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 Introduction Mobile, a big player in an “omnichannel” world A new competitive landscape Moving beyond transactions 12 Conclusion 14 Appendix: Executive survey results 15 Appendix: Consumer survey results 22 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking Preface Redefining banking to survive and thrive in a digital world explores how mobile technologies are transforming retail banking While the rise of mobile computing will not eliminate web, physical and other paths to customers, people around the world are clearly embracing mobile—and banks need to so as well Indeed, if they fail to help shape the change, they risk being swept aside by newcomers who enable mobile-empowered consumers to reach their financial goals and dreams As the basis for this research, The Economist Intelligence Unit conducted two global surveys, sponsored by SAP The first polled 111 retailbanking executives in June 2014 and the other polled 1,827 consumers in September 2014 The findings and views expressed in this report 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 © The Economist Intelligence Unit Limited 2014 Interviewees Brad Jones, head of North Asia operations and Asia transformation at National Australia Bank Ivan Mortimer-Schutts, East Asia-Pacific electronic and mobile banking specialist at the International Finance Corporation Joshua Reich, chief executive of Simple Jose Manuel Villas, head of the digital channel at Banco Bilbao Vizcaya Argentaria Andres Wolberg-Stok, global head of emerging platforms and services at Citibank How mobile is transforming retail banking About the surveys The Economist Intelligence Unit conducted two global surveys on mobile banking, sponsored by SAP: one of 111 banking executives in June 2014 and the other of 1,827 consumers in September 2014 The executive survey Nearly half (45%) of respondents served in the C-suite or board of directors, while 17% were at vice-president or director level or ran business units Outside the “general management” category, the key functional areas were strategy and business development, finance and marketing and sales The survey attracted executives at banks large and small A quarter (24%) hailed from banks with assets greater than $100bn; two-thirds (66%) had more than 100,000 retail accounts Half (50%) described their footprint as either global or multinational, while 18% described themselves as regional and 31% as national About one-fifth (20%) of respondents came from North America, 23% from Asia and 18% from Latin America EMEA accounted for 21% of respondents, with most (19%) from Middle and Eastern Europe (a designation covering the countries from Switzerland and Germany on the west to Russia on the east) © The Economist Intelligence Unit Limited 2014 The consumer survey Respondents to the consumer survey were from five regions and 48 countries All currently use mobile devices and have bank accounts About 13% of respondents were from the US, with 6% each from Brazil, Mexico, Canada, China, the UK and France; no other country accounted for more than 4% Emerging markets were well-represented, with 19% of respondents hailing from the BRIC countries and another 48% from a more broadly defined group of emerging economies About onefifth (19%) came from North America, 19% from Latin America, 23% from EMEA, 26% from AsiaPacific and 14% from Middle and Eastern Europe The median survey-taker was in the 41-to-50 age group; the average age was 45 Men outnumbered women by a ratio of 57:43 In terms of income, respondents exhibited a dumbbell pattern: the largest group made more than $125,000 per year (14%), while the second largest made less than $10,000 (9%) and the third largest between $10,000 and $15,000 (7%) The average annual income of respondents was approximately $57,000 Most have smartphones (86%) and almost half have tablets (47%) A significant portion also uses a feature phone (22%)—a basic phone for calls and texts, with simple games and Internet connectivity How mobile is transforming retail banking Introduction Our grandfather’s retail bank was a columned building with tellers and velvet stanchions Ours is fast becoming an icon among many on a tiny screen The traditional bank represented solidity and permanence The new bank is a portal into a dynamic new digital world As anyone who has witnessed rows of mesmerised commuters knows, mobile devices are becoming central to individuals’ interactions with each other and with businesses Banking, like so many industries, has been swept up by the wave Both bankers and consumers expect the use of mobile-banking technologies to grow rapidly, according to companion surveys of 111 bank executives and 1,827 consumers across five regions and 48 countries conducted by The Economist Intelligence Unit