Mobile Banking: Strategic Advice for Banks
There are many different actors involved in the implementation of mobile banking. Banks naturally play an important role, yet their space in mobile banking is often very different from what they are accustomed to in traditional banking services. In order to stay competitive and relevant in this space, banks must think strategically about their place in mobile banking.
There are four strategic ways that mobile banking can foster growth for banks:
1. Increase market penetration. Mobile banking can serve primarily to reduce the cost of deploying customer touch points into lower income or more remotely located population segments.
2. Sell more services to existing customers. Mobile banking can help the bank to develop new products that target unmet needs of existing customers.
3. Retention of most valuable customers. Mobile banking can protect the roughly 20 percent of customers who bring roughly 80 percent of the value to banks, offering them a quality and breadth of service that will make them less vulnerable to churn.
4. Reduce cost of service provision. Mobile banking can replace more expensive channels and devices with the cheaper mobile solution.
Given these four ways in which mobile banking might support a bank’s various strategic objectives, there are three different deployment scenarios. The main differentiation is between those banks that use agents and mobile phones to bring new conveniences to their existing customer base versus those that use them to reach a new customer base.
1. Cool value add. A bank seeks to exploit the personal nature of the mobile handset to build a stronger relationship with its customers. The business case is based on customer retention by creating a specific point of differentiation from other banks.
2. Easy bank. A bank uses the mobile phone to broaden the range of channels through which it interacts with its customers. It does not seek to displace established channels for existing customers, but the breadth of channels allows the bank to address more diverse segments.
3. Virtual bank. A bank seeks significant outreach and growth of customers, because of new market entry or geographic expansion or a run for scale. A bank can seek growth without investing in as much physical infrastructure by using mobile banking as the main customer touch point.
|
