mobile opportunities for the financial sector (emea)

8/14/2019 Mobile opportunities for the financial sector (EMEA)

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N a n o - e c o n o m i c s :

Mobile opportunitiesfor the financial sector


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C o n t e n t s


M o b i l e o p p o r t u n i t i e s f o r t h e f i n a n c i a l s e c t o r

Executive summary 3-4

Research methodology 5

Mobile opportunities 6-7

A case for change 8-9

Nano-economics 10-11

Multi-method balance checks 12

Overcoming barriers to mobile banking 13-14

Payment preferences 15

Techno-literate 16

Conclusion 17-18


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E x e c u t i v e s u m m a r y



With financial services businesses heavily reliant on information services and a significant investment inplace to support customer services, the report concludes that mobile banking makes a logical addition to

existing customer communications tools. Mobile data services alone are generating enough interest to

engage a significant percentage of the customer base, but, when combined with the potential cost savings

presented by using mobile services to automate some aspects of customer information requests, the

business case for refining mobile strategy is robust.

There are some considerable regional differences to take into account when looking at the survey, which

are discussed in the body of the report. A summary of country-specific trends is described below:

France

French respondents check bank balances more frequently than all other regions andare most supportive of receiving personal financial information on the move.

Interestingly, French respondents also describe themselves as most resistant to cutting

edge technology

Germany

Germans express less enthusiasm for mobile banking that is reflective of caution and

a lack of awareness. German respondents also spend less on average on mobile

calls than their European neighbours

UK

British mobile users have the lowest level of awareness of mobile banking services,

but appear to spend more on mobile calls each month. UK respondents, along with

the French, are keen to check bank balances, with more UK consumers checkingbank balances via the internet than other European region

Italy

Italians are the most enthusiastic cash watchers, being more likely to know exactly

how much money they have in the bank. Along with Spain, Italy expresses the most

interest for mobile banking service across the sample

Spain

From the survey, there are more Spanish mobile bankers than any other region

(10% of overall sample). This is mirrored by the nations considerable enthusiasm for

a wider range of mobile banking services and high levels of awareness for mobile

banking overall

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R e s e a r c h m e t h o d o l o g y



The research surveyed 1,250 mobile users across 5 European regions: France, Germany, Italy, Spain andthe UK (250 interviews conducted in each country). Interviews were undertaken via an internet-based

questionnaire during November 2006. The researchwas commissioned by Sybase 365 and carried out byLoudhouse Research, an independent research consultancy based in the UK.

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M o b i l e o p p o r t u n i t i e s


M o b i l e o p p o r t u n i t ie s f o r t h e f i n a n c i a l s e c t o r

When evaluating what potential services customers seek via a mobile device, Figure 1 shows a clear pictureof what the public wants. Account balance enquires present the most obvious opportunity to get people

interacting with their accounts via mobile handsets, with 61% of respondents citing balance enquiries as a

service they would be interested in if offered by their bank.

Interestingly, the three other services that 35% to 49% of the market is interested in revolve around personal

banking security or the prevention / alerts on over-spending: Ability to freeze a card (49%), Potential fraud

alerts (44%) and minimum balance alerts. Consumers are more likely to see a mobile phone as a means of

protection, risk reduction and control than as a device that can be used for transactions. Mobile users are

more interested in being alerted if things are not as they should be, rather than paying for items or receiving

general financial information in the shape of incentives, offers, interest rates and so on.

6

Fig 1 :

Fig 1: Which of the following

mobile banking services would

you be interested in if offered

by your bank?

13%27%29%30%31%

35%44%

49%61%

0% 20% 40% 60% 80%Info requests eg. Interest ratesAutomatic transaction updates

Payments via mobileStatements on request

Overdraft alertsMinimum balance alerts

Potential fraud alertsAbility to freeze a card

Account balance enquiries


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M o b i l e o p p o r t u n i t i e s



As Figure 2 shows, almost all mobile users are familiar with and utilise text-based mobile services, meaningthat they should be comfortable with text-based services. Of the 98% of mobile users in the survey that are

familiar with sending and receiving texts, 97% actually use the service. Understandably, the more sophisticated

mobile data services are not experiencing the same level of use; price and ease of use undoubtedly playing a

role in cooling user adoption.

However, with European mobile penetration rates nearing, and in some cases exceeding 100%, it is very

encouraging to see the number of people that are engaging in more sophisticated mobile services.

