At a time when banks are struggling with revenue and profit growth, mobile banking is emerging as a critical weapon in the battle to retain customers and cut expenses. The average cost to a lender for a mobile transaction is 10 cents, about half that of a desktop-computer transaction and far less than the $1.25 average cost of an ATM transaction, according to data from Javelin Strategy & Research.
But the spread of smartphones and tablets also presents risks for banks. Customers today expect their lenders to offer a range of mobile services, from simple functions such as balance inquires and transfers to trickier maneuvers like paying bills through photo imaging. When banks don’t deliver, some customers are walking.
All told, about 60% of smartphone or tablet users who switched banks in the fourth quarter said mobile banking was an important factor in the decision, up from 7% in the second quarter of 2010, according to data from New York-based consulting firm AlixPartners.
But as mobile-device use increases, more customers are giving it a try.”The world is quickly going mobile, and if banks aren’t there already, they’re way behind,” says Robert Meara, a senior analyst at financial-services research and consulting firm Celent.
Some mobile functions are especially appealing. While customers can view balances, transfer money and perform other functions using ordinary computers, they can deposit checks only in person or on a mobile device.”There are few things more inconvenient to banking consumers than carrying a check around and waiting to come to a branch or ATM,” Mr. Meara said.
For banks, mobile deposits are especially cost-efficient. J.P. Morgan Chase & Co. recently said mobile check deposits cost the bank three cents per transaction, versus 65 cents for deposits made with a teller.
“How come this bank with the kind of weather we have in NJ and NY doesn’t have mobile deposits! I’m just going to switch banks,” wrote one user on the Google Play app store page for Santander’s U.S. mobile-banking app.
Average Cost of Bank Transactions
- In person at a branch: $4.25
- By phone a call center: $1.30
- ATM: $1.25
- Online banking: $0.19
- Mobile banking: $0.10
With CSI’s SPIN, you can provides community banks customers with more direct person-to-person (P2P) payment functionality. The P2P offering delivers a more efficient payment process that allows consumers the quickest access to funds in the P2P industry.
5 Reasons why SPIN is the Best P2P Option for Community Banks
1. Requires only the 16-digit debit card number to send a payment to any Visa® cardholder, which improves adoption among bank customers looking for a faster transaction process
2. Enables funds to clear in a matter of minutes, eliminating the delay in availability for the receiver
3. Fully encrypts card information to ensure complete security and compliance, and can be reused to send additional payments without providing the full card number each time
4. Helps maintain customer satisfaction and improves the overall customer experience by providing a more immediate P2P payment process
5. Delivers an array of value-added tools that can drastically expand your bank’s mobile adoption, and increases transaction volumes by eliminating the need for customers to seek third-party P2P providers
More lenders are introducing fees on checking accounts, just as consumers and business are pouring record amounts into the most basic of banking services.
After regulators made it harder for banks to collect debit-card fees and new laws led to higher compliance costs, banks have been looking for different sources of income. Recent evidence suggests that one of them is the humble checking account, an entry-level service offered to most customers.
About 41% of U.S. financial institutions aren’t offering unconditional free checking accounts this year, up eight percentage points from a year earlier, according to Moebs Services, an economic-research firm in Lake Bluff, Ill. The firm surveyed 2,890 institutions, including large and small banks and credit unions, in January.
Bank branch closures in the U.S. last year hit the highest level on record so far, a sign that sweeping technological advances in mobile and electronic banking are paying off for lenders but leaving some customers behind.
U.S. banks cut a net 1,487 branch locations last year, according to SNL Financial, the most since the research firm began collecting the data in 2002.
Branch numbers have been on a steady decline since 2009 and reached a total of 96,339 at the middle of last year, the lowest since 2006, according to data from the Federal Deposit Insurance Corp.
Since the financial crisis, U.S. banks have been ramping up mobile and online services and moving away from physical locations to avoid overlap. “There’s less of a need to have branches now,” says Sandler O’Neill + Partners analyst Jeff Harte.
Culling branches, with their real-estate, labor and security costs, has become a popular way for banks to boost profits at a time of sluggish revenue and loan growth. No U.S. state or territory logged net bank-branch additions in the cumulative period running from 2010 to 2013, according to SNL.
“Regardless of the form factor, a favorite holiday gift is money. Some people like to give crisp 20s, the hand-written check still has a certain charm (as long as the recipient has mobile deposit capture), but the biggest growth area has been the plastic gift cards. Banks should have owned this trend, at least in the United States. Those 100,000 branches would have been good distribution points, a place that you trust far more than the express checkout lane at Safeway.
But alas, that ship has sailed. The good news? Financial institutions still have an opportunity to be major players in digital gift card distribution, especially mobile.
- Purchase time is reduced to seconds, since you already know the customer
- Customers trust you to deliver a valid gift card, and if there is a problem, it’s relatively easy to find someone to help them
- Buyers are already logged in to your site; it’s super easy to get a promo in front of them
- Funding the card has almost zero cost with “on-us” funds transfers
- You can sell a mix of real and/or electronic store cards, prepaid/reloadable Visa/MasterCard/Amex
- You can save previous info (recipient name, address, birthday, etc.) so customers can purchase again and again with a single click
- Knowing the user’s location and spending patterns, you could deliver targeted card offers
- Electronic cards can be stored in the bank’s mobile wallet and used at the POS