and sponsored by SAP Yet the surveys also show that, even as mobile interactions grow, other channels where consumers and banks connect will remain as important as ever Many consumers still appreciate the feeling of stability that brick-and-mortar branches provide—and they will always need branches or ATMs to deposit and withdraw cash Regional breakdowns on mobile channel use (% of executive respondents) Branches, ATMs PC EMEA Call centre Mobile devices North America Middle and Eastern Europe 18 13 Now 11 40 Now 52 24 Latin America 14 12 18 Now Now 60 27 Asia-Pacific Now 67 32 30 32 In five years 11 28 26 37 In five years 26 10 28 In five years 26 27 38 20 31 In five years 53 35 In five years 46 21 26 Source: Economist Intelligence Unit survey, September 2014 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking Will banks help shape change or be swept aside by newcomers with mobile products that help consumers reach their financial goals and dreams? Many like the larger screens that their home computers provide Still, most also want the convenience of paying for items and handling transactions on their phones This “omnichannel” world is diverse Consumers are not uniform in their banking preferences: retirees in Mallorca, millennials in Seattle and villagers in Peru will each be inclined to use a different mix of branches, ATMs and online and mobile services But consumers around the world are clearly embracing mobile as a vital channel—and banks need to be there In the EIU’s executive survey, 82% of retail bankers agree or agree strongly that in the next five years mobile will become the number one channel for millennials and younger consumers—banks’ future customers “Seventy percent of the Spanish population owns a smartphone It is clear that customers are increasingly moving to mobile,” says Jose Manuel Villa, head of digital channels at Banco Bilbao Vizcaya Argentaria (BBVA) “We need to enable distinctive digital platforms, and that requires a © The Economist Intelligence Unit Limited 2014 substantial investment in both talent and technology.” Moreover, mobile services could help make developing countries and the underbanked and unbanked more accessible and attractive markets to banks In emerging markets, approximately 1.2bn mobile users will use mobile money accounts by 2015, up from a negligible number in 2010, according to Ovum, an IT and telecom research firm A 2014 Federal Reserve study, “Consumers and Mobile Financial Services 2014”, found that the unbanked make heavy use of mobile phones and smartphones and that almost 40% of the underbanked use mobile transaction services at a relatively high rate Bankers must develop their “omnichannel” strategies and watch the mobile horizon closely We not yet know how profoundly mobile commerce will change consumer behaviour—or whether banks will help shape that change or be swept aside by newcomers with financial products that help mobile consumers reach their financial goals and dreams How mobile is transforming retail banking ❛❛ Users rightly expect to be able to whatever they need to on whichever device they happen to be using at that particular moment ❜❜ Andres Wolberg-Stok, global head of emerging platforms and services at Citibank Mobile, a big player in an “omnichannel” world Bankers and their customers agree on two things: Interaction via mobile devices will continue to grow quickly and traditional banking channels will not go away Tradition, inertia and screen size may largely explain why Well over half (56%) of consumers who dislike mobile say that they simply prefer the PC and another 35% like ATMs better About one-quarter of bank customers (26%) not expect to visit branches less frequently, even if mobile banking improves For now, almost all consumers need a branch sometimes—if only to get cash—and a few want a branch all the time Of course, these attitudes may well change as consumers gain familiarity with mobile services, electronic payments become more ubiquitous and apps become more intuitive New technologies are emerging and digital commerce is growing in a world that is increasingly mobile Retail financial services may not always live on a spectrum with mobile transactions on one end and traditional banking on the other In a time of flux, new business models may emerge, and they may coexist with traditional models—or upend them Today’s bankers, most of whom have spent their careers in a world of branch banking, believe that branches will continue to be important Threequarters say branches are needed to facilitate conversations, engage customers and explain complex products “There are things that happen in branches that are not immediately replaceable by remote approaches like online and mobile © The Economist Intelligence Unit Limited 2014 banking,” says Andres Wolberg-Stok, global head