Current mobile data trends from many corners of the industry all suggest that this usage is only set to increase

over the next 3-5 years. Looking at bank balance checks specifically, the ratio of awareness-to-usage is also

positive with around 1 in 3 mobile users aware of the service choosing to use it. This gives rudimentary

mobile banking a higher use-to-awareness ratio than many of the more infotainment based services, such as

watching TV streaming or checking sports scores.

Perhaps of wider concern is the fact that only 36% of

mobile users are aware that it is possible to check

banking information via a mobile. Evidently, this will be

influenced by the fact that not all high street banks

offer mobile banking information updates, but general

awareness could still be higher. This begs the question,

to what degree banks are promoting mobile services to

existing customers? Also, and perhaps more importantly,

are mobile services being marketed to potential new

customers that are seeking value-added services?

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5%4%

11%9%8%12%

32%19%

32%

29%35%36%40%42%

50%

61%67%

74%98%97%

Make payments via mobileWatch live TV

Check bank balanceInstant messaging

Check traffic reports / directionsCheck latest sport scores

Play / s tore musicE-mail

Access InternetSend / receive texts

Have usedAware of Fig 2:

Which of the following

mobile services are you

a) aware of and b) have

used in the last 3 months?


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A c a s e f o r c h a n g e



Figure 3 highlights further enthusiasm for mobile banking, though at this stage it is also possible to look at

how regions start to differ in their approach to mobile services. The first chart shows that there is considerablesentiment supporting the desire to deal with finances on the move. France (59%) and Spain (58%) are more

supportive of the idea than the UK (36%) and Germany (15%).

Though it is difficult to be prescriptive about what this means for each region in terms of mobile opportunities in

banking, these findings are reflected to some degree in other areas of the survey: mobile banking awareness

is lower in Germany and the UK than the other European territories and Spain, France and Italy have more

mobile banking users than their Northern European counterparts.

The graph also shows that a surprising proportion of mobile users would consider changing banks if mobile

banking was provided as a free service. As consumers become more familiar with switching bank accounts,

mortgages, credit cards and other financial products, this potential for customer attraction should be of interestto the financial sector.

On average, 25% of respondents would be tempted by

free mobile banking services, making it a considerable

marketing tool in an increasingly competitive sector.

In Spain and Italy, the percentage increases to one in

three mobile users. With general awareness of mobile

banking services already considered as something that

requires greater attention, the potential of new customers

may provide a catalyst for some banks to review their

existing focus on mobile banking marketing.

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33%

49%

37 %

58 %

16 %

59 %

16 %

1 5%

23 %

3 6 %

0 % 2 0 % 4 0 % 6 0 %

I would

consider

switching to a

bank if I was

offered free

mobile

banking

I would like to

be able to deal

with my

finances on

the move

U K

G e r m a n y

F r a n c e

S p a i n

I t a l y

Fig 3:Statements of agreementsurrounding enthusisam formobile services: % shownare those scoring 4/5 on1-5 scale of agreement(agree / strongly agree)


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A c a s e f o r c h a n g e



The temptation to switch banks points to a wider issue for banks seeking to provide expanded mobile banking

provision; mobile services receive a warmer reception when there is no charge attached. This underlines theneed for banks to consider what strategy to pursue when looking at developing or refining mobile strategy.

In terms of value added services, mobile banking need not be seen as purely a nice-to-have for sophisticated

customers. Another point to consider is that the resource burden experienced by customer call centres in

responding to relatively basic customer requests could be eased by text, or mobile data services.

The significant push on telephone banking from the financial sector over the past three years has resulted in

15% of respondents in the survey checking balances over the phone. At present 7% of respondents check

balances by text message, though, anecdotally the level of marketing drive to push text services is far less than

that of telephone banking. This suggests, especially with the raft of enthusiasm for internet banking (68% of

respondents use the internet to check bank balances), that users are becoming more familiar with efficient

data/information services, and less reliant on a voice at the end of the phone for some aspects of personal

banking.

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10/18

Na n o - e c o n om i c s



The Sybase 365 Mobile Banking Survey highlights a particular breed of personal banker in Europe the

nano-economist. 40% of Europeans can be described as nano-economists, and, as shown in Figure 4,can be identified by their ability to state their exact bank balance at any point in time. Such diligence seems

to increase with age; only 29% of 18-24 year olds claim to know their exact bank balance whilst 47% of

those aged 45 or over can boast this degree of knowledge. The reasons behind such high levels of

financial awareness are likely to be wide-ranging and may include a lack of available funds, a prudent attitude

to money and potential concerns over fraud or identity theft.

