Redefining banking to survive and thrive in a digital world - How mobile is transforming retail banking
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A report from The Economist Intelligence Unit How mobile is transforming retail banking Redefining banking to survive and thrive in a digital world
How mobile is transforming retail banking
Contents
Preface 2
1 Introduction 4
2 Mobile, a big player in an “omnichannel” world 6
3 A new competitive landscape 9
4 Moving beyond transactions 12
Conclusion 14
Appendix: Executive survey results 15
Appendix: Consumer survey results 22
1 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Preface
Redefining banking to survive and thrive in a digital Interviewees
world explores how mobile technologies are
Brad Jones, head of North Asia operations and Asia
transforming retail banking. While the rise of
transformation at National Australia Bank
mobile computing will not eliminate web, physical
and other paths to customers, people around the Ivan Mortimer-Schutts, East Asia-Pacific electronic
world are clearly embracing mobile—and banks and mobile banking specialist at the
need to do so as well. Indeed, if they fail to help International Finance Corporation
shape the change, they risk being swept aside by Joshua Reich, chief executive of Simple
newcomers who enable mobile-empowered
Jose Manuel Villas, head of the digital channel at
consumers to reach their financial goals and
Banco Bilbao Vizcaya Argentaria
dreams.
As the basis for this research, The Economist Andres Wolberg-Stok, global head of emerging
Intelligence Unit conducted two global surveys, platforms and services at Citibank
sponsored by SAP. The first polled 111 retail-
banking executives in June 2014 and the other
polled 1,827 consumers in September 2014. The
findings and views expressed in this report do not
necessarily reflect the views of the sponsor. The
author was Dan Armstrong. Riva Richmond edited
the report and Mike Kenny was responsible for the
layout. We would like to thank all of the executives
who participated, whether on record or
anonymously, for their valuable insights.
2 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
About the surveys
The Economist Intelligence Unit conducted two The consumer survey. Respondents to the
global surveys on mobile banking, sponsored by consumer survey were from five regions and 48
SAP: one of 111 banking executives in June 2014 countries. All currently use mobile devices and
and the other of 1,827 consumers in September have bank accounts. About 13% of respondents
2014. were from the US, with 6% each from Brazil,
Mexico, Canada, China, the UK and France; no
The executive survey. Nearly half (45%) of other country accounted for more than 4%.
respondents served in the C-suite or board of Emerging markets were well-represented, with
directors, while 17% were at vice-president or 19% of respondents hailing from the BRIC
director level or ran business units. Outside countries and another 48% from a more broadly
the “general management” category, the key defined group of emerging economies. About one-
functional areas were strategy and business fifth (19%) came from North America, 19% from
development, finance and marketing and sales. Latin America, 23% from EMEA, 26% from Asia-
The survey attracted executives at banks large and Pacific and 14% from Middle and Eastern Europe.
small. A quarter (24%) hailed from banks with
assets greater than $100bn; two-thirds (66%) The median survey-taker was in the 41-to-50 age
had more than 100,000 retail accounts. Half group; the average age was 45. Men outnumbered
(50%) described their footprint as either global women by a ratio of 57:43. In terms of income,
or multinational, while 18% described themselves respondents exhibited a dumbbell pattern: the
as regional and 31% as national. About one-fifth largest group made more than $125,000 per year
(20%) of respondents came from North America, (14%), while the second largest made less than
23% from Asia and 18% from Latin America. $10,000 (9%) and the third largest between
EMEA accounted for 21% of respondents, with $10,000 and $15,000 (7%). The average annual
most (19%) from Middle and Eastern Europe income of respondents was approximately
(a designation covering the countries from $57,000. Most have smartphones (86%) and
Switzerland and Germany on the west to Russia on almost half have tablets (47%). A significant
the east). portion also uses a feature phone (22%)—a basic
phone for calls and texts, with simple games and
Internet connectivity.
3 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
1 Introduction
Our grandfather’s retail bank was a columned mobile-banking technologies to grow rapidly,
building with tellers and velvet stanchions. Ours is according to companion surveys of 111 bank
fast becoming an icon among many on a tiny executives and 1,827 consumers across five regions
screen. The traditional bank represented solidity and 48 countries conducted by The Economist
and permanence. The new bank is a portal into a Intelligence Unit and sponsored by SAP.
dynamic new digital world. Yet the surveys also show that, even as mobile
As anyone who has witnessed rows of interactions grow, other channels where
mesmerised commuters knows, mobile devices are consumers and banks connect will remain as
becoming central to individuals’ interactions with important as ever. Many consumers still appreciate
each other and with businesses. Banking, like so the feeling of stability that brick-and-mortar
many industries, has been swept up by the wave. branches provide—and they will always need
Both bankers and consumers expect the use of branches or ATMs to deposit and withdraw cash.
Regional breakdowns on mobile channel use
(% of executive respondents)
Branches, ATMs PC Call centre Mobile devices
EMEA North America Middle and Eastern Europe Latin America Asia-Pacific
8 8 9 14
18 8 6
13
40 12
11 18
Now Now Now Now Now
52 24 53
60
27 67
20
32
30 26 26 27
32 31 35
37 38
In five In five In five In five 46 In five
years years years years years
10 6
11 8
9 28 21
28 26 26
Source: Economist Intelligence Unit survey, September 2014.
