When online banking became available a few years ago, consumers were cautious in adopting the new convenience. Since then, online banking has become mainstream — and more popular for some transactions than visiting a branch. An American Bankers Association survey last year estimated that 36 percent of consumers preferred online banking, compared to 25 percent for branches — a reversal from 2007, when online comprised 23 percent and branch banking 35 percent.
Now, there’s a new kid on the block, and it’s working its way up in the trends statistics: mobile banking. While the adoption rate is slow — and not surprisingly, faster among the younger generations, who are more likely to use smart phones — the industry is predicting a big push in the next few years. A report by Mercatus LLC (sponsored by Visa) estimates that by 2015, about half of mobile phone users will do mobile banking, compared to less than a third currently. Other statistics show lower numbers, but is just as brisk a growth.
“The big thing is, customers will choose their banking however they want to and we want to be there for them… (Mobile banking) is an option for customers. If they want to come into the branch, great, (but) we want to provide services for customers wherever they are,” said Ken Hall, Bremerton-based district manager for the peninsula area at Chase (the holding company JPMorgan Chase & Co. took over the failed Washington Mutual a few years ago).
Chase has been among the leaders in the mobile banking field, offering mobile browser and text banking as well as applications for the iPhone and Android platforms; iPhone and Android users even have the option of “QuickDeposit,” depositing checks remotely by capturing their images with their phone camera. Customers can receive instant alerts via text, email or app notices when their balance goes below a specified amount, their account is overdrawn or for other choices, and they can even transfer money between two accounts via text messaging.
“Just like with the ATMs, with the mobile banking side of things, we’re seeing a wide range of people using it,” Hall said. “…A real benefit is that you can do your banking wherever you are.”
Some banks have proceeded more cautiously with mobile apps, offering instead a mobile browser version that works on all platforms.
“We offer a web-based portal, and the reason why we do that is every phone can interact with it. It allows us to provide mobile services to customers regardless of their branch or carrier,” said David Devine, senior vice president and marketing director at Columbia Bank.
Columbia piloted mobile about two years ago and since then has increased the functionality, which includes text and email alerts. Devine said customers in all age ranges utilize mobile banking, and with smart phone usage on the rise, Columbia is looking at expanding mobile banking options.
“(Apps) are proprietary and different apps are required for various brands (of phones). That world is changing and like other banks, we’re evaluating our options constantly,” he said. “Adoption rates for smart phones are increasing to a point it will make sense to provide additional options.”
Bank of America started rolling out mobile apps for Washington and Idaho customers in April. The technology has been available to BOA customers in many other states, but Washington deployment has been delayed because the platform uses different technology here, according to spokeswoman Britney Sheehan.
“We understand it’s definitely a way our customers are looking to do their banking,” she said.
Kitsap Bank, which has been offering a mobile browser for about a year, is also exploring the idea of apps and text banking.
“We have gone the route of a browser-based solution, rather than an app, thus far because of the ability to cross platforms and serve a greater number of customers. Recent studies indicate that the future of the mobile Web is more likely to be dominated by cross-platform browser-based mobile websites, rather than apps built specifically for iPhone, Android or other platforms,” Sue Besselievre, vice president/Customer Support Center manager at Kitsap Bank, said via an email interview.
She said only about 5 percent of online banking users have enrolled in mobile banking so far, 85 percent of which are consumer/retail customers. But, she added, Kitsap Bank has just completed development of an iPhone app, with Android and Blackberry apps in development as well.
“…Once completed, Kitsap Bank will review the impacts on our customers’ experience and consider the overall benefits of deployment,” she said. Text banking is another upcoming feature, and customers will be able to receive alerts, check balances and transactions via text messaging.
“Mobile banking began as an extension of the home computer, with customers mainly looking for transaction information and alerting capabilities. Mobile bill pay and payments in general seem to be gaining more customer acceptance, although there still seems to be some customer hesitation in that area,” Besselievre said.
While banks are always looking at the new wave of possibilities as technology evolves, bankers don’t see mobile replacing online banking in the future.
Hall, who’s been in banking for 17 years, said people used to think ATMs would replace branches but that hasn’t been the case. Plus, human interaction is not going away either. “A lot of people still prefer to deal face to face with a person when they have questions or issues,” he said.
Devine shares the sentiment, saying that he thinks mobile banking will be more of a convenience, just as ATMs are. “I don’t see it replacing online banking, it’s just another tool,” he said. “…Human interaction is (still) an important part of the Columbia Bank brand. If you call Columbia Bank, for example, you talk to a live person,” he said. “It’s very important we keep that one-on-one contact.”
