For the first time, a perfect alignment of market conditions, customer demand, network efficiency and technological innovation make mobile business an immediate opportunity.
So how do you take advantage of this?
Should you focus on internal efficiency or customer engagement?
What is the best business model to adopt?
PA Consulting Group’s mobile experts held an internal roundtable with some of our financial services team. Here, we share some highlights from that discussion on how the industry is developing and the key factors for success.
Contributors
Ted Bissell
Mobile business expert, communications, media and entertainment and financial services.
Ted is a sought after expert in mobile business most recently running projects in the financial services sector. His many years of experience span the communications and media industries as well as managing of a number of private equity and venture-funded companies.
Daniel Meere
Mobile business expert, financial services
Daniel has consistently led high-profile engagements across the financial services sector including retail, wealth, offshore and investment banking. His experience in leading major transformation initiatives and senior stakeholder groups, includes designing and implementing e-commerce, mobile and self service solutions for financial services clients.
David Stansell
Mobile business expert, communications, media and entertainment and transaction support services
David is an expert in the mobile communications and media sector with a focus on business planning and transaction support. He has led multiple business planning exercises for clients involving market analysis, mobile proposition definition, and financial forecasting as well as due diligence for investors considering debt or equity investments in the sector.
Mobile Vision
Why is now the right time for mobile business in financial services?
David Stansell:
There’s a great opportunity to reduce costs. The credit crunch has had a major impact on the balance sheets of the sector and mobile technology provides an opportunity to cut out large swathes of unnecessary processing costs.
Daniel Meere:
Most banks have a large degree of customer churn so attracting a new generation of customers is essential to future growth. To this generation, known as the digital native, the mobile phone is their primary communication device.
Ted Bissell:
It is important that the sector recognizes that this is how people will want to interact with their bank. We are seeing that consumers are voting with their feet and going after financial services providers that are best adapted to their lifestyle. They are out and about and don’t want to have their lifestyles infringed upon by the constraints of traditional banking.
What is the promise of mobile business to financial services and is it relavance to all areas of the sectors?
Ted Bissell:
I can’t see an area of financial services that this does not apply to.
Most of the sector is still reliant on out-of-date processes. We have found that huge cost savings are made through the efficiencies made to these processes through mobile business. For example financial institutions can securely attain transaction verification by text and cut out days of seeking authorization by fax. The mobile device actually adds an extra level of security from the phones unique ID to location finding and even face recognition through the phones camera.
It’s already happening in Japan where one of the banks allows you to apply for a new loan using the camera phone on your device.
Daniel Meere:
With financial services there are quick wins that could realize instant returns. For example we know that about a third of calls to retail banks are using a mobile device. There would be instant cost and time saving by simply by supplying an application to those phones that enables them to conduct basic transactions.
Equally if you think about traders, they are highly mobile. Enabling them to trade on the move would ensure that traders are generating revenue no matter where they are.
There are a great many possibilities for mobile business in financial services.
Ted Bissell:
We all know that the financial services sector is an extremely competitive market that changes very quickly. The need for investors has only increased this competition. Mobile business gives the banks a channel directly to the customer, using a device that is always with them, delivering information in real-time. There is a real opportunity for a substantial competitive advantage.
Customer proposition
Where can mobile business be applied in financial services?
David Stansell:
When you look at the applications of mobile business the possibilities are endless. Trading in investments, basic account handling, transaction services; services that we can now handle through the mobile device.
For example; the call centre has become the thorn in the side of retail banking. They are costly and universally poorly rated. Mobile business can be used to provide a lot of the same services on one device cutting out the need for the call centre interaction. Carefully thought through and brought to market, this has the potential to reduce costs and increase customer satisfaction.
Daniel Meere:
We can go one step further then that and say that the mobile device truly has the potential to become the single point of aggregation for financial dealings.
For example an application which would allow them to bring in all of their investment products, their savings and current account products as well as their loans into one place. From this they will be able to view and manage all of that via one single device.The technology exists right now to make it happen.
Business capability
What are the changes in strategic thinking that companies need to adopt to ensure success?
Ted Bissell:
Financial services institutions that want to be successful need to embrace the fact that the mobile device is part of the customer’s everyday life. The need to recognize that this is going to become the primary communication channel of choice is now!
Secondly look at the security policies. The move to mobile business would lead to a significant level of information being transmitted and held in offsite servers (the cloud). Ensuring the security of this information is key to customer acceptance.
David Stansell:
When looking at the mobile business strategy there are two essential questions that need to be answered. What role should the financial services sector take in people’s and companies’ everyday lives? What role can the mobile phone and the bank play in combination?
Also it is worth drawing attention to the differences in geographies. For example the geographic nature of the US coverage and bandwidth can often be sporadic therefore FS companies need to target the major metropolitan markets and suburbs.
Daniel Meere:
Mobile business, in combination with no longer needing the backing of a major bank, is reducing the barriers to market entry. So I think you will see this massive shift in the balance of power in the sector, which will fundamentally change the business model of financial services companies. They need to be ready for this.
What is the one key insight that you think people who are looking to enter this market should know?
Daniel Meere:
We need to put the trust back into banking and mobile business is a key way of achieving this.
David Stansell:
The balance sheets of most banks are in a poor state. Mobile business provides a way of quickly reducing costs, increasing customer satisfaction and developing a myriad of new revenue streams. The key is understanding the ecosystem that is required to achieve this.
Ted Bissell:
Mobile business presents the financial services sector with a number of opportunities. From the provision of financial services in under banked countries to the flow of remittance; simply adopting the technology is not enough. Fostering a culture of open innovation is key.
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