4 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Many like the larger screens that their home substantial investment in both talent and
computers provide. Still, most also want the technology.”
convenience of paying for items and handling Moreover, mobile services could help make
transactions on their phones. developing countries and the underbanked and
This “omnichannel” world is diverse. Consumers unbanked more accessible and attractive markets
are not uniform in their banking preferences: to banks. In emerging markets, approximately
retirees in Mallorca, millennials in Seattle and 1.2bn mobile users will use mobile money accounts
Will banks help
villagers in Peru will each be inclined to use a by 2015, up from a negligible number in 2010,
shape change or different mix of branches, ATMs and online and according to Ovum, an IT and telecom research
be swept aside by mobile services. firm. A 2014 Federal Reserve study, “Consumers
newcomers with But consumers around the world are clearly and Mobile Financial Services 2014”, found that
mobile products embracing mobile as a vital channel—and banks the unbanked make heavy use of mobile phones
that help need to be there. In the EIU’s executive survey, and smartphones and that almost 40% of the
consumers reach 82% of retail bankers agree or agree strongly that underbanked use mobile transaction services at a
in the next five years mobile will become the relatively high rate.
their financial
number one channel for millennials and younger Bankers must develop their “omnichannel”
goals and dreams? consumers—banks’ future customers. strategies and watch the mobile horizon closely.
“Seventy percent of the Spanish population We do not yet know how profoundly mobile
owns a smartphone. It is clear that customers are commerce will change consumer behaviour—or
increasingly moving to mobile,” says Jose Manuel whether banks will help shape that change or be
Villa, head of digital channels at Banco Bilbao swept aside by newcomers with financial products
Vizcaya Argentaria (BBVA). “We need to enable that help mobile consumers reach their financial
distinctive digital platforms, and that requires a goals and dreams.
5 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
2 Mobile, a big player in an
“omnichannel” world
Bankers and their customers agree on two things: banking,” says Andres Wolberg-Stok, global head
Interaction via mobile devices will continue to of emerging platforms and services at Citibank.
grow quickly and traditional banking channels will This is also true in emerging markets, according
not go away. to Brad Jones, Brad Jones, a specialist in mobile
Tradition, inertia and screen size may largely financial services in Southeast Asia who has worked
explain why. Well over half (56%) of consumers with IFC, Visa and mobile payments provider WING
who dislike mobile say that they simply prefer the Cambodia. “There will always be a need for the
PC and another 35% like ATMs better. About customer to be able to have some connection with
❛❛ one-quarter of bank customers (26%) do not the provider. Maybe it happens at the level of an
Users rightly
expect to visit branches less frequently, even if agent who [visits homes and businesses with a
expect to be able mobile banking improves. For now, almost all mobile device and] is himself supported by a
to do whatever consumers need a branch sometimes—if only to get branch. Maybe it’s the ability to contact a call
they need to do cash—and a few want a branch all the time. centre to address problems. The human channel
on whichever Of course, these attitudes may well change as engenders trust. Maybe your customer transacts
device they consumers gain familiarity with mobile services, through mobile primarily, but having a human to
happen to be electronic payments become more ubiquitous and address issues such as fraud or security is critical.”
apps become more intuitive. New technologies are The multiplicity of channels persists because no
using at that
emerging and digital commerce is growing in a channel is a perfect substitute for another.
particular world that is increasingly mobile. Retail financial Accordingly, banks need to manage all channels to
moment. services may not always live on a spectrum with provide an optimal overall experience for the
❜❜ mobile transactions on one end and traditional consumer. “Increasingly, users rightly expect to be
Andres Wolberg-Stok, banking on the other. In a time of flux, new able to do whatever they need to do on whichever
global head of emerging
platforms and services at business models may emerge, and they may coexist device they happen to be using at that particular
Citibank with traditional models—or upend them. moment,” says Mr Wolberg-Stok.
Today’s bankers, most of whom have spent their Thus banks will have to invest significantly, not
careers in a world of branch banking, believe that only in mobile systems but in integrating all their
branches will continue to be important. Three- channels so customers can move seamlessly
quarters say branches are needed to facilitate between them. Only 15% of respondents say that
conversations, engage customers and explain all channels are integrated now. But by 2019, three
complex products. “There are things that happen in out of four banks expect to have achieved full
branches that are not immediately replaceable by integration.
remote approaches like online and mobile Mobile does offer unique business value for both
6 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
banks and customers, however. By pushing respondents (33%) say attrition will decline and the
low-value transactions to mobile, banks can greatly rest (28%) are not sure.
improve efficiency and service, which can help The first group of executives believes mobile will
them grow their businesses significantly without fray the bonds that bind them to customers. They
higher operating costs, Mr Jones says. think customer churn will rise because mobile will
“Somebody who wants a savings account and increase commoditisation (70%), reduce barriers
needs to withdraw $10 doesn’t need to come to a to entry (63%) and make switching easier (74%).
