The older generation would recall the monthly visit to the local bank branch, standing in a queue to draw cash and stopping by the manager’s office for a quick chat, perhaps even a cup of coffee. In those unhurried days, banking was almost a part of social life. A customer’s relationship with the local bank had all the elements of friendship — proximity, trust, intimacy and personal rapport. Today, with the explosion in the number of customers and the rapid pace of life, banking products and services are so commoditised that it doesn’t matter where one banks. Besides, customers are smarter and more aware to make decisions without the guidance of bank managers.
Yet, despite achieving near utility status and changing beyond recognition, customers still aspire for those traditional values of the local bank — trust, relationship and personalised service.
In the coming future, my bet is that the mobile phone will be the world’s local bank. That’s because, when it comes to convenience, establishing a cordial, personalised relationship with customers, and understanding the context of a transaction, mobile banking is hard to beat.
Let’s start with convenience. Earlier, convenience meant proximity, a branch that was just a short walk away. However, for modern day customers, convenience means nothing less than ubiquitous banking, available at all times, everywhere. With subscriptions touching six billion, or 86 per cent worldwide penetration (over 70 per cent in India), no device is as pervasive as the mobile phone. Consequently, no channel is as ubiquitous as mobile banking. What’s more, thanks to technologies such as Mobile Remote Deposit Capture and mobile video conferencing, this channel can provide the intimacy of branch banking services.
While traditional local banking was limited to pure banking, the mobile phone can add services such as payment and commerce. Nearly three decades after credit cards revolutionised payments and shopping behaviour, signalling the end of cash and cheques, the mobile phone is poised to do the same, except that this time around, plastic is at the receiving end. Mobile payments and commerce will scale $1 trillion globally in three years, according to an Ovum study.
The days of warm hospitality may be behind us, yet, banking can reclaim lost intimacy in other ways. As an instrument that enriches lifestyles and not just banking transactions, the mobile phone is privy to more customer insight than any other banking channel. This window got bigger when Internet-enabled smartphones provided connectivity to social networks. Now, the mobile phone not only provides insights about an individual, but also the social groups the customer belongs to.
Through this information, banks can cultivate a deeply personal understanding of their customers and invest that knowledge to create extremely personalised and relevant products, services and offerings. With the help of analytics, banks can distil information gathered by the mobile channel to not only create offerings targeted to individual needs, but also go a step further to predict future demands and fulfil them proactively. Personalisation is to mobile local banking what cordiality was to its traditional form.
In the days of traditional banking, banks knew little besides what their customers told them. The arrival of solutions such as core banking and CRM (customer relationship management) systems provide bank staff a 360-degree view of customers, including the history of their transactions with the bank, which would serve as a context for the current interaction. What’s more, features such as location tracking or social networking mean that banks are never separated from their customers.
Provided privacy issues are adequately addressed, such a situation is beneficial to banks as well as the customers.
Today, mobile banking is on the innovation agenda of every bank. Banks value the mobile phone for many reasons: it is cost-effective, it helps generate revenue, it has unparalleled reach, and is a rich source of consumer insight. So it is natural that banks look at the cellphone not just as a mainstream channel, but the mainstream channel of the future. But this is like missing the forest for the trees. The mobile phone is not only capable of becoming the most important banking channel, it has every chance of morphing into the local bank of the future.
(The author is lead product manager, Infosys Finacle)