Is smart money on smartphone banking?

Could a passion for mobile banking be about to sweep the western world? Mobile phone services have proved popular for paying bills, receiving salaries and checking balances on basic phones using text messaging in Africa, India and Latin Amercia. But smartphone users in Europe and the US have been slower to use their devices for banking transactions.

However, Matt Krogstad, head of mobile banking for California’s Bank of the West, thinks that could be about to change.

He has been working in the financial sector for about three years and was previously employed in the technology industry. There, his career was devoted to giving consumers a reason to conduct business using their smartphones.

Bank of the West has embraced mobile banking, and one of its most popular smartphone services, Quick Balance, is a rapid way to find out how much money customers have in their accounts that bypasses conventional online security checks. Customers only have to download and authenticate the bank’s Quick Balance app once. After that, whenever they want to check their account, all they have to do is use the app.

But while Mr Krogstad has great enthusiasm for mobile banking’s, not everyone is convinced. Lu Zurawski, a consumer banking expert with payment systems company ACI Worldwide, thinks banks should ask themselves some tough questions. “I genuinely don’t think that checking a bank balance is a compelling enough reason to introduce a mobile portal,” he says.

Mr Zurawski also remains sceptical about claims of a breakthrough in the adoption of mobile banking services and argues that, unless banks link mobile services to promotions and deals, consumers will lack incentives to adopt smartphone banking.

He adds that putting the detail and scope of PC-based services on to a smartphone is not easy. “There is a genuine technical problem here. To provide a true mobile banking experience requires lots of really tedious integration with existing banking systems. This work is not the top priority for in-house IT staff.”

This technical challenge means many mobile banking services on offer simply cannot reflect the PC-based online banking experience, says Bernd Richter, a Frankfurt-based partner with consulting group Capco.

“The classical web interface has more functions than do apps, where the service is similar to a self-service banking machine. Almost no bank I know has integrated the one experience across all its online channels.”

Certainly, simplicity is crucial if a mobile banking application is to succeed. Mr Krogstad’s past career in mobile commerce software has left him wary of foisting technically impressive products on customers. “People don’t want to fill out forms,” says Mr Krogstad. “The user experience has to be carefully designed.”

The Quick Balance app aims to meet the criterion of being designed to fulfil a definite customer need, as checking accounts is something most of us do on a regular basis. Bank of the West says mobile banking sign-ons have grown 400 per cent in the 18 months since Quick Balance was launched, with active users turning to the app 21 times a month on average.

As a result of this success, Mr Krogstad thinks the perception of mobile banking is changing fast. “More than 50 per cent of our active online customers use the mobile banking app. I’d say that a huge amount of transactions happen on phones.”

He also points to the rise of cheque deposits being made using smartphone cameras as “a fundamental shift” in the conduct of customers in a US economy where paper cheques still feature prominently.