❛❛ branch. That’s like using a cannon to kill a fly,” says They also worry that a diminished human
If you can explore
Ivan Mortimer-Schutts, an East Asia-Pacific connection will hurt interaction and engagement.
new types of electronic and mobile banking specialist at the The second group believes that if mobile helps
services as well as International Finance Corporation (IFC), part of the them provide an easier, faster banking experience,
providing more World Bank. “It’s out of proportion these days, customers will not want to leave (83%). These
convenience, then because there are other tools at our disposal.” bankers tend to believe many customers prefer
you have a chance Meanwhile, these routine, commodity mobile self-service and that allowing them to serve
to leverage mobile transactions and products like mobile wallets can themselves at the time and place of their choosing
become gateways to deeper relationships and the will encourage them to stay and that mobile will
to really create
sale of higher-value-added services like loans. reduce providers’ costs and, thus, lead to lower
differentiation. Indeed, mobile offers advantages that extend to costs for customers.
❜❜ higher-value transactions as well, including But anytime, anywhere self-service is already
Andres Wolberg-Stok,
global head of emerging
real-time alerts and seven-day-a-week, 24-hour-a- becoming a basic—banks will have to offer more
platforms and services at day customer service. than account balances, transactions and bill
Citibank payment, Mr Wolberg-Stok says. “If you can explore
Loyalty—created or destroyed? new types of services as well as providing more
Banking executives remain divided about whether convenience, then you have a chance to leverage
mobile will affect customer loyalty. A plurality of mobile to really create differentiation.”
39% predicts it will increase attrition, with bankers For instance, Citi’s mobile “Snapshot” feature
in Asia-Pacific and Middle and Eastern Europe enables customers to view deposits, credit-card
registering the most concern. But one-third of total balances and recent transactions without having to
How will the migration of customers to mobile banking affect customer attrition?
(% of executive respondents)
Attrition will decline Not sure Attrition will rise
33 28 39
Why will attrition decline? Why will attrition rise?
(% of respondents) (% of respondents)
Banks will have more ways to Security concerns will rise
36 30
differentiate themselves
Banks will predict the customers likely Human interaction will decrease
47 37
to leave and make offers to keep them
Greater efficiency will allow banks to Barriers to market entry will fall,
53 63
lower costs for customers leading to more new providers
Many customers will prefer self-service Basic banking services will
56 70
over interacting with personnel become even more commoditised
Banks will gain scope for Switching to new providers will
61 74
personalisation become easier
Banks will build loyalty
61
with innovative features
Banking will become easier and faster 83
Source: Economist Intelligence Unit survey, September 2014.
7 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
log into their accounts. The app sends notifications house”—and save for them over time by subtracting
when checks clear, balances fall below a set from their “Safe to Spend” discretionary funds. “We
threshold and payments come due. see what customers are saving for. If they’re saving
Many bankers see personalisation and for a down payment on a house, we’d love to be
innovation as important retention tools (61%). there to underwrite that mortgage at some point in
Simple, a digitally native and millennial-friendly US the future or to offer student loans or do a variety of
bank recently purchased by Spain’s BBVA, is so other things on the credit side of the house,” says
convinced of this it only accepts new account Joshua Reich, Simple’s CEO.
applications from prospective customers with Two different world views, two different results;
smartphones. The bank lets customers customise both are plausible and, in fact, both may come
their accounts with budgeting and goal-setting true. Some banks will use mobile to differentiate
tools, “smart” transaction tagging, and instant and get customers seeking more personal and
account updates to their smartphones. comprehensive services. Others will provide
Simple’s mobile interface lets consumers name generic solutions and retain customers satisfied
their goals—be it a “Paris vacation” or “buy a with a commodity experience.
8 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
3 A new competitive landscape
The mobile invasion is forcing banks to navigate a with discounts, offers and loyalty programmes. Yaap
complicated world of new partnerships and Shopping aims to become Spain’s largest customer-
rivalries. Transactions must be easy, convenient loyalty network. A second service, Yaap Money, is a
and relevant and take place securely on any device peer-to-peer-service that enables anyone to send
in any location. In response to these competitive funds from one mobile device to another.
mandates, an array of alliances is emerging among To better understand the new competitive
payment processors, financial institutions, landscape, the EIU asked bankers to identify rivals
mobile-network operators and retailers. and potential partners. It found that traditional
For example, under the Yaap partnership in rivals remain—large, established banks were
Spain, Santander, Telefónica and LaCaixa have clearly entities to be feared (83%)—while other
collaborated to create virtual showrooms for types of companies occupy less clear ground.
retailers and a payment service. Yaap is an open Exactly half of retail bank executives see virtual
platform where any store, including small retailers banks, or banks that do not have physical
with limited online presences, can reach hundreds of branches, as rivals, while three in 10 view them as
thousands of potential customers via a mobile app potential partners. Bankers are almost evenly
Many potential partners and a few big rivals
(% of executive respondents)
Primarily a potential partner Neither a rival nor partner Primarily a potential rival
Mobile phone providers
71 14 16
Social media firms (eg Facebook)
60 25 15
Big retailers (eg Walmart)
54 20 26
Internet retailers (eg Amazon)
51 24 25
Online payments firms (eg PayPal)
46 12 42
Personal financial management firms
41 24 35
Internet banks
30 19 50
Big retail banks
12 5 83
Source: Economist Intelligence Unit survey, September 2014.