of emerging platforms and services at Citibank This is also true in emerging markets, according to Brad Jones, Brad Jones, a specialist in mobile financial services in Southeast Asia who has worked with IFC, Visa and mobile payments provider WING Cambodia “There will always be a need for the customer to be able to have some connection with the provider Maybe it happens at the level of an agent who [visits homes and businesses with a mobile device and] is himself supported by a branch Maybe it’s the ability to contact a call centre to address problems The human channel engenders trust Maybe your customer transacts through mobile primarily, but having a human to address issues such as fraud or security is critical.” The multiplicity of channels persists because no channel is a perfect substitute for another Accordingly, banks need to manage all channels to provide an optimal overall experience for the consumer “Increasingly, users rightly expect to be able to whatever they need to on whichever device they happen to be using at that particular moment,” says Mr Wolberg-Stok Thus banks will have to invest significantly, not only in mobile systems but in integrating all their channels so customers can move seamlessly between them Only 15% of respondents say that all channels are integrated now But by 2019, three out of four banks expect to have achieved full integration Mobile does offer unique business value for both How mobile is transforming retail banking ❛❛ If you can explore new types of services as well as providing more convenience, then you have a chance to leverage mobile to really create differentiation ❜❜ Andres Wolberg-Stok, global head of emerging platforms and services at Citibank banks and customers, however By pushing low-value transactions to mobile, banks can greatly improve efficiency and service, which can help them grow their businesses significantly without higher operating costs, Mr Jones says “Somebody who wants a savings account and needs to withdraw $10 doesn’t need to come to a branch That’s like using a cannon to kill a fly,” says Ivan Mortimer-Schutts, an East Asia-Pacific electronic and mobile banking specialist at the International Finance Corporation (IFC), part of the World Bank “It’s out of proportion these days, because there are other tools at our disposal.” Meanwhile, these routine, commodity mobile transactions and products like mobile wallets can become gateways to deeper relationships and the sale of higher-value-added services like loans Indeed, mobile offers advantages that extend to higher-value transactions as well, including real-time alerts and seven-day-a-week, 24-hour-aday customer service Loyalty—created or destroyed? Banking executives remain divided about whether mobile will affect customer loyalty A plurality of 39% predicts it will increase attrition, with bankers in Asia-Pacific and Middle and Eastern Europe registering the most concern But one-third of total respondents (33%) say attrition will decline and the rest (28%) are not sure The first group of executives believes mobile will fray the bonds that bind them to customers They think customer churn will rise because mobile will increase commoditisation (70%), reduce barriers to entry (63%) and make switching easier (74%) They also worry that a diminished human connection will hurt interaction and engagement The second group believes that if mobile helps them provide an easier, faster banking experience, customers will not want to leave (83%) These bankers tend to believe many customers prefer self-service and that allowing them to serve themselves at the time and place of their choosing will encourage them to stay and that mobile will reduce providers’ costs and, thus, lead to lower costs for customers But anytime, anywhere self-service is already becoming a basic—banks will have to offer more than account balances, transactions and bill payment, Mr Wolberg-Stok says “If you can explore new types of services as well as providing more convenience, then you have a chance to leverage mobile to really create differentiation.” For instance, Citi’s mobile “Snapshot” feature enables customers to view deposits, credit-card 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 33 39 Why will attrition decline? Why will attrition rise? (% of respondents) Banks will predict the customers likely to leave and make offers to keep them Greater efficiency will allow banks to lower costs for customers Many customers will prefer self-service over interacting with personnel Security concerns will rise 36 Human interaction will decrease 47 Barriers to market entry will fall, leading to more new providers 53 Basic banking services will become even more commoditised 56 Banks will gain scope for personalisation 61 Banks will build loyalty with innovative features 61 Banking