In a recent poll of nearly 200 international banking executives, NGDATA, Clear2Pay and Finextra asked some key questions about their thoughts and plans of emerging technologies like mobile wallet applications and Big Data strategies and how they would prioritize these two key areas in coming months. We found that while more than 80 percent of banking executives feel that Mobile Wallet offerings and Big Data are critical to customer retention and acquisition, while many admitted they do not have the right resources in place to take advantage of Big Data – a critical component to an effective mobile wallet application.
The survey, distributed earlier this year, looked closely at the banking and digital practices of mainly (76 percent) large banks with 2500 or more employees. Respondents ranged from C-level executives to business development, IT and marketing strategy management – with a nearly even split between national and international banks. The survey found that while Big Data has been on the minds of executives across several industries for the past couple of years, many banks have still failed to identify a way to make that data manageable and actionable. The following information comes from the survey.
Losing Customers – A Growing Problem for Banks
Banks have recently struggled with customer intimacy issues. Having slowly migrated away from a strong, autonomous, local branch presence, to basing decisions on now limited customer interactions rather than branch manager intelligence and local risk management, there has been a divorce from the customer. While the transactional environment was put in place to support this, through ebanking and smarter ATMs, the engagement component was on the whole neglected and so typical in-channels for intelligence above transactional data were removed. This in turn has created a misperception of the value of banks towards the consumer and been a huge contributing factor in the retail component of the recent global crisis. The problem is evident – how do banks regain the trust of their customers without returning to a manpower heavy infrastructure that they no longer have resources for and the customer no longer has time for? The answer: the goldmine of Big Data they are sitting on to gain better insights on customers wants, needs, frustrations and habits. Yet, they’ve struggled to find a way to take advantage of this information in a timely manner. Yesterday’s annoyance is today’s decision to leave one bank for another.
Banks do not traditionally manage data in real time except where it has a direct financial consequence. Few are able to manage the mobile paradigm efficiently – many viewing it as merely a replacement for the teller than a complementary alternative for the entire branch and a way to develop new customer-engagement services. Big Data will drive transactional banking from batch processing to real-time. To make the move from batch data, banks need to modernize back office systems, moving to a centralized payment hub architecture that allows them to leverage the latest innovations such as cloud processing and react quickly when analysis of Big Data indicates that they need to update or innovate their product line.
It’s clear that Banks ‘get’ the main reason for investing in Big Data – to drive revenue growth through delivery of personalized services. A majority of respondents believe that Big Data will help them increase their revenues, despite their admissions that they are ill-equipped to leverage it. Additionally, 71 percent of banks acknowledged that in order to increase their top line, banks need to better understand customers and Big Data will help them do so.
Mobile Wallet – where does it stand?
With increasing competition from traditional technology players like Google, PayPal and others who are infringing on banks territories with mobile wallet applications – banks are feeling the pressure to make mobile wallet a priority. While hailed as a technological success and proof of the wallet concept, Google Wallet wasn’t met with huge enthusiasm by consumers and prompted a rethink of the product, and a refocus on highlighting the payment brands behind the wallet – alongside the launch of a Google card to supplement the wallet at points of sale where the mobile wallet can’t interact. And this indicates the primary issue with wallets designed around non-banking environments, it is hard to break the chicken-and-egg cycle of acceptance over issuance – payments isn’t a field of dreams, it isn’t necessarily because you build it that they will come. What is important to note is that ‘bank-friendly’ doesn’t equate to ‘bank-owned’. The fact is strong links into the banking system have been shown to add trust to a payment system and allow wallet owners access to the important current account balances.
Mobile Wallet: The Findings
There continues to be growing awareness among banking executives as it pertains to mobile wallet strategies. More than half 55 percent) of respondents said they understood the mobile wallet’s role in the overall mobile banking ecosystem.
So what is the real driver behind getting together a mobile wallet strategy, then? 80 percent of banks would like to add value beyond the transaction by making relevant commercial offers at the Point of Sale (POS). 67 percent of banks said they would like to capture and be the full custodian of their customers’ value (money, coupons, air miles, etc.).
We encourage you to check out the full results of our survey here. In summary, banks are aware of the challenges that lie ahead of them when it comes to understanding and executing Big Data and Mobile Wallet strategies. An overwhelming majority have made this a priority over the next six to 12 months. The key will be to identify the right solution for their needs and identify the most qualified partners to work with throughout the process. Banks hold the competitive advantage, but the window of opportunity is shrinking with every passing day. Sound similar to your situation?
