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