will become easier and faster Attrition will rise 28 (% of respondents) Banks will have more ways to differentiate themselves Not sure Switching to new providers will become easier 30 37 63 70 74 83 Source: Economist Intelligence Unit survey, September 2014 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking log into their accounts The app sends notifications when checks clear, balances fall below a set threshold and payments come due Many bankers see personalisation and innovation as important retention tools (61%) Simple, a digitally native and millennial-friendly US bank recently purchased by Spain’s BBVA, is so convinced of this it only accepts new account applications from prospective customers with smartphones The bank lets customers customise their accounts with budgeting and goal-setting tools, “smart” transaction tagging, and instant account updates to their smartphones Simple’s mobile interface lets consumers name their goals—be it a “Paris vacation” or “buy a © The Economist Intelligence Unit Limited 2014 house”—and save for them over time by subtracting from their “Safe to Spend” discretionary funds “We see what customers are saving for If they’re saving for a down payment on a house, we’d love to be there to underwrite that mortgage at some point in the future or to offer student loans or a variety of other things on the credit side of the house,” says Joshua Reich, Simple’s CEO Two different world views, two different results; both are plausible and, in fact, both may come true Some banks will use mobile to differentiate and get customers seeking more personal and comprehensive services Others will provide generic solutions and retain customers satisfied with a commodity experience How mobile is transforming retail banking A new competitive landscape The mobile invasion is forcing banks to navigate a complicated world of new partnerships and rivalries Transactions must be easy, convenient and relevant and take place securely on any device in any location In response to these competitive mandates, an array of alliances is emerging among payment processors, financial institutions, mobile-network operators and retailers For example, under the Yaap partnership in Spain, Santander, Telefónica and LaCaixa have collaborated to create virtual showrooms for retailers and a payment service Yaap is an open platform where any store, including small retailers with limited online presences, can reach hundreds of thousands of potential customers via a mobile app with discounts, offers and loyalty programmes Yaap Shopping aims to become Spain’s largest customerloyalty network A second service, Yaap Money, is a peer-to-peer-service that enables anyone to send funds from one mobile device to another To better understand the new competitive landscape, the EIU asked bankers to identify rivals and potential partners It found that traditional rivals remain—large, established banks were clearly entities to be feared (83%)—while other types of companies occupy less clear ground Exactly half of retail bank executives see virtual banks, or banks that not have physical branches, as rivals, while three in 10 view them as 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 Big retail banks 12 19 50 83 Source: Economist Intelligence Unit survey, September 2014 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking Appendix: Executive survey results Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses How customers primarily conduct transactions at your bank? Provide percentage estimates so that each column adds up to 100% (% respondents) Branches, ATMs PC Call centre Mobile devices 12 30 10 Five years from now Now 54 24 35 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 managed separately Some are integrated, but not all All four channels are integrated (ie, we have “omnichannel” capabilities) 15 18 30 Five years from now Now 55 15 © The Economist Intelligence Unit Limited 2014 75 How 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 It is not considered important 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 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 for the industry Below average Average Online capabilities for customers 14 32 Mobile capabilities for customers 21 32 Mobile capabilities for customer-facing branch employees 21 Mobile capabilities for customer-facing employees who visit customer locations 25 Mobile capabilities for back-office employees to aid service performance 12 23 Mobile capabilities for managers and executives to aid service-related decision-making 20 16 © The Economist Intelligence Unit Limited 2014 Above average Well above average for the industry 36 14 32 41 39 41 38 27 24 25 21 How mobile is transforming retail banking Which mobile features can your customers use now, and which you expect to support