9 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
EMEA banks are most likely to see threats to their franchises
To what extent do you see these entities as potential rivals?
(% of executive respondents)
Internet-only banks 65
Online payments services (eg, PayPal) 61
Large retailers (eg, Walmart, Tesco) 48
Personal financial management companies 39
Mobile phone service providers 22
Source: Economist Intelligence Unit survey, September 2014.
Percentage of bankers who disagree with the statement:
“Our customers trust us with their money more than they would trust an internet company.”
(% of executive respondents)
EMEA 17
Asia 16
MEE 10
Latin America 5
North America 5
Source: Economist Intelligence Unit survey, September 2014.
divided on the threat from digital-payments social-media companies as potential partners.
companies like PayPal and firms that advise on To fully realise the full potential of mobile to
personal financial management; a similar split empower customers, banks will need to ally
exists for personal financial advisers. themselves with other members of the mobile and
An array of
The rest of the world is rich with potential retail ecosystem. These partnerships must be much
alliances is
partners: Mobile-phone companies (71%), more than marketing initiatives; to have real
emerging among social-media firms (60%), large brick-and-mortar business impact, they will have to be ambitious
payment retailers (54%) and Internet retailers (51%) are efforts to create and offer open platforms, as Yaap
processors, viewed primarily as potential partners. is attempting to do, where data are integrated and
financial This view, however, is less accepted in Europe, user experiences are seamless—and customers get
institutions, the Middle East and Africa (EMEA), where 65% view something new that is of real value.
virtual banks as significant rivals, 61% worry about
mobile-network Mobile employees
payments services and 48% see retailers as future
operators and
competitors. Some 17% disagreed with the As mobile capabilities for customers gain currency,
retailers. statement “Our customers trust us with their banks are likely to see the virtues of also providing
money more than they would trust an Internet bank employees with more mobile capabilities—to
company,” more than triple the percentage in the operate smarter, drum up new business and
Americas. However, 68% of EMEA respondents view compete in the marketplace.
As banks become more virtual, mobile and focused on customer experience, how will the roles of employees at your
bank change over the next five years
(% of executive respondents)
Real-time mobile will help them identify
84
opportunities, cut risk and improve services
They will speed up approvals and processing 69
They will go to customers rather than
50
customers coming to the bank
Source: Economist Intelligence Unit survey, September 2014.
10 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Customers come A large majority of bankers believe that mobile So far, however, banks have not focused as
first, executives services can help employees identify opportunities, sharply on mobile capabilities for employees as
reduce risk and improve service. Seven out of 10 they have on capabilities for customers. While half
second, the front
(69%) think mobile for employees will help speed of survey respondents say they are above-average
office third and up approvals and processing. And half see bankers in developing mobile capabilities for customers,
the back office going to customers rather than customers coming only one-third say that about their capabilities for
last. to the bank—a trend that is already in full swing in executives and one-quarter indicate such about
emerging markets, where banks are enlisting local capabilities for employees in the back office.
agents and arming them with tablets to support Customers come first, executives second, the front
rural customers. office third and the back office last.
In your effort to improve online and mobile experiences for customers, how would you rate your organisation
on the quality of these operational elements?
(% of executive respondents)
Well below average Below average Average Above average Well above average
for the industry for the industry
Online capabilities for customers
5 14 32 36 14
Mobile capabilities for customers
6 21 32 32 9
Mobile capabilities for managers and executives to aid service-related decision-making
8 20 38 27 7
Mobile capabilities for customer-facing branch employees
9 21 41 24 5
Mobile capabilities for customer-facing employees who visit customer locations
6 25 39 25 5
Mobile capabilities for back-office employees to aid service performance
12 23 41 21 5
Source: Economist Intelligence Unit survey, September 2014.
11 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
4 Moving beyond transactions
For customers to embrace mobile fully, banks must Banks in the Asia-Pacific region are furthest ahead;
offer a more compelling experience, which means those in Middle and Eastern Europe are furthest
going beyond the basics. behind.
