Digital natives banking on mobile

Over the past decade, consumers have grown used to multichannel banking, using a combination of branches, call centres and online channels to handle their financial affairs. More recently, mobile devices have created not just opportunities, but also challenges for traditional banks, forcing them to tweak existing systems and processes to optimise the user experience for these new devices.

Alongside this, though, a new breed of customer has emerged; one who has grown up surrounded by digital interaction and has no desire to be a multichannel customer. “These are true digital natives who don’t visit the branch or call the call centre and often don’t use online banking either,” says Geoffrey Keast, digital channels and payments director for Europe, the Middle East and Africa at financial technology firm Fiserv. “They try to perform as many of their banking functions as they need to on their mobile device.”

As a result, banks need to devise systems and processes with the mobile-only user in mind, from the user interface to back-office processes, rather than attempting to shoehorn existing operations into a mobile format. One example of a financial institution which has done just this is America First Credit Union, which has recently worked alongside Fiserv to refine its front and back-end processes to enable customers looking for a loan to conduct the entire process from their smartphone. This can be for a number of products, including vehicle and personal loans.

Those banks that can offer convenience stand to not only retain existing customers, but win new ones too

“The first thing they tackled was the upfront capture of information,” says Mr Keast. “They allow members looking for a car loan to take a photo of the vehicle identification number and send that away to the bank.” Leveraging mobile phone camera technology for banking was an easy segue for members to make, as remote deposit capture is highly prevalent in the US market. This allows customers to take a photo of their cheque and send it to the bank for processing, something that could be rolled out next year in the UK.

The system then performs a number of other stages instantaneously, including running a check on the valuation of the car and credit-checking that individual, both internally and with external credit-rating agencies. “They’re making the credit risk decision in real-time rather than through a batch-based process, which is how a lot of banks currently operate,” says Mr Keast.

The upshot is that individuals get an almost immediate response to their loan request, and any request that would ordinarily be rejected is referred to a call centre, which can contact that person to discuss any issues there and then. “A mobile user doesn’t want a delayed process; they want an immediate response because they’re in the moment,” adds Mr Keast.

Industry research suggests convenience is now one of the biggest factors in improving how financial institutions’ relationships with customers, ahead of other elements such as price or product features, meaning those banks that can offer convenience stand to not only retain existing customers, but win new ones too. “Banks can only differentiate so much, but one area where they can is the customer experience,” says Mr Keast. “They need to think about how they’re going to fulfil that new generation of customers.”



Developing a dedicated mobile strategy means banks are also able to take advantage of greater insight into customer behaviour and the use of analytics. “Smartphones can provide more insightful data than other devices, because when someone is engaging with a smartphone, they’re normally not just browsing for the sake of it, they’re in a situation that they need their mobile device for something specific,” says Mr Keast. “If banks are able to capture that information, it makes it a lot more relevant and can provide a greater level of segmentation to what they have had before.”

Banks can use this to their advantage by promoting their own products and services to engaged users, allowing them to watch the impact of campaigns in real-time, and respond to these if they are not having the desired effect in a test-and-learn process.

One bank already doing this is Bank of Ireland, which conducts real-time reviews of its marketing campaigns. “Fiserv provided a ‘mobile wrapper’, which is essentially an app that frames the traditional mobile banking experience, where the bank can push banner ads and notifications to consumers,” says Mr Keast. “They’re now able to adjust the messaging based on analytics they see.” This can not only boost sales, but also deliver better customer experiences, he adds.

This approach can be extended to relationships with core retailers, making targeted and relevant offers to particular customers based on information around their buying habits. “A bank might send me an offer from Starbucks because they know I buy five coffees every week,” says Mr Keast. “That is going to be interesting to me and will benefit the bank because they get more transaction volumes. It will also benefit their relationship with that retailer.”

Lloyds Bank is already using such capability. “They use an analytics engine of merchant-funded offers which are pushed to consumers based on transaction data that the bank has collected, and they also use an algorithm to identify what kind of offer could generate a purchase from that consumer,” he says.

In the face of growing competition in the sector, failing to implement such a system is no longer an option, Mr Keast warns. “Banks need to think about how they’re going to engage and interact with the real digital natives to compete with the likes of Apple, Google, PayPal and Amazon,” he says. “Traditional banks are at a massive competitive advantage because of the amount of information they have about people; the key is to leverage that data effectively.”

Fiserv has worked with thousands of banks to develop digital initiatives. To find out more visit