Part 1: Mobile account acquisition—the future is here.
In this candid, engaging two-part series, we talk with Eric Lindeen, marketing director for the credit decisioning and loan origination solution provider Zoot Enterprises, Inc., on the next big thing in banking—mobile account acquisition. Here, in the first installment, he speaks in detail about the opportunities and benefits of expanding into this largely untapped space.
Is mobile account acquisition a top initiative for big banks?
Yes. We’ve seen virtually all of the top 100 banks investing in how to figure out what their mobile position should be, and in many cases, actually moving forward with mobile account opening. When you look at the progression of mobile capabilities, it started with text messaging, and now it’s moved toward full banking. Account opening is next in that continuum of consumer expectations in terms of the capabilities they would like to see on their mobile devices. Having said that, there are very high expectations on the part of consumers regarding what they think that process should be like. Most of their experience is geared towards opening an account with a payment provider like Amazon® or PayPal®; however, paying for a purchase is a much simpler transaction than opening a new bank account. Yet, in the consumer’s mind they are very similar transactions. So it can be challenging to open accounts in a way that is secure for the bank, but that also meets consumer expectations. That’s why it’s not only a high priority, but it’s also not as trivial a task as we all wish it might be.
What are the biggest benefits of transitioning to a mobile acquisition strategy?
There are two strategic reasons why institutions are going this way. First of all, the market is going there. You can be first, or a fast follower or you can be last, but it’s where consumers are going. Among younger consumers, we see a very high percentage that are very focused on mobile, and we’re increasingly seeing older consumers placing more value in the convenience they get from a better mobile experience. Your ability to open accounts and maintain relationships with your consumers is going to be significantly driven by how early you adopt mobile, and how well you adopt mobile.
Second, mobile still represents a minority of a bank’s transactions, it can be a safer place to do experimentation. Its digital nature allows you to implement a policy, concept or interface for a very small segment of the population, providing more of a test-and-learn approach, rather than a traditional large scale pilot and rollout. This is a huge advantage for institutions. For example, when thinking about opening a checking account, there are processes in most bank branches and back offices that could be automated to provide more reliable, and better results. But it’s hard to develop and implement them in a live environment. With the test-and-learn capability of mobile, banks can develop new processes and procedures, test out new data sources and measure the Return on Investment (ROI) impact of all of those things. Once they’ve proven that it’s a desirable path that produces a good ROI, then they’re rolling it out through their other channels. So, a big advantage of mobile account opening is you can develop your new best practices in an efficient and manageable way and then roll out those best practices across the entire enterprise. You gain the efficiency and ROI advantage through your entire institution, while doing it in a way that’s relatively safe and proven.
In short, mobile account acquisition is on everyone’s radar, both banks and consumers. However, the top financial firms are investing in it now, seeing the fresh opportunity it offers to reach a wider audience of customers and the safe, more flexible environment it provides for operational testing, pilot programs and product launches. Next up, in the second installment of “Mobile account acquisition—the future is here now,” Eric speaks frankly about the challenges associated with mobile account acquisition and offers fresh insight and guidance for banks considering a mobile acquisition strategy.
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