five years from now? (% respondents) Now Access and manage accounts (eg, savings, transactional, credit, loans) Find information on products, services and branch and ATM locations Five years from now 91 52 85 54 Make transfers, payments and deposits 72 61 Receive alerts 83 52 27 Open new accounts 76 28 Apply for loans or credit 75 20 Access advanced services (eg, financial-management tools, wealth-management services, spending analyses) 77 32 Make and manage investments 70 31 Access and manage mobile wallets 73 19 Receive personalised products and services (eg, based on profile, history, location, circumstances) Use advanced security features (eg, biometrics, two-factor authentication) Access non-traditional services (eg, legal, insurance) 74 32 66 13 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 17 Significant increase 30 Moderate increase 46 24 No change 15 Moderate decrease 13 Significant decrease Don’t know Next five years 16 22 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 2014 How 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 How 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 (% respondents) Revenue will rise Net interest income 57 10 33 50 34 16 33 29 24 16 60 Dividends on minority interest 32 49 19 Traditional service offerings 50 34 16 Third-party fees, commissions and advertising revenue 18 No change/impact 57 10 Customer fees and commissions 54 Revenue will fall 54 18 29 24 16 60 32 49 19 46 15 39 service offerings (eg, legal, insurance) Non-traditional 46 15 39 Which of the following types of entities you see as potential rivals and which as potential partners to your bank’s retail franchise? Select one in each row (% respondents) Primarily a potential rival Large, established retail banks 83 16 71 14 26 Large retailers (eg, Walmart, Tesco) 60 25 25 Internet retailers (eg, Amazon) 51 24 42 12 35 Personal financial management companies © The Economist Intelligence Unit Limited 2014 54 20 15 Social media companies (eg, Facebook) 18 50 30 19 Mobile phone service providers Other Neither a rival nor partner 12 Internet-only banks Online payments services (eg, PayPal) Primarily a potential partner 24 20 20 46 41 60 How mobile is transforming retail banking How 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 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 Why 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 19 © The Economist Intelligence Unit Limited 2014 How 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 disagree Agree Agree strongly The wealthier the customer, the less likely he or she is to be an active user of mobile banking 17 44 17 20 The poorer the customer, the more likely he or she is to be an active user of mobile banking 39 20 25 Mobile will be the number one channel for millennial (and younger) customers 10 51 31 Branches are necessary to facilitate conversations, personally engage customers and provide the best venue for explaining complex products to customers 12 53 21 We are very good at using mobile customer transaction data to develop promotions and targeted offerings 29 28 32 Consumers expect banks to offer the same personalisation and ease of use as large Internet companies 22 47 22 The more widely adopted mobile banking becomes, the harder it will be to get earnings from float 17 36 33 12 Mobile and online banking capabilities are not the reason why most of our customers choose us 17 23 48 Our customers trust us with their money more than they would trust an Internet company 11 42 36 What is the value of your organisation’s total global assets in US dollars? Which of the following best describes your title? (% respondents) (% respondents) Board member Under $500m 14 CEO/President/Managing director $500m-$1bn 14 CFO/Treasurer/Comptroller $1bn-$5bn 10 CIO/Technology director $5bn-$10bn 12 CMO/Marketing director $10bn-$25bn 15 Other C-level executive $25bn-$50bn 11 SVP/VP/Director $50bn-$100bn 20 13 Head of Business Unit Over $100bn 24 Head of Department 15 Manager 13 20 © The Economist Intelligence Unit Limited 2014 How 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 16 Customer service 15 India, Mexico, Singapore Finance 27 Poland, United Kingdom General management 32 Brazil, Italy Human resources Austria, Canada, Germany Information and research China, Spain, Switzerland IT Argentina, Australia, Colombia, France, Middle East and North Africa, Russia Legal Africa, Indonesia, Japan Marketing and sales 24 Risk 23 R&D Approximately how many retail accounts does your bank have? (% respondents) Strategy and business development 40 Other Under 5,000 7 5,000 to 10,000 10,000 to 20,000 In which region are you based? 20,000 to 40,000 (% respondents) 40,000 to 70,000 Asia 23 70,000 to 100,000 EMEA 21 Over 100,000 North America 66 20 MEE 19 Latin America Which of the following best describes the geographic scope of your bank? 18 (% respondents) Global What is your primary industry? 