The bar is high. Seven out of 10 (69%) retail But five years from now, the emphasis will shift
bankers say that consumers expect banks to to more advanced features like spending analyses
provide the same quality of experience big Internet and wealth-management capabilities (78%),
companies provide. The nightmare scenario for opening new accounts (76%), personalised offers
banks is the spectre of distintermediation at the (75%) and mobile wallets (74%). Again, Asia-
hands of the “mobile wallet disruptors”—Google, Pacific is in the lead and Middle and Eastern Europe
Facebook, Amazon, Apple and PayPal—whose reach lag.
into the consumer market dwarfs that of even the Latin American banks are most likely to see
largest banks. themselves as becoming a hub for services beyond
Sensing the danger, banks are planning to traditional banking, for example, legal advice and
significantly expand mobile capabilities for insurance. Within the next five years, 85% of Latin
customers over the next five years. American respondents expect to offer
A large majority currently offer the basics: nontraditional services, compared with about 59%
mobile access and management of accounts, for all other regions.
information about products and bank and ATM The strategy looks wise. According to the EIU
locations, and alerts, transfers and payments. survey, large numbers of consumers want help from
In which areas of money management could you most improve, and in which
would you most like help from your bank
(% of consumer respondents) Areas for improvement Areas wanting help from banks
Managing it 72
43
Spending it 64
44
Earning it 58
53
Saving it 55
61
Investing it 50
75
Source: Economist Intelligence Unit survey, September 2014.
12 © The Economist Intelligence Unit Limited 2014 74 44
68 45
59 54How mobile is transforming retail banking
their banks to manage, spend, earn, save and their mobile devices as they spend money out in
invest their money. the world—and popular nonbank financial
In general, however, the more they think they applications, such as Mint and Level Money, focus
need improvement, the less they think their banks on these areas where many consumers see banks
Many consumers can help; the less they think they need falling short.
are open to improvement, the more they think their banks can The good news is that large numbers of
getting help with help. For instance, 72% of consumers rank consumers are open to getting help with their
their personal “managing money” as an area where they could personal finances from their banks. This suggests
finances from most improve, but only 43% think their banks can that a lot of opportunity exists for innovative
help them manage their money better. Likewise, services—mobile and otherwise.
their banks. This
64% cite spending as a key area of improvement, Simple has a feature called “block card” that
suggests that a lot but only 44% say their banks can help. helps its customers enforce personal limits on their
of opportunity Consumers believe that banks can be most spending.
exists for helpful to them in saving and investing: 61% say “Usually you want zero friction; when you’re
innovative banks could help them save better, while three- buying coffee in the morning, want to give your
services—mobile quarters say banks could help them invest more order and spend the money instantly,” says Mr
and otherwise. wisely. But fewer consumers think they need help Reich. “But if you’re trying to control your
in this area. spending, you may want friction. You may want to
Mobile offers a way to change consumer views set limits at certain times of day, with certain
about banks’ inability to help them with spending merchants or for spending over a certain dollar
and budgeting decisions. Consumers are joined to amount.”
13 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Conclusion
Mobile is quickly becoming a vital banking channel, Apple and Android app stores are already packed
but even banks that have developed addictive with mobile apps for record-keeping, budgeting,
mobile experiences cannot afford to neglect other financial education and decision-making. But few
❛❛
Banks and their channels. of these services are offered by financial
A few banks have pursued a model based on institutions.
regulators are
digital and call-centre services and partnered with “Banks and their regulators are going to have to
going to have to ATM networks to provide cash. But that is not an embrace technology-driven innovation. Otherwise
embrace option for most banks—and it is not necessarily it will simply happen by stealth, driven by players
technology-driven good business. The face-to-face conversations with outside the industry,” wrote Peter Sands, chief
innovation. agents, whether in branches or at businesses and executive of Standard Charted, in the Financial
Otherwise it will homes, provide value for customers and more fee Times in 2013. “Too much of the debate about
simply happen by income for banks. banking is about not repeating the mistakes of the
“The idea of ‘omnichannel’ is that you need to past. We risk missing the opportunity to make
stealth, driven by
employ absolutely every available channel in your banks much better in the future.”
players outside package,” says Mr Wolberg-Stok of Citi. “You need If the violent shocks to the retail and publishing
the industry. to make sure that customers can reach you on the industries have anything to teach us, it is that
❜❜ channel of their choice at any given time.” disruption can happen much faster than we
Peter Sands, Mobile may also offer important new business expect—especially when the product can be easily
chief executive of Standard
Charted opportunities. For a large segment of the digitised. Few things are more easily digitised than
population, mobile will become the platform of money. Banking’s mobile revolution may be closer
choice for personal financial management. The than we think.
14 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Appendix:
Executive
survey
results
Percentages may not How do customers primarily conduct transactions at your bank?
Provide percentage estimates so that each column adds up to 100%
add to 100% owing to (% respondents)
rounding or the ability Branches, ATMs PC Call centre Mobile devices
of respondents to
choose multiple
responses. 12
10 30
35
Five years
Now from now
54
24 9
26
Are these four channels managed separately in your organisation—each in its own silo—or are they integrated?
Select one in each column.
(% respondents)
Each of the four channels is Some are integrated, All four channels are
managed separately but not all integrated (ie, we have
“omnichannel” capabilities)
7
15
30 18
Five years
Now from now
75
55
15 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
How does online and mobile banking rank in terms of strategic priorities for your organisation?
(% respondents)
It is the top priority
24
It is one of its major priorities
67
It is not a major priority
8
It is not considered important
1
Why is online and mobile a high priority?
Select the top two.
(% respondents)
Cost-cutting opportunities
38
Competitive differentiation
51
Keeping up with competition
39
Maintaining customer satisfaction
52
Other
2
In your effort to improve online and mobile experiences for customers, how would you rate your
organisation on the quality of these operational elements?