Whilst the vast majority of Europeans (81%), will know their bank balance within 100, at the other end of the

spectrum 17% of Europeans can be described as financial ostriches and are completely ignorant about how

much is in their bank account.

Some interesting country differences emerge in terms of the need to stay abreast of personal financial affairs.

Italians are the most on the ball with 60% claiming to know their exact bank balance. UK consumers cantypically estimate their bank balance to the nearest 10 or 100 whilst at the other extreme, Spanish

consumers are the most lackadaisical; a third have no idea what their bank balance is and another 25% can

only estimate this within 1000.

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17%2% 18%

23%

40%

0% 20% 40% 60%Don't knowTo nearest 1000To nearest 100

To nearest 10Exactly

Fig 4:Degree that people knowthe amount of money inpersonal bank accounts


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Na n o - e c o n om i c s



Against a context of almost obsessive financial awareness, it is not surprising that consumers are checking

their bank balances very frequently - monitoring the nano-economy - often daily or every few days as shownin Figure 5.

The French are the most frequent bank balance checkers, with 23% checking their balances daily whilst in

line with their more laissez-faire attitude to finance, the Spanish are checking their bank balances less often

than their European neighbours, only 7% are checking daily and 28% are checking them on an ad hoc basis.

For Italians, ad hoc checking of bank balances (28%) seems to be translating into a more exact knowledge of

financial wellbeing, in contrast to Spain where this ad hoc balance checking is more likely to be coupled with

something of a financial fog.

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Fig 5:Frequency that peoplecheck bank balances

5%

26%

11%

28%

18%

12%

11%

28%

12%

25%

18%

7%

1%

12%

9%

29%

27%

23%

5%

17%

8%

19%

33%

17%

0%

11%

8%

29%

38%

14%

0% 20% 40%

Less than

once a month

Ad hoc/ when I

need to

M onthly

Weekly

Eve ry few days

Daily

UK

Germany

France

Spain

Italy


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M u l t i - m e t h o d b a l a n c e c h e c k s



Consumers now have a wealth of tools at their disposal to check their bank accounts, many of which reflect

the 24/7 society in which we now live. Figure 6 shows the methods that consumers use to check their bankbalances. Two-thirds of Europeans (68%) now check their bank balances via the Internet, whilst 42% will use

a cash point or ATM. Internet banking is particularly popular amongst those aged 25-34 years, used by 76%

of this age group, whilst checking at the cash point is most evident amongst the under 24s, presumably to

check funds are available to withdraw against.

Some would claim that telephone banking has lost its way in recent years. Despite a strong industry push in

its early years, it is used only by 15% of consumers. This is perhaps due in part to highly publicised call centre

outsourcing and the emergence of an arguably more convenient and flexible alternative via the Internet. Mobile

banking, as a relative newcomer, is used by 7% of Europeans to check their bank balances.

Again, interesting regional differences emerge in terms of banking preferences. UK consumers are more likely

to be banking via multiple methods and are higher than average users of the Internet (80%), cash points (55%),statements (39%) and telephone banking (21%). Spain shows a stronger predilection for bank contact either

via cash points (60%) or within the branch itself (36%) than other markets. In contrast, consumers in France

are most likely to shun the banks themselves, preferring to check their bank balances either on the Internet (80%)

or via statements (35%).

Of course, consumers do not typically stick to just one

method of checking their bank balances. Internet bankers

often still check their balance prior to withdrawing cash from

a cash point and may still receive statements in the post.

Mobile banking provides another alternative for people

wanting to keep in touch with their finances, offering thedistinct advantage to consumers of being able to check

finances whilst on the move and to receive finance alerts

and updates virtually instantaneously rather than having to

wait to log on or to queue at the cash point or branch.

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Fig 6:Methods used to checkbank balances

7 %

15 %

24 %

26 %

42 %

68 %

0% 20% 40% 60% 80%

Mo bile

banking/ text

from bank

Via telephone

Go to bank

Statement in

post

Via ATM / cash

point

Internet


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O v e r c o m i n g b a r r i e r s t o

m o b i l e b a n k i n g



Mobile banking has not yet reached widespread consumer consciousness, despite other mobile services,

such as games and music gaining popular appeal. Indeed, half of European consumers (49%) do not actuallyknow whether their bank offers mobile banking services and only 6% can categorically state that their bank

does not offer mobile banking. Awareness is particularly low in the UK (69%), Germany (50%) and France (51%).

