It’s not that long ago since the only way to interact with your bank was by visiting a branch to speak face-to-face with a bank official. The introduction of ATM cash machines in 1967 heralded the first fledgling steps towards a more self-service orientated approach to banking. Since then, telephone banking has taken off, followed in the 1990s by the introduction of Internet banking. Now in the first decade of the 21st century we’re beginning to see a new banking channel emerge, that of mobile phone banking. This article assesses how it compares to online banking and whether it can become as (or more) popular than online banking?
Online banking offers users the convenience of being able to undertake a wide range of transactions from the comfort of their home, or anywhere else that has a computer with Internet access. Online banking was launched to huge acclaim, with some media pundits claiming that it would see the death of bank branches. That proved to be an exaggeration, with the reality being that bank customers have embraced online banking as a complementary way of doing their banking, rather than as a direct substitute for using branches.
The typical range of functions available through online banking includes:
Funds transfers (between all accounts the user holds with the bank)
Direct payments (to another person, or to an account you hold with another bank)
Create, amend, or cancel standing orders
Amend address and other personal details
Apply for additional accounts, or an overdraft, or travel currency, etc
Activate a debit card
Order a new chequebook
Whilst Internet banking has enjoyed steady growth in usage, and has become fairly mainstream, it has perhaps not quite reached the levels of usage that many had forecast. Partly, this is a reflection that there are some transactions (such as taking out a mortgage) that people prefer to do in a face-to-face environment, but an additional factor has been to do with security.
Internet banking requires users to create passwords and/or PINs which they are then asked for every time that they logon. In additional to these user-created security credentials, online banking is protected by very strong encryption. This has proved successful in protecting online banking from the risk of fraudsters hacking into online banking services. However, human errors and susceptibility (to phishing attacks*) have at times allowed fraudsters to take money from users’ accounts and this has created a certain fear factor for some around using online banking.
* Phishing is where fraudsters send out bulk e-mails purporting to be from your bank and asking you to click on a hyperlink that takes you to a fake version of your bank’s website. On that spoofed web page, the fraudster asks you to provide your security details, and once you’ve done that they use them to login to your online banking session and transfer funds from your accounts. It relies on tricking users into giving away details.
MOBILE PHONE BANKING
Mobile phone banking, as the name implies, enables you to do banking transactions via your mobile phone handset. It is still in its infancy but is being looked at by banking and media experts as one of the next big things in banking circles.
For those who are already familiar with online banking, the process of getting set up with mobile phone banking will be fairly familiar. As with online banking, you will be required to create a set of logon security credentials, such as passwords and/or PINs. A slight difference, though, is the requirement to download an application to your phone. This leads us to one of the most fundamental differences between online banking and mobile phone banking. With online banking, once registered, you can use any computer to access online banking. All you need to do is enter the logon details. The downside to this is that if a fraudster has tricked you into giving away your security details, then they can access your money from a computer based anywhere in the world. The position with mobile phone banking is different as you can only access your account details by entering your security details (something you know) on your mobile phone (something you own). This provides an additional level of protection. If we think back to a scenario where a fraudster has got hold of your login details, this will be useless to them unless they can also steal your phone. It’s worth noting that no account details are held directly on the phone, so if you lose your phone a fraudster couldn’t retrieve any details from it.
So, we can see that mobile phone banking looks like quite a good proposition from a security angle. But what about customer convenience and usability? Convenience is one of the key selling points that has led to the growth of online banking but mobile phone banking has the potential to take things one step further. As well as being able to do your banking at any time of day (avoiding branch queues, etc), you will now also be able to do your banking from anywhere. Okay, in theory, this is already facilitated through online banking if you carry a laptop about with you, but we don’t bring our laptop with us when we go to the pub, whereas we do bring our mobile.
Usability, though, is probably the area that will determine just how successful and popular mobile phone banking will become. Simple transactions, such as a balance enquiry or mobile phone top up, render pretty well on mobile phone screens. However, some functions such as viewing full statements may be better viewed on a computer screen rather than a mobile phone screen. The size of screens available through mobile devices is one of the greatest challenges that mobile phone banking providers are grappling with. Early evidence, though, is that users adapt quite quickly to the different user experience and that they are less concerned by aesthetic niceties and more interested in functionality.
The range of functions being offered currently through mobile phone banking tend to include:
Mobile phone top-up
Text alerts (e.g. tell me when my balance goes below a certain amount)
However, it is likely that (just as with online banking) the range of functionality will expand as the channel becomes more popular and as customers demand extra capabilities. Indeed, there is probably no reason why the scope of mobile phone banking can’t grow to match that offered by online banking, although it’s still a bit too early to be certain of this.
FUTURE USAGE: ONLINE OR MOBILE?
I think the simple answer to this question is that many customers will use both online banking and mobile phone banking. We all want convenience and the multi channel banking proposition seems to be clearly be prevailing over Internet or telephone only banking services.
However, there will be a degree of competition between these two digital channels. It is likely that many of the current online banking aficionados will continue to remain loyal to the online channel, whilst the mobile channel will probably attract its own set of fans who probably would never have considered online banking. Mobiles have become ubiquitous, especially amongst the younger generations, and people seem to have an affinity for their phone that goes beyond the connection they feel with their computer. You only have to look at how people behave when waiting for a train; invariably they will be cradling their phone, looking at text messages, playing games, or perhaps just hoping that a phone call or text will arrive! I think this emotional attachment, and the ability to receive information instantaneously through a text message, may ultimately mean that mobile phone banking will achieve a level of use that has so far eluded online banking. Whatever happens, though, the good news for bank customers is that there has never been more choice in how we do our banking.