With mobile application development a persistent priority within the enterprise, most IT organizations find several common challenges among their efforts:
- The creation of an effective, consumer-level, customer experience is not easy for many traditional developers.
- Existing enterprise IT infrastructure does not lend itself to mobile applications support.
- Mobile application development is not a one-time event, but rather a continuing process of ongoing innovation.
Customer experience presents one of the primary opportunities for a business to differentiate itself, and increasingly customers are interacting with companies via a mobile device. In many ways, the challenge is organizational, as IT departments struggle to gather the resources and create the environment required for successful mobile innovation.
Banks grapple with developing the mobile channel
Retail banking is one vertical where the greatest demands on mobile have converged: banks serve consumer and small business markets with complex, highly-regulated products that have the highest of security requirements. Though mobile phones are consumer-oriented devices, banks in general have struggled to bring a consumer-level customer experience to their complicated mobile apps. But banks are investing heavily in the channel, and they are learning how to create an environment for successful app development and delivery.
Several recent developments in the financial sector provide indicators of how mobile application development can be both innovative and institutionalized:
- NASDAQ has recognized the importance of the customer experience in using mobile applications, and as Wall Street Technology reports, has purposely brought in a cadre of designers far afield from banking technology to create their investor relations customer experience. The company decided it is better to bring in top-level designers and introduce them to financial services, than to take experienced financial services developers and introduce them to top-level design. Thus the firm formed a design team with experiences as diverse as online retail, Disney, Broadway theater, design agencies, and nonprofits. The team spent six months learning the NASDAQ business environment before creating its new app for investor relations professionals. As Michael Cotter, the SVP of corporate solutions at NASDAQ OMX put it, “I think user experience is a strategic differentiator. I fully believe that the end user experience is what drives value.”
- Similarly, the consumer driver app Uber has become something of a model for bank technologists. Uber was both the highest-rated non-financial mobile app among a panel of bankers and among the inspirations for JPMorgan Chase’s new mobile banking app.
- From the other direction, banks are finding that aspects of their commercial-level applications can scale down for the consumer mobile banking market. Banks have already built applications that enable their commercial customers to see multiple accounts, keep running balances, make various types of transfers, and the like. Many of these same capabilities can be translated to consumer and small business products, and if they have been developed on a common mobile application platform, that translation is all the easier.
- Even mid-sized banks are finding value in mobile application platforms. The MA-based Eastern Bank, with $8.7 billion in assets, opted for a mobile development platform to enable the firm to keep innovating with its mobile products. Development platforms will become viable for more SMEs as the tech market packages such innovation engines for smaller and smaller enterprises. This approach can be seen as part of a broader need to update financial services technology infrastructure.
- A recent report on mobile banking highlights the receptivity found in the small office/home office (SOHO) market. Just over a quarter of those surveyed were interested in a checking account package that included mobile banking and 62% of those were willing to pay a fee. Although the report apparently concludes that there is a great willingness to pay for mobile services, I expect that once the market (likely quickly) moves to mobile banking as a required, “check off” item, additional fees will not be welcome. A similar report shows that coming into the new year, the mobile channel represented 20% of merchants’ payments. That may not seem like great penetration, but it represents a doubling of volume over a 12-month period, and in that time the share of merchants accepting mobile payments more than doubled from 30% to 66%. Mobile banking as a share of online banking can probably be expected to increase at least as rapidly. And, there is of course a poll showing the importance of mobile to Gen Y’ers when selecting a bank: fully 78% say it is at least somewhat important.
- Indeed, Bank of the West’s Quick Balance mobile app, which recently won the Monarch Innovation Award for most innovative financial service product/feature, targets the small business market. The app enables a customer to view five accounts simultaneously or, on an iPad, view up to 30 days of pending payments and eBills—capabilities traditionally provided only to commercial customers—as well as customized messages or promotional links. These commercial-level capabilities are combined with a consumer level of simplicity: no traditional login is required to access the multiple account view.
In sum, although banks have some scars for their early efforts and misses in designing customer-friendly mobile apps, their experience shows the following:
- The mobile channel is inevitable for both consumer and business customers. A rapid adoption curve and changing demographics are transforming markets.
- Simply assigning traditional engineers to design consumer-level apps is probably not a good solution, with nontraditional design engineers likely needed to provide the level of customer experience required: Consumerization is a trend to which IT departments must proactively adapt.
- Infrastructure must be updated, and a modern development platform is critical not only for agile, continuing innovation, but also for the efficient leverage and integration of development components across applications and departments.
- Although these requirements are first realized within large enterprises, vendors are increasingly packaging products to enable development and innovation for lower levels of the SME market as well.
- Applications and IT departments that can combine sleek consumer design with institutional-level platforms and practices can effectively bring higher levels of products to lower levels of the market more effectively and efficiently.