The banking industry has suffered significant damage to its reputation over the past two years, and with the latest report from the Financial Services Authority (FSA) showing that customer complaints now exceed 7,000 per day, banks are painfully aware that they have a lot of ground to make up to restore customer trust and loyalty. As a result, many financial institutions are now considering the mobile channel as a way to do so, and reach new customer segments in the process.

According to IE’s latest research with YouGov, one in four of the elusive Generation Y (aged between 18 and 34) would have a better their opinion of their bank if it offered mobile phone banking services. In fact, organisations are increasingly using mobile marketing both to drive revenues, and to engage with customers through loyalty and CRM programmes. The mobile is becoming more and more ubiquitous, and for the financial services sector, this is having a huge impact. Almost half of global consumers conducted banking transactions using their mobile devices in 2010 (Source: KPMG Consumers & Convergence Survey IV, 2010).

IE’s research also confirmed the continuing decline of traditional banking services, in favour of direct, electronic ‘anytime’ access channels, with 74 per cent of respondents surveyed stating that the internet and mobile are their preferred methods to check bank balance information. Failing to acknowledge this trend towards the mobile channel will have repercussions for a bank’s brand image and customer loyalty. Convenience is now paramount, and financial institutions must respond to this customer demand for anytime, everywhere access to financial products and services and integrate mobile banking to gain a competitive advantage.

Vast potential
The mobile channel has vast potential for financial institutions to not only gain a better understanding of  the way  customers choose to interact with their bank, but also to adapt their offerings to suit individual customer needs. Being able to deliver timely, tailored marketing messages to the right customer, in the right place, at the right time is an important differentiator for customer-oriented banks. For example, if an individual checks their account balance at the weekend from Oxford Street and is about to go overdrawn, there is an increased likelihood that they will need extra funds because they may well be going shopping. Therefore the individual is far more likely to be receptive to messages around loans or credit cards.

What’s more, mobile banking itself has the potential to come in various different guises, often leading financial institutions to weigh up the different routes to market in order to implement a cohesive mobile strategy. Two common approaches are apps and the mobile web – both of which have their own advantages and drawbacks from a marketing perspective. For many banks, however, there’s no need to choose between the two; a future-proof mobile strategy should exploit both routes to market. If constraints are in place, however, and only one approach can be adopted, banks should consider the typical users, the level of functionality that is required and the depth of security needed.

On one hand, apps can be built to perform a huge array of capabilities – from finding the nearest retail outlet to supporting loyalty and reward schemes. By their very nature, apps allow organisations to provide a highly tailored and valuable service to their customer base. Apps are viewed by many as the preferred approach for providing the richest mobile experience to the end consumer and one which represents the greatest potential for innovation.

On the other hand, the major benefit of the mobile web is its reach – any device that can connect to the internet can access mobile web pages. This means that it is simpler to support from an IT perspective, but the trade-off is a less rewarding end user experience, with potential time delays while waiting for web pages to load and, in some instances, cumbersome navigation.

Unprecedented growth
As financial institutions consider programmes to restore their brand image and reputation, mobile is an important channel that cannot be ignored. Although tempting, banks cannot wait for device standardisation, as the unprecedented growth in mobile represents a significant revenue opportunity and a channel for service-based differentiation to rebuild customer goodwill.

Financial institutions must look to implement a flexible solution that can keep pace with rapid changes in technology. As our research has shown, offering customers greater functionality and empowerment to directly choose how and when they interact with their bank is crucial, and will ensure that financial institutions can improve their image with the lucrative Generation Y. However while mobile represents one piece of the puzzle, banks will need to improve customer service across all channels to fully convince customers to trust them again. 

James Richards is director, mobile at Intelligent Environments