Better promotion by banks of both the existence of a mobile banking service and the benefits this offers

consumers, is vital for mobile banking to become both a mainstream mobile service or added value banking

offering.

Critical to maximising the appeal of mobile banking to consumers is the need to better understand the reasons

why people have not yet included this in their bank balance checking tool box. As the predecessor to mobile

banking, exploring the adoption of Internet banking provides some interesting parallels. Barriers to both Internet

and mobile banking follow similar themes most notably, non-users struggle to see the need for these services

and may have either security or usability concerns. Security was stated as a barrier to Internet banking use by

36% of respondents on the survey (not shown), higher than for mobile banking where 25% see this as a reasonnot to use the service (Figure 7).

Figure 7 shows how barriers to mobile banking

vary by country. A perceived lack of need for

mobile banking is more apparent amongst

non-users in UK, France and Spain. Security is a

bigger barrier in the UK (33%) and Germany (30%)

than in other countries, whilst France is more

concerned about service costs (27%) than other

countries.

13

Fig 7:Barriers to mobile banking

11%

14%

13%

38%

22%

35%

38%

12%

11%

21%

52%

21%

30%

52%

13%

22%

27%

46%

21%

37%

46%

25%

16%

20%

35%

30%

27%

35%

22%

27%

17%

48%

33%

29%

48%

0% 20% 40% 60%

Don't

understand

how to use it

Phone thef t

Cost of

service

Not sure my

phone

supports it

Security

concerns

Not interested

No t

considered

necessary

UK

Germany

France

Spain

Italy


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O v e r c o m i n g b a r r i e r s t o

m o b i l e b a n k i n g



Interestingly, amongst users of mobile banking, perceptions of security improve, as shown in Figure 8.

Whilst only 33% of non-users consider mobile banking to be secure, this figure climbs to 63% amongstusers of mobile banking.

Similarly, satisfaction levels amongst users of mobile banking are encouraging for the industry. Three quarters

of users of mobile banking are either satisfied or very satisfied with the service and satisfaction levels climb to

90% amongst those for whom the service is free.

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Fig 8:Respondents that agree,

or strongly agree that mobile bankingis secure

33%63%

0% 20% 40% 60% 80%

Mobilebanking

UsersNon-users


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P a y m e n t p r e f e r e n c e s



Figure 9 shows the methods of payment preferred for mobile banking services. The services shown are the

five most popular services from the survey that respondents would pay a nominal fee to receive. Cleary, theservices that justify a per message or subscription payment for mobile users are those that reduce the risk of

money leaving their accounts fraudulently, where, logically, a per message alert service is the most common

preference.

The sample is split more evenly when selecting preferred formats for making payments via the mobile.

Typically, mobile transaction costs, which is most commonly used for infotainment purchases such as theatre

tickets etc., will be absorbed in the overall purchase price. However, Figure 9 shows that, if charges are to be

added to mobile transactions, 40% of respondents are prepared to pay a nominal subscription fee.

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Fig 9:How would you prefer topay for mobile banking serices?60%

66%53%

80%71%

30%19%

40%12%

19%

10%15%

7%8%

10%

Info requests eg.Interest rates

Overdraft alertsPayments via

mobileAbility to freeze a

cardPotential

fraud alertsPer message Subscription No preference


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T e c h n o - l i t e r a t e



One of the considerations that many businesses have to factor into a mobile content strategy is the issue of

technology formats. Though this challenge is being overcome with each new iteration of delivery platforms anddevices, (lack of) compatibility is something that can confuse users. However, surprisingly the Sybase 365

survey shows that users have a high level of understanding of different technology formats, with two thirds of

respondents in each region familiar with technologies such as MMS and WAP. Figure 10 shows that, though

there is a degree of understanding of phone formats, the majority of respondents express either no preference

or dont know which format is preferable. Notably, MMS is perceived to be the best format of the three

provided in the survey

Within the survey, only 7% of respondents describe themselves as techno-phobic, though in France this spiked

to 22%. An additional 6% said they were resistant to technology, but generally speaking mobile users are either

happy to keep pace with tech developments or keen to be ahead of the curve.

Perhaps the most important consideration forbanks regarding the technology considerations of

mobile users is that enthusiasm for mobile banking

is not technology driven. Techno-phobes are no

more or less likely to desire mobile banking

services than early adopters in the survey. It is a

practical need to keep a handle on finances

rather than a want for state-of-the-art services that

creates the strongest driver for mobile banking.

