Emerging Technologies: Mobile Banking, Remote Capture Are Key to Attracting Gen Y

Today's Hottest Solutions Are All About Securing Tomorrow's Customers Linda McGlasson • June 30, 2008 Mobile banking, Web 2.0, remote check capture - they're among the emerging technologies that appeal most to banking institutions. The key driver: the chance to offer more services to customers, and also cut costs through the further automation of banking transactions.

We recently spoke with leaders of the top banking solutions vendors to get their perspectives on the emerging technologies with the greatest buzz in the marketplace. Their responses range from the obvious -- mobile banking and bill pay - to more global concerns such as international payment systems and multi-language services.

The Year of Mobile Banking?
The internet sparked this industry-transforming change from physical to electronic banking. Now the march continues with mobile banking via smart phones and other devices aimed to reach the 200 million cell phones in the United States.

Tom Wachtl, Corporate Senior Vice President and Chief Technology Officer for FISERV's Online Banking Group, says there has been a "huge buzz in the industry about mobile banking, from trade magazines and vendors saying its finally here -- the three moons have aligned."

Institutions are asking for mobile banking solutions, agrees Dottie Yates, Vice President of Product Management ePayments/eBanking at Fidelity Information Services (FIS). "The biggest area of interest this year seems to be mobile banking and mobile bill pay," she notes.

Dave Fortney, Chief Technical Officer at Metavante says his company has several strategic initiatives for its clients that want to offer mobile banking. Metavante recently bought half-interest in a company, Monetise Americas, which is co-owned by a British firm, Monetise UK. Monetise Americas offers mobile banking and payment services to 30 institutions in the US since it was formed in Fall 2007.

Fortney notes the decision to partner with a British firm was because the UK, along with the rest of Europe, is ahead of the U.S. in offering mobile banking transactions. The technology Monetise UK developed is now running at Metavante. "We're offering as a first phase, banking transactions including balances, mini statements and transfers -- all are similar to our online banking solution," Fortney says.

Every one of Metavante's product lines has some plan to utilize mobile banking. "That is why we partnered with Monetise UK and invested in a company that is pushing the envelope," he says.

The success model for mobile banking is already seen in the use of services such as text messaging by the Gen X and Gen Yers, says Wachtl. He sees an interesting spin on the evolution of mobile banking. "I expect that mobile banking will look a lot like online banking did in the late 1990s, as far as adoption rates go." But as institutions ramp up in the next five-to-seven years Wachtl imagines "Anywhere from 20 to 30 percent of the population will use mobile banking."

The evolution of mobile banking technology will mimic the early days of ATMs, where all banks had their proprietary bank networks that would only accept that bank's ATM cards. "Eventually all of that got worked out, and based on adoption or market demands, mobile banking will become a ubiquitous service and there will be some standards, phones will have a chip in them that can work in anyone's point of sale system," notes Wachtl.

Coming Soon ...
Banking institutions are also clamoring for other new technologies, says FIS' Yates. On the online banking side, "Clients are constantly asking FIS to launch new technologies that offer more self-service capabilities to our eBanking and ePayment suites of products," Yates notes.

Here are some examples of the new technologies bank clients are requesting:

Commercial Banking Services - Financial institutions are looking for technologies that drive revenue within the banks, especially those services that they can resell to their commercial clients such as Internet commercial cash management, and business bill pay.

Internet Account Opening - Banks are only beginning to want to launch Internet account opening services, and there is a great deal of interest in this area now, says Yates.

Mobile Banking and Bill Pay - Institutions are interested in providing multiple modes across their own market segments, targeting the appropriate mode to the appropriate segment of their clients, such as SMS to student accounts. Institutions that offer online bill pay have also shown a great deal of interest in mobile bill pay.

Mobile Payments - Institutions are just beginning to look at competing in the mobile person-to-person payment market. Yates says FIS' mobile offering will soon include mobile P2P payments. "It will also offer the ability to conduct and approve commercial cash management transactions such as ACH batches, Positive Pay, transfers and wires," she explains. FIS' initial mobile offering will build the infrastructure needed to offer the payment wallet of the future, where users will store their bank debit and/or credit cards for use in contactless payments. "FIS clients are also asking for mobile integration to our other financial services offerings including pre-paid and credit card in order to target the unbanked or underbanked."

Two-way SMS Messaging/Alerts - Banking clients are interested in not only providing account alerts, but providing "actionable" alerts that allow customers to respond. SMS two-way alerts allow users to take appropriate action. In this area, Metavante partnered with H & R Block and offers alerts on H&R Block's Emerald card. The Emerald card is a debit card for H & R Block customers' tax refunds. It can also serve as a payroll debit card, or it can be reloaded by other ways. Metavante plans to add prepaid cards or reloadable prepaid cards as part of its regular offerings to institutions, along with the mobile alert capability, Fortney says.

Remote Deposit Capture - With the growth in demand for virtual banking services comes the need to make deposits remotely. Remote deposit capture for commercial accounts has been successful for some time; now institutions' focus is on the consumer accounts. Deposits are still the one thing most customers have to drive to do, resulting in high transportation costs, impact on the environment and loss of productive time, explains Yates. Wachtl observes, "Even people at home can use this, to avoid having to drive to make a deposit. I don't know what the impact on the acceptance rate will be with the rising price of gas." He adds people will use anything that will automate something they find distasteful or a waste of their time, like driving to the bank to make a deposit.

Expedited Payment Services - As banks look to grow fee income and to continue to offer more "green" services, they are increasingly more interested in technologies they can offer to their commercial clients.

Fraud mitigation/Early Risk Detection - With the constant drum beat of criminal activity and fraud impacting the entire financial services industry, Wachtl sees anything that reduces or offers early detection will hold the interest of financial institutions. "No one will ever tell you how much they've lost, but industry estimates run well into the upper 10 billions, and someone is paying for those fraud losses," says Wachtl.

Electronic Billing Information Delivery Service - As online commerce continues to grow, banks are increasingly separated from their clients by services such as PayPal, explains Yates. FIS is working with NACHA to implement the EBIDs network for expanded bill presentment and payment options in its ePayments solution.

International payment systems/Multi-language services - Conducting banking transactions across borders in multiple currencies and multiple languages will continue to gain ground at US institutions, says Wachtl. "It's not a U.S. arena banks are doing business in; it's now a global marketplace. Institutions are extending multi-language services within the US, especially in the Hispanic market," he says. In border areas and major metropolitan zones, English may be the second language most customers use.

The Future
FIS' Yates sees the industry moving toward increasingly self-service banking technologies that have a lower impact on the environment. "The industry will also move toward revenue generation through electronic payments options and from offering additional electronic services that help commercial banking clients grow their own revenues," she observes.

The future, she sees, is in providing banking technologies that attract Gen Y customers, who will be critical to bank success. "Gen Y customers are technology savvy and expect access to their banking services and information anywhere, anytime and via any device. This segment will have the largest revenue potential of any prior generation," she notes. It will behoove banks to attract those clients now in order to profit from that unprecedented revenue stream in the next 10 years.

FISERV's Wachtl agrees. "The belief is the Gen Y crowd is the future bank customer. If banks offer them the innovative technologies, they'll keep them through their life cycle," he predicts.