What’s the big deal with mobile?

Banking on your mobile phone. Hasn’t it been interesting to watch the various reports coming from all directions about the pending, almost-there, any-day-now launch of the new Citibank mobile banking service? There have been sneak previews, scoops based on early trials in the Philippines, and analysis of terms and conditions changes coming from the bank.

None of this has come from Citibank itself: it has all been frenzy from journalists and bloggers about the new service.

I think the service has actually launched now. At least it has in the US, according to Finextra.

It all seems rather a lot of coverage for a new channel which, apart from being mobile, is rather less functional than other self service channels available.

Which brings me to the point of this article. I’ve been talking with quite a few mobile banking vendors over the last year. I’ve been asking them to tell me why their offering is different to every other offer I’ve seen.

There is usually not a single point of difference (other than architectural artefacts, which, lets face it, deliver no business advantage whatsoever). Everyone is so focussed on delivering the standard stuff that no-one is dreaming up new and creative ways to deliver services.

Here’s the thing.

If we accept that channel substitution is a myth, or, at least, that customers who have current channel preferences don’t abandon them entirely, you simply can’t argue a business case based on reduced cost to serve. And I think the jury is out on whether you can actually sell new products on a tiny mobile phone screen, given that there are challenges getting them to buy on a big browser screen.

That leaves acquisition and retention. For the latter, having a service that is decent enough is all that is required. But for the former, it has to be a service that is attractive and differentiated enough to cause customers to switch.

Doing the standard stuff isn’t enough. What we need is a trialable, observable innovation on the phone that delivers a substantive new benefit, in addition to having the basic functionality that everyone else has.

In the meantime, I am certainly watching the rollout of mobile banking services with great interest. I’d love one for myself, but then, I am a quick adopter of new innovations.

I’m not certain, however, that everyone else shares my love for banking gadgetry

8 Responses to“What’s the big deal with mobile?”

  1. April 18, 2007 at 3:37 pm #

    Agree on all your points. Too many banks tried replicating web onto mobile and other devices, instead of looking at the device features and matching products/services to them.
    Also in Channel integration there has been a lot of focus on tracking transactions through channels rather than innovations. For example if you look at what could be achieved just by “channel hopping” alone. E.g. Internet “Man in the middle attacks” in internet banking could be overcome if transactions had to be confirmed by mobile text, or I use internet to set up “event triggers” and use mobile to respond e.g. share price drop initiates a prompt to buy on mobile.

  2. Brian Jackson
    April 19, 2007 at 2:54 pm #

    Hi James,
    Interesting post. I think the lack of really compelling innovation that you see in vendors is a natural (almost Darwinian) response to the “cargo cult” nature of many buyers. If a vendor does come up with something truly innovative and compelling, one of the first questions they’ll hear from a bank will be, “Great, but who else is doing this?”
    The response “no one” should be a sign that this technology may be a basis for differentiation (albeit temporary, since these advantages are easily imitable). Instead, the lack of “real world case studies” will be seen as a sign that the technology is too risky or simply unproven.
    BTW, heard you’ve changed positions. Best of luck and keep in touch.

  3. Jesse Haifley
    April 25, 2007 at 3:24 pm #

    I suppose I’m being redundant to some bits of James’ original post, but when I hear discussion of mobile-phone banking I’m never clear on what the existing need is that this technology would be satisfying. In other words: is it a solution in search of a problem?
    The conversations that I’ve heard have tended to be tech-oriented (rather than customer-oriented), and focused on things like the security challenges (or security benefits) relating to mobile banking.
    I wonder if there is marketing research data to support the idea that the availability of mobile banking services would be likely to result in customer attraction and/or retention?
    All the best.
    – Jesse

  4. April 25, 2007 at 11:48 pm #

    I agree to a point Jesse – is simply adding banking to a mobile device a natural evolution that the customer wants, or are we as channel innovators in retail banking simply looking at a new outlet?
    Some markets may have proven to take up mobile banking, but is that at the heart of their use of mobiles, rather than their use of banking products and services? I’d assume Japan is far more successful in this arena than markets like mine here in Oz.
    Some serious customer consultation is needed, and test cases made amongst the early adopter segments. Even then I fear downloading ringtones and videos will be more important than paying a boring bill.
    RF – thebankchannel.blogspot.com

  5. May 14, 2007 at 12:01 pm #

    In New Zealand we’ve almost got universal offering of mobile banking across the major banks (as you know, all owned by Aussies), so I’m thinking instead of it being a case of customers driving the market its a case of each bank offering the service because the others have the service.
    In our market there is very very little that differentiates the banks, and mobile banking is one example of a “me too” offering.

  6. May 15, 2007 at 2:16 am #

    Rob: Even Japan with their reputation as being on the cutting edge of technology is experiencing slow uptake because of a crowded market or “me too” solutions:

  7. May 22, 2007 at 12:36 pm #

    I would like to challenge you to talk to us (Fundamo) on our offering and experience in this space, and then revisit this sentence in your blog: “There is usually not a single point of difference”. If you think it merits a re-write…

  8. May 22, 2007 at 1:56 pm #

    Always willing to hear from anyone with anything interesting! Please do call me and/or email to set up soemthing.

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