Jun 10, 2013 Sean Albert
With the advent of a host of new technologies, the days of needing to go into a bank to conduct many everyday financial transactions have disappeared. ATMs and online banking have already been established as easy ways to take care of monetary responsibilities, but as smartphones and tablets are becoming a more integral part of everyday life, so are mobile banking methods. These techniques not only allow many consumers to enjoy a more convenient experience depositing their checks, verifying their balances and more, but they can also be an excellent tool for providing a gateway to the world of alternative financial services to those who are in the greatest need.
Mobile banking catching on
According to Mobile Commerce Daily, one recent sign that mobile banking is truly catching on with the American populace is its high level of use at American Savings Bank. The organization revealed that in March, 40 percent of its customers made deposits from their smartphones or tablets. The source noted that since the bank launched its mobile banking services in November, it has already exceeded its two-year adoption goals.
"American Savings Bank customers took to mobile deposits because it makes banking more convenient, eliminating the need to visit a bank branch or ATM to make a deposit, without sacrificing the safety and security customers associate with banking institutions," said Carl Tsukahara, chief marketing officer at Monitise. "It brings the branch and ATM functions right into the home."
Tsukahara added that nowadays, having mobile banking options may mean the difference between running a thriving financial institution or finding yourself at the helm of a sinking ship. Because today's consumers want to reap the benefits of emerging technologies, it is likely that they will opt out of interactions with businesses that lag behind. Developing a smartphone- and tablet-optimized plan should be part of any comprehensive business strategy.
Unbanked need options
While mobile banking certainly appeals to a broad demographic, there is one particular group that may reap a great deal of benefits from this new kind of financial management: the unbanked. In a 2012 report, the Federal Deposit Insurance Corporation (FDIC) noted that one in every 12 American households is unbanked, in which traditional financial institutions are not being used either due to financial hardship or the choice to opt out of the system. Another 20.1 percent of Americans are underbanked, meaning they may have some access to banking resources, but not enough.
In order to cope with lack of access to the same resources other consumers rely on to manage their money, the unbanked and underbanked often use alternative financial services. Among the unbanked, 64.9 percent have used these options - including tools like ACH cards and alternative credit products - while about 25 percent of the underbanked have done the same. Additionally, the organization noted that mobile technology may be key in gaining the business of these demographics, as lack of convenience can be a major motivator for opting out of financial systems.
If the alternative financial services industry wants to remain highly competitive with more traditional options when it comes to winning over unbanked and underbanked consumers, developing mobile solutions may be critical. If the typical bank is offering the same options or better, it's possible customers will go back to standard banks for their needs. But alternative providers can continue to show their worth through innovation. For instance, making it simpler to link up a prepaid card and track transactions can help users ensure they're managing their money as effectively as possible, while those that offer alternative credit services may want to develop their own tools that can be integrated with mobile apps. The clearer the benefits to banking off the beaten path are, the more likely consumers will be to stick with these methods.