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This story appears in the August 2009 issue of Cards&Payments.

Activating mobile-phone channels for banking can reduce financial institutions' costs of doing business by increasing customer self-service. Going mobile also can deepen customer relationships, build loyalty and create new revenue-generating lines of business, such as the much-anticipated promise of mobile payments.

Customer satisfaction, loyalty and revenue opportunities clearly point to a need for financial institutions to offer a variety of mobile services, including payments.

According to Visa Inc., consumers increasingly are interested in using their phones as payment devices, with 64% of those ages 18 to 42 surveyed saying they would switch carriers for a phone that enables payments. Another 58% stated they would switch banks for mobile-payment functionality.

The challenge for banks is to integrate mobile registration and cross-channel support into the account opening, ongoing communications, service and payments mix before, during and after every purchase.

To venture into mobile services, financial institutions and other businesses need customers' mobile numbers. The one who enrolls is the one who controls, meaning whoever enrolls the customer for a mobile offering will be in the driver's seat for other new valued-added services.

Of course, the only entities that have enrolled their entire customer base are wireless carriers. For banks and others to participate in mobile commerce, they first must incorporate mobile registration as an integral part of their service-delivery strategies.

Banks are fortunate in this regard compared with other businesses because federal laws require them to know and register their customers (and often their mobile numbers) as a normal course of business.

The fastest and easiest way for banks to build a registered user base is first to enable mobile self-service for such things as account notifications, funds transfers and, ultimately, for all forms of payments. Customers enrolled in mobile balance alerts via text messages, for example, easily can activate other services later, such as mobile-payment and user-defined opt-in offers, advertising and rewards.

Banks should look to leverage all seven channels available on the mobile device for building a registered user base: voice, text, mobile Web browsers, downloadable handset applications, Near Field Communication, camera for bar code scanning and remote-deposit check imaging, and Bluetooth for point-of-sale coupons, data transfer and alternative payments.

Banks need to update service-delivery strategies to harness the new potential of cross-channel integration, knowing that mobile is present in nearly every other existing channel experience and provides a continuous connection point.

The mobile phone now plays a supporting role in every other channel experience.  In fact, Forrester Research Inc. is projecting that nearly 40% of all retail sales will be cross channel-enabled by 2012 compared with less than 20% today.  Banks can take advantage of that trend by extending two-way communications with payment card customers before, during and after each purchase transaction via the mobile phone channels.

Banks that build a mobile-user registry and wireless offering will have a series of opportunities to carry new revenue-generating payloads within their existing transaction-processing networks by delivering user-defined, opt-in advertising and offers.

Personalized mobile marketing and loyalty programs have set the stage for payment-product development never before possible. This is neither spam nor mass marketing. Instead, it is opt-in, user-defined mass customization where customers define the offers, advertising and loyalty programs that are meaningful to them.

Registered customers who opt in to mobile marketing in this manner command some of the highest advertising rates in the market today. Knowing that the one who enrolls is the one who controls, this is a market that represents a whole new product life cycle for banks and their payment networks, one that eMarketer Inc., Frost & Sullivan and others project will grow fourfold to more than $12 billion in less than three years.  CP

Richard K. Crone is CEO and founder of Crone Consulting LLC, a San Carlos, Calif.-based strategic advisory firm specializing in mobile commerce and electronic payments. He can be reached at rcrone@croneconsulting.com.

 

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