(% respondents)
Well below average Below average Average Above average Well above average
for the industry for the industry
Online capabilities for customers
5 14 32 36 14
Mobile capabilities for customers
6 21 32 32 9
Mobile capabilities for customer-facing branch employees
9 21 41 24 5
Mobile capabilities for customer-facing employees who visit customer locations
6 25 39 25 5
Mobile capabilities for back-office employees to aid service performance
12 23 41 21 5
Mobile capabilities for managers and executives to aid service-related decision-making
8 20 38 27 7
16 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Which mobile features can your customers use now, and which do you expect to support five years from now?
(% respondents)
Now Five years from now
Access and manage accounts 91
(eg, savings, transactional, credit, loans) 52
Find information on products, services 85
and branch and ATM locations 54
Make transfers, payments and deposits 72
61
Receive alerts 83
52
Open new accounts 27
76
Apply for loans or credit 28
75
Access advanced services (eg, financial-management tools, 20
wealth-management services, spending analyses) 77
Make and manage investments 32
70
Access and manage mobile wallets 31
73
Receive personalised products and services 19
(eg, based on profile, history, location, circumstances) 74
Use advanced security features 32
(eg, biometrics, two-factor authentication) 66
Access non-traditional services 13
(eg, legal, insurance) 63
How have the rise of online and mobile services affected your bank’s overall servicing costs in the last five years?
How will they affect them in the next five years?
(% respondents)
Last five years Next five years
Significant increase 17
30
46
Moderate increase
24
15
No change
7
16
Moderate decrease
13
4
Significant decrease
22
1
Don’t know
4
Which of the following customer segments will retail banks become more adept at serving due to declining costs?
Select all that apply.
(% respondents)
Low-income consumers in developed countries
43
Low-income consumers in middle-income countries
57
Low-income consumers in developing countries
51
Young consumers in developed countries
68
Young consumers in middle-income countries
65
Young consumers in developing countries
51
17 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
As banks become increasingly virtual, mobile and focused on customer experience, how will the roles of employees
at your bank change over the next five years?
Select all that apply.
(% respondents)
They will go to customers rather than customers coming to the bank
50
They will speed up approvals and processing
70
They will be supported by real-time mobile information that helps them identify opportunities, reduce risk and improve service
84
Other
6
How do you expect the transition to service delivery through mobile and other digital screens to affect your bank’s
revenue from the following sources over the next five years?
Select one in each row. Revenue will rise Revenue will fall No change/impact
(% respondents)
57
Net interest income 10
57 10 33 33
50
Customer fees and commissions 34
50 34 16 16
54
Third-party fees, commissions and advertising revenue 18
54 18 29 29
24
24 16 60 Dividends on minority interest 16
60
32
32 49 19 Traditional service offerings 49
19
46
46 15 39 service offerings (eg, legal, insurance)
Non-traditional 15
39
Which of the following types of entities do you see as potential rivals and which as potential
partners to your bank’s retail franchise?
Select one in each row. Primarily a potential rival Primarily a potential partner Neither a rival nor partner
(% respondents)
83
Large, established retail banks 12
5
50
Internet-only banks 30
19
16
Mobile phone service providers 71
14
26
Large retailers (eg, Walmart, Tesco) 54
20
15
Social media companies (eg, Facebook) 60
25
25
Internet retailers (eg, Amazon) 51
24
42
Online payments services (eg, PayPal) 46
12
35
Personal financial management companies 41
24
20
Other 20
60
18 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
How do you believe customer attrition will be affected by the migration of customers to mobile banking?
(% respondents)
Attrition will rise
39
Attrition will decline
33
Not sure
28
Why do you believe attrition will rise?
Select all that apply
(% respondents)
Switching to new providers will become easier
74
Basic banking services will become even more commoditised
70
Barriers to market entry will fall, leading to more new providers
63
Human interaction will decrease
37
Security concerns will increase
30
Other
2
Why do you believe attrition will decline?
Select all that apply
(% respondents)
Banking will become easier and faster
83
“Banks will gain scope for personalisation using customer data”
61
Banks will be able to build loyalty by providing innovative features
61
Many customers will prefer self-service over interacting with personnel
56
Greater efficiency will allow banks to lower costs for customers
53
Banks will get better at predicting which customers are likely to leave and making offers to get them to stay
47
Banks will have more ways to differentiate themselves
36
Other
8
19 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
In your effort to improve online and mobile experiences for customers, how would you rate your
organisation on the quality of these operational elements?
