For decades now financial institutions have been trying to move their customers from a more traditional and costly, person-to-person type relationship, to a more cost-effective, customer self service model. Starting in 1966 with the introduction of the automated teller machine (ATM) the customer self-service model began. The basic philosophy was, let the customer service themselves and the financial institution won't require as many tellers in the branch.
Considering the times, it was a pretty bold move. Back then person-to-person relationships were considered very important. You would never consider taking a valuable customer and making them talk to a machine. But that's just what financial institutions did. They realized that not all customers were profitable and that the unprofitable customers were taking time away from the customers that were profitable.
I remember there was a time where some of the big banks that provided basic checking accounts would charge the customer if they actually went into the bank and talked to a live teller. I'm not sure to what extent that that policy is in effect today, but it sure does let you know who they value and well, who they don't.
After some time passed, people became accustomed to the ATMs and some even preferred the faster self service they provided. The ATM network grew over the years and ATMs became more prevalent as people became more accepting. Then in 1981, a crazy new banking product was first introduced, although it was more than a decade later when the Internet let it take off.
Online banking brought the banking experience into your home. It also scared the pants off a lot of people. Privacy and security issues instantly became big worries for people who wanted to use this new product, but Internet security was virtually non-existent back then. Online security was a valid concern. But slowly, daring people started using the online banking system and were introduced to an even more efficient means of customer self service.
About two and half years ago, I was part of a roundtable discussion on the future of wireless technology. When we got on the topic of mobile financial applications, I was very skeptical. I looked at my flip phone and said how am I going to read anything on this little screen? And there was no reliable wireless broadband. I just didn't see how something like mobile banking would work. Obviously great strides were made with both the wireless devices and wireless broadband service.
Enter 2008
In today's environment the applications can be written and loaded directly on the array of smart phones out there. Broadband wireless service is prevalent in most markets and mobile banking is taking hold as just another channel that a financial institution must provide service through.
What's Next
Mobile banking is just the beginning for mobile services. I can see my kids in the not-too-distant future using their mobile devices not just as a phone or Web browser, but instead using it as their mobile wallet. This device will house the ability for instantaneous wireless payments for merchants, Internet purchases, bus pass, train pass, movie tickets, etc. With the introduction of the iPad you now have your mobile computer as well and there is no telling what uses will come from that device. Let's face it, "It's a Mobile World After All."
I recently read an article about a NYC hot dog vendor that bought a new iPad. He loves the device but had some very interesting ideas on some apps for it; here are a few of them:
More Buns and Dogs Please: A wireless ability to order replenishment supplies during the day. As a one-person operation, he wants to be able to order more hot dog buns or knishes from his supplier without leaving the stand.
Language Translations: He sells food to people who speak dozens of languages and sometimes have difficulty understanding his Egyptian-accented English. He would love to have a menu, with prices and ingredients in numerous languages. People want to know if the hot dogs have pork (no) and if the chestnuts are ready (yes, in winter). And, some would order more if they could just press a picture.
Schedule Updates: His business is impacted by the start and ending times of Broadway shows and special events in Manhattan. He needs to have kabobs almost cooked by the time "Rock of Ages" and "Jersey Boys" lets out. He would integrate show times into his iPad and keep some historical data on who is hungrier. (Hint - musical shows are best for hot dogs. Dramas buy less but are good for a soda).
To me the only decision we have to make is how do we, as an industry, leverage this new mobile marketplace. There will be more than just mobile banking and payments. Soon you will be tying in social aspects into the mobile ... whatever. The mobile future is only limited to our imaginations and we can't view this future from a Boomer or even Gen-X vantage point. Our industry needs to attract the young to survive, so let's provide them with banking solutions for the future not from the past.
Chris Barber is a veteran of more than 20 years in information technology. He is a former CIO of WesCorp and now a consultant to credit unions.
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