venues such as social networks, the future of banking comes into clear view.
Mobile devices likely will move quickly beyond the ATM-in-a-pocket stage to the bigger and bolder notion of a “bank-in-a-hand.” Bank services and brands must make the transition to this new reality to survive, if not to thrive.
But beyond that, the mobile transformation seems headed toward an irrepressible future of unconstrained options for managing and monetizing financial assets on an individual basis. In this brave, new–and somewhat scary–world, each and every digitally empowered and technologically savvy consumer or small business can become a bank-of-one, in effect. And that kind of self-sufficiency and self-actualization really does change everything.
Steve Mott is a principal at BetterBuyDesign, a Stamford, CT-based payments consultancy. He may be reached at stevemottusa@yahoo.com.