(% respondents)
Disagree strongly Disagree Neither agree nor Agree Agree strongly
disagree
The wealthier the customer, the less likely he or she is to be an active user of mobile banking
17 44 17 20 2
The poorer the customer, the more likely he or she is to be an active user of mobile banking
8 39 20 25 7
Mobile will be the number one channel for millennial (and younger) customers
1 7 10 51 31
Branches are necessary to facilitate conversations, personally engage customers and provide the best venue for explaining complex products to customers
5 9 12 53 21
We are very good at using mobile customer transaction data to develop promotions and targeted offerings
5 29 28 32 6
Consumers expect banks to offer the same personalisation and ease of use as large Internet companies
8 22 47 22
The more widely adopted mobile banking becomes, the harder it will be to get earnings from float
3 17 36 33 12
Mobile and online banking capabilities are not the reason why most of our customers choose us
3 17 23 48 9
Our customers trust us with their money more than they would trust an Internet company
2 9 11 42 36
What is the value of your organisation’s total global Which of the following best describes your title?
assets in US dollars? (% respondents)
(% respondents)
Board member
Under $500m 2
14 CEO/President/Managing director
$500m-$1bn 14
7 CFO/Treasurer/Comptroller
$1bn-$5bn 7
10 CIO/Technology director
$5bn-$10bn 5
12 CMO/Marketing director
$10bn-$25bn 5
15 Other C-level executive
$25bn-$50bn 11
5 SVP/VP/Director
$50bn-$100bn 20
13 Head of Business Unit
Over $100bn 7
24 Head of Department
15
Manager
13
20 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
What are your main functional roles? In which country/region are you personally based?
Select no more than three. (% respondents)
(% respondents)
United States
Customer service 16
15 India, Mexico, Singapore
Finance 8
27 Poland, United Kingdom
General management 7
32 Brazil, Italy
Human resources 6
2 Austria, Canada, Germany
Information and research 4
5 China, Spain, Switzerland
IT 3
7 Argentina, Australia, Colombia, France,
Legal Middle East and North Africa, Russia
3 2
Marketing and sales Africa, Indonesia, Japan
24 1
Risk
23
R&D
4 Approximately how many retail accounts does your bank have?
Strategy and business development (% respondents)
40
Under 5,000
Other
7
7
5,000 to 10,000
4
10,000 to 20,000
7
In which region are you based?
20,000 to 40,000
(% respondents)
5
Asia 40,000 to 70,000
23 6
EMEA 70,000 to 100,000
21 5
North America Over 100,000
20 66
MEE
19
Latin America
18 Which of the following best describes the geographic
scope of your bank?
(% respondents)
What is your primary industry? Global
18
(% respondents)
Multinational
Retail banking 32
100 National
31
Regional
18
Are you familiar with mobile technology trends in Other
retail banking? 2
(% respondents)
Yes
100
21 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Appendix:
Consumer
survey
results
Percentages may not How old are you?
(% respondents)
add to 100% owing to
Under 21
rounding or the ability 0
of respondents to 21 to 25
5
choose multiple 26 to 30
responses. 10
31 to 35
13
36 to 40
13
41 to 50
24
51 to 60
18
61 to 70
14
Over 70
2
Are you male or female?
(% respondents)
Male
57
Female
43
22 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
What is your annual income in US dollars?
(% respondents)
Under $10,000 9
$10,000 to $15,000 7
$15,001 to $20,000 6
$20,001 to $25,000 5
$25,001 to $30,000 6
$30,001 to $35,000 5
$35,001 to $40,000 5
$40,001 to $45,000 5
$45,001 to $50,000 4
$50,001 to $60,000 6
$60,001 to $65,000 4
$65,001 to $70,000 3
$70,001 to $80,000 4
$80,001 to $90,000 3
$90,001 to $100,000 4
$100,001 to $125,000 7
Over $125,000 14
If you use a bank, how do you primarily conduct transactions currently? How do you expect toconduct transactions in the future?
Provide percentage estimates so that each column adds up to 100%.
(% respondents) Branches, ATMs PC (eg, website) Call centre Mobile device(s)
36
The percentage of transactions 46
I conduct now 4
15
28
The percentage of transactions 44
I expect to conduct five years from now 3
25
What are your primary reasons for using mobile banking?
Please select the top three.
(% respondents)
I can bank any time I want
77
I can bank any place I want
54
I do not have to wait for service (eg, on a line or on hold)
36
Mobile banking provides easy access to my account records
36
I do not want to travel to a branch
33
I prefer self-service to interacting with bank employees
19
My bank does not have a nearby or convenient branch
12
Digital is the only way my bank does business
3
Mobile banking is more secure
3
Other
2
23 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Why don’t you use mobile banking?
Please select the top three.
(% respondents)
I prefer to use my PC
57
I do not trust the security of mobile banking
43
I prefer to use the ATM
35
I do not like to use my phone in public (eg, for security reasons)
27
I prefer to use a bank branch
24
My mobile phone is not capable
10
I prefer interacting with bank employees
8
My phone is too hard to use
6
My bank does not offer mobile banking
3
Other
4
If you could bank using your mobile device easily and safely, would you visit a branch less often?
(% respondents)
Yes
74
No
26
Which mobile banking features have you used? Which would you use if they were available?