18 (% respondents) Multinational 32 Retail banking 100 National 31 Regional 18 Are you familiar with mobile technology trends in retail banking? Other (% respondents) Yes 100 21 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking Appendix: Consumer survey results Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses How old are you? (% respondents) Under 21 21 to 25 26 to 30 10 31 to 35 13 36 to 40 13 41 to 50 24 51 to 60 18 61 to 70 14 Over 70 Are you male or female? (% respondents) Male 57 Female 43 22 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking What is your annual income in US dollars? (% respondents) Under $10,000 $10,000 to $15,000 $15,001 to $20,000 $20,001 to $25,000 $25,001 to $30,000 $30,001 to $35,000 $35,001 to $40,000 $40,001 to $45,000 $45,001 to $50,000 $50,001 to $60,000 $60,001 to $65,000 $65,001 to $70,000 $70,001 to $80,000 $80,001 to $90,000 $90,001 to $100,000 $100,001 to $125,000 Over $125,000 6 5 4 14 If you use a bank, how you primarily conduct transactions currently? How you expect toconduct transactions in the future? Provide percentage estimates so that each column adds up to 100% (% respondents) PC (eg, website) Call centre Mobile device(s) 36 The percentage of transactions I conduct now The percentage of transactions I expect to conduct five years from now Branches, ATMs 46 15 28 44 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 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 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 Mobile banking is more secure Other 23 © The Economist Intelligence Unit Limited 2014 How 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 not trust the security of mobile banking 43 I prefer to use the ATM 35 I 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 My phone is too hard to use My bank does not offer mobile banking Other 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 device to this I have not used my mobile device to this but would be willing to I have not used my mobile device to this and would not be willing to Don’t know Access and manage accounts (eg, savings, transactional, credit, loans) 54 21 21 Find information on products, services and branch and ATM locations 50 28 17 Make transfers, payments and deposits 48 25 23 Receive alerts 52 Open new accounts 11 38 Apply for loans or credit 11 38 Access advanced services (eg, financial-management tools, wealth-management services, spending analyses) 16 40 Make and manage investments 19 37 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 Receive personalised products and services (eg, based on profile, history, location, circumstances) 16 41 Use advanced security features (eg, biometrics, two-factor authentication) 16 46 Access non-traditional services (eg, legal, insurance) 12 42 24 © The Economist Intelligence Unit Limited 2014 27 15 42 44 34 33 10 35 28 33 26 10 12 13 How 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 nor disagree Somewhat disagree Strongly disagree I trust my bank to keep my accounts secure 41 43 12 I trust my bank to keep my personal data secure 36 I trust my bank and would be reluctant to switch to another bank 27 43 13 36 29 Which of the following online and/or mobile banking features 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 Personalised information to provide me with more valuable banking services 45 Tracking, alerts and analysis about where and how I spend money Minimally valuable Not valuable at all I have not used this feature 41 53 2 38 11 Personalised suggestions on how to get more value from my spending 48 34 Personalised suggestions on how I can better manage my money 43 42 Advice related to financial products (eg, mortgages, credit cards, insurance, investments, credit scores, legal services and real estate) 34 49 Customer service via Facebook or other social media 36 36 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 Access to legal, tax or other professional non-banking services 41 42 Travel services, including currency conversion 39 41 25 © The Economist Intelligence Unit Limited 2014 15 2 11 31 11 18 34 21 10 4 15 How 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 not have currently? Please select all that apply in each column (% respondents) Username and password Security features I have now 94 Questions that only I can answer 78 22 11 Voice authentication Fingerprint scan Security features I would like to have 89 One-time code sent via text message 91 63 37 49 51 Encryption 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) Managing it (eg, budgeting, planning, paying bills) Spending it (eg, making wise purchases) Areas in which I could most improve Areas in which I would most like help from my bank 72 43 64 44 