Friday, February 15, 2013
Mobile Banking the tip of the Mobile Iceberg?
Rob Kimmett, Sr. VP Marketing, New England Credit Union Services, LLC
A great deal has been written about disruptive technology and its more vogue sibling disruptive innovation. Whatever we call them these phenomena are descending on us with startling frequency. The technology elephant in the credit union room right now is the smart phone and its mobile banking capabilities. It is quite literally impossible to open a trade journal or website without seeing an article on this subject.
There is no doubt that the smart phone is now a critical part of the financial services delivery system. In fact mobile banking has now achieved the same degree of importance that online banking did a decade ago. A mobile banking application has become “table stakes” meaning if you don’t have it you aren’t going to sit down to play.
These technologies are important to your entire relationship with the member, but the essence of the smart phone's value to the consumer of financial services is its role in facilitating transactions. Credit unions need to think of the smart phone as an intrinsic part of their checking/debit product. Some day in the very near future that will be because the phone will be the payment device (if it is charged up). But for now it is still a part of the product because it manages the account. It is in the member's pocket or bag and the check book and register are collecting dust at home.
If that weren’t enough, I’m going to remind you that the real disruption is going to come from the fact that mobile technology is going to totally change the way people buy things and organize their daily travel routines. The impact that these devices are having on retail is the disruption. If people, especially young people, can order and pay for goods and services from a device that is always with them, how many more retail establishments are going to cease to operate? Why are businesses going to invest in storefronts, parking lots, and to some extent, personnel when the consumer is demonstrating that they can, and in many cases prefer, to do without? Anyone remember service station attendants?
The only places that are guaranteed foot traffic are those that provide a service that require the actual presence of the body, such as auto repair shops, dentists, and tattoo parlors or those that add value through in-person interaction, like restaurants, theater, and spectator sports. Credit unions can try to perpetuate the idea that in-person interactions are valuable but fewer members are going to be visiting branches in the future. And if they do, what will the surroundings look like? Is the small town or city center going to be a retail center or will it be more of a place where people socialize? Future branch strategies must take these factors into account.
The point is that the direct impact of the smart phone on our business is Mobile Banking and that is undeniable. However, if we don’t pay careful attention to all of the change these devices are going to bring to the entire retail environment, we do so at our own peril.