TBT: Looking back on some predictions

Nine years ago to the day, I wrote the post below, in which I offered some predictions about the future of mobile banking. I’d say the predictions held up pretty well.


The Future of Mobile Banking (2010) 

With every technological advance, there’s never a shortage of cheerleaders predicting around-the-corner marvels. Their timeframe of choice is often a decade: “Once we sequence the shitake mushroom genome, we will eradicate cancer, domesticate the cockroach, eliminate halitosis — not to mention make better filet mignon toppings — within the decade.

Still, with the seeming mobile banking explosion upon us, I can’t resist a prediction or two of my own.

Of course, because time can prove you wrong, predictions are risky. If you ever chuckled at the once futuristic but, by today’s standards, clunky-looking instrumentation on Captain Kirk’s supposed 23rd-century starship, or found Tomorrowland in a Disney theme park laughably quaint, you know what I mean.

But then, predicting can also be safe, since in due time most people won’t remember that you predicted anything at all, much less what it was. (Unless you’re a politician, in which case your opponents will trot out your every failed utterance: “You said you’d vote against any bill legalizing vandalism, yet no such bill was ever introduced, which means you, in fact, never voted against one, thereby breaking your promise. What do you say to that?”)

With due respect to those caveats, here are my two cents on the future of mobile banking, along with some problems the industry will face. I shall ground these predictions only on technology that exists, and leave the blue-sky stuff to the cheerleaders.

Mobile banking will supplant online banking. Right now in the U.S., about 60 percent of banking clients avail themselves of online banking. But mobile banking, with 20 percent, is catching up fast. There is less overlap than you might think. Most people who use mobile banking do not use online banking.

There are reasons for that. Convenience is one. Unlike online banking, mobile banking is truly portable. Technology is another. Just as today’s PCs do what once required a room-sized computer, smartphones now do what once required an under-the-desk CPU. Another is that phones have become both a utility and a fashion item, such that brandishing a smartphone that is “so last year” can embarrass an executive as readily as an adolescent. As the fashion-conscious keep up with style, they also keep up with advancing technology. Affordability is yet another reason. People — in fact, entire cultures — who cannot afford PCs can afford basic smartphones. In fact, much of the mobile banking technology we enjoy in the U.S. was first created and perfected to meet demand in other nations. So mobile banking will continue to spread, and not just in the U.S.

So it’s not unreasonable to speculate that mobile banking will outstrip other forms of remote access. If that happens, bankers who treat mobile banking as an adjunct to online banking will miss the boat with clients who want their branch location to be a smartphone or similar device like the iPad.

Mobile banking will become more interactive. You know those trigger-based programs some of you put in place and the rest of you keep saying you’ll put in place as soon as “someday” arrives? The mobile realm allows for trigger programs on steroids. For instance, triangulation and GPS systems let you detect a client’s location so you can provide directions to the nearest branch or ATM. You can offer enhanced security, such as asking clients to verify their identity should they attempt a transaction away from their usual stomping grounds.

Since mobile technology travels with the user, your communications needn’t wait till the client returns home and fires up the PC. Most people open and read SMS text messages, and emails delivered to their phones, within minutes of receiving them. That’s far more instant than so-called “instant messaging” on a PC. And, it’s far more personal. The opportunity that mobile banking provides for that enhanced, instant personal touch shouldn’t be overlooked.

Smartphones will become a preferred payment mechanism. I won’t harbinger the demise of the plastic card just yet, but I won’t rule it out, either. Mobile couponing is already here, and consumer demand is mounting for merchant terminals that read bar codes from tiny screens. It’s only a question of time before people prefer — demand — the ability to use a smartphone in place of a credit or debit card.

Mobile banking won’t be as cheap as we’d hoped. Sure, mobile banking can reduce what we spend on building and staffing branches. But with no one-size-fits-all smartphone model or platform, bankers have no choice but to develop and maintain technologies that work on all of them. Keeping up on and supporting the likes of iPhone, Android, Windows Phone 7, Blackberry and others gets costly. If smartphone marketers converged on a common platform, that expense would go down, but the industry doesn’t appear headed that way.

Banks need to keep things simple even as they ramp up technology. Increasing demand and popularity aside, not everyone, not even in the rising generation, wants mobile banking. There will always be transactions requiring a visit to a bank office, clients who prefer live transactions and, unimaginable as it may seem, people who use their phones only for talking.

And, I predict that Boomers will soon pose a new challenge. As banks cater to rising generations, we must remember that Boomers still make up a large chunk of the market, and will for a few decades more. But beginning at about age 50, people’s facility with new technology and their patience trying to master it tend to diminish. There is no reason to think that Boomers will be an exception. Increasingly, Boomers will want technology that works, but that they can instantly comprehend without having to ask a teenager for help. So banks will need to offer a full complement of mobile banking options that are as easy to use as they are sophisticated. No small challenge.

Challenges and all, I welcome the age of mobile banking. I love the opportunity to deliver relevant financial services fast, with greater accuracy, and with a higher level of interaction. It’s an exciting time to work in banking.

My final prediction: Mobile banking will continue flourishing in ways none of us have yet imagined.

Meanwhile, as mobile banking technology advances, don’t be surprised if you come to work someday to find your smartphone wearing a green visor and arm garters.

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