(% respondents)
Mobile feature
I have used my mobile I have not used my mobile I have not used my mobile Don’t know
device to do this device to do this but would device to do this and would
be willing to not be willing to
Access and manage accounts (eg, savings, transactional, credit, loans)
54 21 21 4
Find information on products, services and branch and ATM locations
50 28 17 5
Make transfers, payments and deposits
48 25 23 4
Receive alerts
52 27 15 5
Open new accounts
11 38 42 8
Apply for loans or credit
11 38 44 8
Access advanced services (eg, financial-management tools, wealth-management services, spending analyses)
16 40 34 10
Make and manage investments
19 37 35 9
Access and manage “mobile wallets” (ie, digital versions of wallets containing items like credit cards, coupons, tickets,
membership cards that are accessed via smartphones)
20 42 28 9
Receive personalised products and services (eg, based on profile, history, location, circumstances)
16 41 33 10
Use advanced security features (eg, biometrics, two-factor authentication)
16 46 26 12
Access non-traditional services (eg, legal, insurance)
12 42 33 13
24 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
How would you rate your level of trust in your primary bank to provide online and mobile services?
Please select a response on a scale from “Strongly agree” to “strongly disagree” in each row.
(% respondents)
Strongly agree Somewhat agree Neither agree Somewhat disagree Strongly disagree
nor disagree
I trust my bank to keep my accounts secure
41 43 12 3 2
I trust my bank to keep my personal data secure
36 43 13 5 2
I trust my bank and would be reluctant to switch to another bank
27 36 29 6 3
Which of the following online and/or mobile banking features do you use?
Please select all that apply.
(% respondents)
Tracking, alerts and analysis about where and how I spend money
57
Personalised information to provide me with more valuable banking services
49
Advice related to financial products (eg, mortgages, credit cards, insurance, investments, credit scores, legal services and real estate)
31
A “mobile wallet” that lets me easily manage bank and loyalty accounts (ie, digital versions of wallets containing items like credit cards,
coupons, tickets, membership cards that are accessed via smartphones)
30
Travel services, including currency conversion
29
Personalised suggestions on how to get more value from my spending
19
Personalised suggestions on how I can better manage my money
19
Customer service via Facebook or other social media
11
Access to legal, tax or other professional non-banking services
11
How valuable are these features to you?
Please select one in each row.
(% respondents)
Highly valuable Somewhat valuable Minimally valuable Not valuable at all I have not used
this feature
Personalised information to provide me with more valuable banking services
45 41 9 2 2
Tracking, alerts and analysis about where and how I spend money
53 38 8 11
Personalised suggestions on how to get more value from my spending
48 34 15 2 2
Personalised suggestions on how I can better manage my money
43 42 11 31
Advice related to financial products (eg, mortgages, credit cards, insurance, investments, credit scores, legal services and real estate)
34 49 11 3 2
Customer service via Facebook or other social media
36 36 18 8 2
A “mobile wallet” that lets me easily manage bank and loyalty accounts (ie, digital versions of wallets containing items like
credit cards, coupons, tickets, membership cards that are accessed via smartphones)
55 34 8 21
Access to legal, tax or other professional non-banking services
41 42 10 4 4
Travel services, including currency conversion
39 41 15 2 3
25 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
How does your bank protect your account from unauthorised access through your mobile device?
What authorisation features would you like to have that you do not have currently?
Please select all that apply in each column.
(% respondents) Security features I have now Security features I would like to have
Username and password 94
6
Questions that only I can answer 78
22
Voice authentication 11
89
Fingerprint scan 9
91
One-time code sent via text message 63
37
Encryption 49
51
Other 45
55
In which areas of money management could you most improve, and in which would you most
like help from your bank?
Please select the top two in each column.
(% respondents)
Areas in which I could most improve Areas in which I would most like help from my bank
Managing it (eg, budgeting, 72
planning, paying bills) 43
Spending it 64
(eg, making wise purchases) 44
Earning it 58
53
Saving it 55
61
Investing it (eg, making 50
money with money) 75
26 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
In what country do you live? Embedded Data Field: Region
(% respondents) (% respondents)
US Asia-Pacific
13 26
Brazil, Canada, China, France, Japan, Mexico, UK EMEA
6 23
Australia, Germany, India Latin America
4 19
Africa, Argentina, Colombia, Indonesia, Middle East/North Africa, North America
Russia, Singapore, Switzerland 19
3 MEE
Austria, Czech Republic, Poland, Spain 14
2
Italy
1
What kind of mobile device do you use?
Please select all that apply.
(% respondents)
Feature phone (ie, a basic phone for calls and texts, sometimes
with simple games and Internet capabilities)
22
Smartphone (eg, iPhone, Android, Windows Phone, BlackBerry)
86
Tablet
47
I do not use a mobile device
0
Do you use a bank to handle personal financial matters?
(Note: A bank would provide you with a savings and/or
checking account.)
(% respondents)
Yes
100
No
0
Do you have one or more insurance policies (eg, health, life,
disability, auto, renters, homeowners)?
(% respondents)
Yes
100
No
0
27 © The Economist Intelligence Unit Limited 2014How mobile is transforming retail banking
Whilst every effort has been taken to verify the accuracy of this
information, neither The Economist Intelligence Unit Ltd. nor the
sponsor of this report can accept any responsibility or liability
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information, opinions or conclusions set out in the white paper.
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