)
)
)
)
While you’ll never be able to exactly deposit or get cash from your handset, your mobile phone might just make many other trips to the bank unnecessary. Pete Daffern, CEO of Clairmail, offers his thoughts on how banking will evolve in your hands.
Daffern was previously CEO of technology company Purisma, where he directed the company’s strategy and operations with a focus on growth through valuable solutions, customer service and business development initiatives. Before Purisma, Pete was President of AIM Technology, a provider of applications for contact centers. He holds a Bachelor of Science degree in Mathematics (Honors) from Sheffield University in England. Here is what he had to say about the state of mobile banking.
AllBusiness: Given that mobile has greater adoption at this point than broadband, do you think it might be possible that some consumers might skip the computer banking and go straight to the handset banking?
Pete Daffern: No question. Some people in the industry have approached mobile banking as an offshoot of online banking, assuming that potential mobile banking customers will come to mobile services via their online experience. However, online banking overall still has less than 40% bank customer penetration on average. On the other hand nearly 100% of bank customers have a mobile handset and more and more that handset is also the computer in their pocket. The mobile device provides an unprecedented opportunity to provide banking services to all bank customers – even the unbanked – anytime or anywhere. By offering mobile banking enrollment through all customer interaction channels – whether it be via the mobile phone, the bank branch, online, or via the call center – we see mobile banking adoption ramping toward that 100% of all bank customers, not a subset of 40%.
AllBusiness: Could you offer any advantages that mobile banking has over other methods, notably in person banking or banking via the computer?
Pete Daffern: Mobile is the first channel that allows a bank to proactively, economically and in a timely fashion reach out to customers, rather than relying on customers to initiate an online session, call, branch or ATM visit. This is a huge advantage that delivers customers more personal and timely information about their finances as well as exposure to new and relevant bank products. Through this proactive communications channel Mobile banking also enables the bank to develop a deeper relationship with their customers resulting in lower churn.
Unlike any other channel mobile banking allows you to have complete control and real-time understanding of your personal finances. More and more bank customers are seeing these offerings as core to choosing and sticking with a financial institution.
AllBusiness.com: Given that there are endless security threats including phishing scams, many of which haven’t made it to mobile, what can you do to keep customers safe?
Pete Daffern: There are natural security concerns around every new technology offering, and this is especially true around personal finance. However, for mobile banking it begins with a financial institution implementing a well-thought out mobile strategy and addressing these sorts of concerns with customers along with features and benefits.
In general mobile is much more secure than online banking. Compare initiating a mobile banking session to the way a typical web session is started. Of the username/password pair, Username is never typed by the user in the mobile example. The session is actually started only after an authenticating “token” is sent back to the mobile phone. This is similar to the dial-back that was used in treasury systems, and sends the outbound token to something you have (the mobile phone) across a non-internet channel. You enter the “something you know” in a secure SSL session and voila you are logged in! A PC cannot do this strong type of 2-factor authentication because it is connected by only one network protocol (the internet) and does not have a specific device ID that uses another network path to receive a message.
In most other mediums better security “costs” the user typing and time. Like multiple locks on the door they toughen the security by making entry more difficult. With mobile phones use we achieve better security with fewer clicks. By understanding what is different about a mobile phone’s capabilities, and then using that we have learned to enhance both ease of use and security.
AllBusiness: Is this technology that is offering more to users with a powerful smartphone over a basic feature phone? And how do you see this evolving?
Pete Daffern: There are hundreds of millions of phones out there, and yes there is a continuing migration afoot from basic mobile handsets to smart phones. That said even with more than 20 million iphones sold there are far more than a hundred million basic handsets out there. Thus banks need to offer customers mobile banking options that fit their needs today, while evolving with them and their handsets into tomorrow. To accomplish this we have an integrated platform that delivers multi-level SMS alerts, mobile Web and dedicated applications to meet the needs of all potential customers and handsets.
As far as the evolution of offerings and technology, we see the future as an organic integration of mobile banking capabilities and channels that bring customers everything they could want or need to satisfy all their banking function from their handset. In fact, this month we were honored by Bank Technology News and named to the Top 10 Innovator’s list for our Smart Client application that integrates all three major channels of mobile banking communication in one slim application. A number of other companies try to cobble together offerings to compete, but we are always looking to innovate ahead of the pack and help set the growth trajectory for mobile banking.
AllBusiness.com: Do you think mobile banking will increase in 2010 and beyond? And what impact does this have for those located in areas such as the developing world, where access to banks is very limited?
Pete Daffern: Mobile banking growth will continue to accelerate in 2010 as more and more bank customers adopt and rely on mobile services. We estimate 50% of banks are looking to deploy mobile next year. A mobile banking offering and strategy used to be a nice-to-have for financial institutions, but every day it is becoming more and more of a must-have to retain and grow a customer base.
When looking at very rural areas and the developing world, one realizes that mobile banking is not always about being “mobile” as much as it is about being ubiquitous. In developing economies as well as just rural areas, home-based Internet access, landline phones and bank branches can be rare, while mobile phones are not. Thus mobile can actually become the main or even first touch point to banking services for millions and millions of consumers around the world.
Mobile banking offers deep customer engagement, flexibility, ubiquity and personalization that is just simply unlike anything financial institutions have been able to offer previously, and in many parts of the world it will not only simplify the lives of bank customers it will also invite in millions of previously unbanked people. The upside for mobile banking on a global basis is astronomical.
AllBusiness.com: Do you see mobile banking as helping go to a world of paperless currency?
Pete Daffern: There may always be some physical exchange of currency, but mobile banking, institutional and peer-to-peer mobile payments will very likely become the coin of the realm.