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Fig 10:Preferred mobile format forreceiving banking servives(Brackets show number ofrespondents that could identlfy)

8%

25%

7%

7%

53%

6%

50%

6%

9%

29%

11%

31%

5%

7%

46%

26%

35%

7%

17%

15%

13%

44%

6%

13%

24%

0% 20% 40% 60%

Don' t know

No preference

Prefer Java

Application

Prefer WAP

Pre fe r MM S

UK (177)

Ge rmany (204)

France (187)

Spain (199)

Italy (196)


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Con c l u s i o n



Financial sector organisations have a unique opportunity to capitalise on mobile services, but the strategy will

only pay dividends if executed appropriately. In order to do this, it is important to first understand how mobilebanking fits into a wider mobile picture.

Mobile suggests immediacy of information and flexibility for any type of information delivery. Its usage, in general

terms, is more widely associated with dynamic forms of information, such as sports fixtures and news events.

However, dynamic content can also be relevant to people when looking at personal financial information,

especially for those individuals with lively accounts, or those with share portfolios wanting to track stock price

movements.

The Sybase 365 Mobile Banking survey shows that current adoption rates for mobile banking services sit at

around 7% of mobile users across the five regions sampled in the study. Evidently, these figures will shift from

country-to-country and by demographic variables, but this modest level of use tells a story in itself.

Mobile banking is very much in its infancy. Despite this, mobile devices are becoming increasingly sophisticatedcommunication tools, with mobile users becoming more familiar and comfortable with data and text based

services.

Mobile services deliver value in one of two ways: Monetisation and cost reduction. Monetisation is often

presented as the more vibrant area for businesses to focus on, especially in the media and entertainment

fields where premium pay mobile content creates exciting new revenue opportunities. Here lies one of the

first important considerations for the banking sector; consumers seem prepared to pay handsomely for

ringtones and wallpaper for mobile devices, but they are less enthusiastic about the parting with money for

an SMS bank statement.

There are monetisation opportunities for the financial sector as people are prepared to pay for premium services,alerts of potential fraud activity, card freezing, overdraft alerts and mobile payments are cited in the survey as

the most popular options for subscriber, or per message payments.

The legacy of bank charges, and the highly emotive response it renders from customers, is a potential barrier

to mobile services adoption. If customers are resistant to charges from banks then mobile charges may

compound this issue. However, as the precedent for paying for services has already been set by existing

services, some customers will tolerate fees. On average, one in three people in the survey would pay a

nominal charge for alerts on overdrafts or fraud payments.

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Con c l u s i o n



Cost reduction also presents a compelling business proposition for mobile banking services. Creating data

services to lighten the burden on customer services infrastructure, whilst also adding value to the customerexperience, is more likely to create a business case for financial services companies. In short, banks need a

360-degree view of mobile service deployment and its benefits to customer and operational expenditure alike.

Financial sector organisations need not look at mobile users in the same way that an operator or content

providers does. Average Revenue Per User (ARPU), the common model for establishing commercial feasibility

of a mobile data project, should be exchanged for a Total Cost of Customer Ownership model in orderforbanksto fully realise mobile data opportunities.

Overall, the signs for the industry are look promising. Users are generally satisfied and with use, any lingering

security concerns are largely allayed. The onus is on the industry, banks in particular, to more actively promote

mobile banking services and to highlight the benefits of mobile banking to an audience who are likely to be open

to using another tool to support their financial fastidiousness in a more immediate manner than the Internetcan provide.

In response to the findings, Sybase 365 has developed five key considerations for evolving mobile services andadoption in the banking sector:

Increase awareness of mobile banking services amongst customer base

Develop more sophisticated mobile data services beyond balance and payment updates

Establish the enthusiasm for mobile banking services with different aspects of the customer demographic

Evaluate operational savings of text push services to replace aspects of customer service proposition

Use flexibility of mobile data projects to validate wider strategy mobile services expansion

Mobile banking should not be seen as a panacea for all customer needs. Like any technology format it is a tool

that can enhance existing services. However, it appears that existing mobile provisioning could do more to

capture the imagination of mobile users. In a sector where innovation and cost management is integral to

commercial success there are solutions to operational and customer needs held in the vaults of mobile

banking service. The challenge ahead for financial sector businesses is finding the right combination to unlock

this mobile potential.

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For further information on theSybase 365 Mobile Banking Study,please contact:

Carmel [email protected]

Tel: +331 53 05 29 10Fax: +331 53 05 29 09

mobile opportunities for the financial sector (emea)

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