Earning it 55 Saving it Investing it (eg, making money with money) 26 © The Economist Intelligence Unit Limited 2014 58 53 50 61 75 How mobile is transforming retail banking In what country you live? Embedded Data Field: Region (% respondents) (% respondents) Asia-Pacific US 26 13 EMEA Brazil, Canada, China, France, Japan, Mexico, UK 23 Latin America Australia, Germany, India 19 North America Africa, Argentina, Colombia, Indonesia, Middle East/North Africa, Russia, Singapore, Switzerland 19 MEE Austria, Czech Republic, Poland, Spain 14 Italy What kind of mobile device 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 not use a mobile device 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 Do you have one or more insurance policies (eg, health, life, disability, auto, renters, homeowners)? (% respondents) Yes 100 No 27 © The Economist Intelligence Unit Limited 2014 How 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 for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper About our Sponsor As the world’s leading provider of enterprise application software, SAP delivers products and services that help accelerate business innovation for its more than 183,000 customers in more than 120 countries See more related to this Cover: © Hybrid Images/cultura/Corbis report at sap.com/banking 28 © The Economist Intelligence Unit Limited 2014 London 20 Cabot Square London E14 4QW United Kingdom Tel: (44.20) 7576 8000 Fax: (44.20) 7576 8476 E-mail: london@eiu.com New York 750 Third Avenue 5th Floor New York, NY 10017 United States Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 E-mail: newyork@eiu.com Hong Kong 6001, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) 2585 3888 Fax: (852) 2802 7638 E-mail: hongkong@eiu.com Geneva Boulevard des Tranchées 16 1206 Geneva Switzerland Tel: (41) 22 566 2470 Fax: (41) 22 346 93 47 E-mail: geneva@eiu.com [...]... 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 2014 How 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... Social media companies (eg, Facebook) 18 50 30 19 Mobile phone service providers Other Neither a rival nor partner 12 Internet-only banks Online payments services (eg, PayPal) Primarily a potential partner 24 20 20 46 41 60 How 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... Limited 2014 How 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 disagree Agree Agree strongly The wealthier the customer, the less likely he or she is to be an active user of mobile banking 17 44... Multinational 32 Retail banking 100 National 31 Regional 18 Are you familiar with mobile technology trends in retail banking? Other 2 (% respondents) Yes 100 21 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking Appendix: Consumer survey results Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses How old are you?... 15 © The Economist Intelligence Unit Limited 2014 75 How 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)... customer locations 6 25 Mobile capabilities for back-office employees to aid service performance 12 23 Mobile capabilities for managers and executives to aid service-related decision-making 8 20 16 © The Economist Intelligence Unit Limited 2014 Above average Well above average for the industry 36 14 32 9 41 39 41 38 27 24 5 25 5 21 5 7 How mobile is transforming retail banking Which mobile features can... 2014 How 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. .. dollar amount.” How mobile is transforming retail banking Conclusion ❛❛ Banks and their regulators are going to have to embrace technology-driven innovation Otherwise it will simply happen by stealth, driven by players outside the industry ❜❜ Peter Sands, chief executive of Standard Charted 14 Mobile is quickly becoming a vital banking channel, but even banks that have developed addictive mobile experiences... 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... closer than we think How mobile is transforming retail banking Appendix: Executive survey results Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses How do customers primarily conduct transactions at your bank? Provide percentage estimates so that each column adds up to 100% (% respondents) Branches, ATMs PC Call centre Mobile devices 12 30 ... Limited 2014 How mobile is transforming retail banking Preface Redefining banking to survive and thrive in a digital world explores how mobile technologies are transforming retail banking While... bank does business Mobile banking is more secure Other 23 © The Economist Intelligence Unit Limited 2014 How mobile is transforming retail banking Why don’t you use mobile banking? Please select... now Now 55 15 © The Economist Intelligence Unit Limited 2014 75 How mobile is transforming retail banking How does online and mobile banking rank in terms of strategic priorities for your organisation?