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Emerging Payments

Viewpoint: Why Internet and Mobile Banking Can Be Out of Sync

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In the continuing discussion around mobile banking as a standalone channel, a new dimension has emerged: the platform’s parity with Internet banking.

Mobile banking apps, especially native apps, are evolving at a rate higher than Internet banking. Not surprisingly, cool, new technologies are geared more towards a mobile platform. The creativity in this particular space is, in part, due to the overwhelming demand for the service. Consumers' use of mobile banking rose dramatically in 2011, jumping by 63% to 57 million U.S. adults from 35 million in 2010, according to Javelin Strategy & Research.

The same scenario happened 10 years ago when Internet banking became the leading channel. It pushed the envelope in terms of how we interact with end users while moving ahead of other channels.

During the past six to nine months, financial institutions executives have started taking notice of online channel parity. The mobile channel moved ahead and the Internet feature-set stopped evolving, much less matching the new features coming out of the mobile channel. According to a study conducted by the Federal Reserve in 2012, nearly 21% of mobile phone users report that they used mobile banking in the past 12 months. Furthermore, among those consumers who do not currently use mobile banking, 11% report that they will "definitely" or "probably" use mobile banking in the next 12 months.

Internally, that creates some interesting conversations about channel parity. Are all channels created equal with features available across the board?  Do online channels warrant special consideration?

The answer is simple: Channels will inevitably differ.

The disparity in channel innovation can be due to tactical issues, such as waiting for technology to advance so a feature can be added to a new platform.  Because the pace of innovation is different for each channel, it can be difficult to tie channels together. However, it is a good idea to ask ahead of time if a new feature is even appropriate for a particular channel.

Certain features are unique to a platform, because, fundamentally, they service customers and members in different ways. Taking a picture of a check to make a deposit works best on a mobile phone. That experience cannot be exactly replicated through any other channel, even though we use similar technology with ATM (image deposit), branch (branch capture) and remote (home scan) channels.

Another mobile-exclusive feature is the capability to instantaneously turn your debit card "off and on" depending on usage. In order to avoid fraud, you can keep your debit card deactivated until you need to complete a transaction. Using your mobile banking app, you can activate the card for that one purchase. The capability is also important if you are out and notice your debit card is missing. Instead of spending time on the phone with your institution while someone is running up charges on your card, you can pull out your mobile device and instantly turn the card off, then reach out to your bank to report the issue. Unless consumers carry their laptops with them while shopping, this is a feature that is exclusive to the mobile channel. 

Careful consideration of whether a feature should be applied across platforms will ensure the development of a cohesive cross-channel experience. 

Conversely, if you apply a standard of parity, you wind up in a holding pattern because right now and for the foreseeable future, Internet banking is not keeping pace with mobile banking. If you wait to launch a new feature on both platforms simultaneously, you will no longer be innovating. You will, instead, be behind the times. 

Mobile is not just Internet banking on the phone, so why treat it the same?

Admittedly, with new channels, customer expectations have grown. However, deploying a coordinated channel strategy to create a cohesive customer experience does not mean all those channels will do the same thing. While the story of multichannel banking continues to evolve, platform parity is much more myth than reality. In the end, by pushing channel-specific innovation, all parties win. 

Robb Gaynor is the co-founder and chief product officer of Malauzai Software Inc., a mobile banking solutions provider.

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