More banks are moving to mobile online banking for retail customers, setting the stage for mobile phone banking for businesses.
In any economy, boom or bust, cash flow is critical to business survival. Online banking has provided business managers with a near instantaneous look at their balance sheets, but even more real-time promise will come from mobile banking. In this era of technology-enabled mobility, the predictions come fast and furious, and one forecast is that the smart phone eventually will take the place of the debit card.
That certainly appears to be happening, particularly for the banking industry’s retail customers. However, the same online banking capabilities that are emerging for personal banking will slowly but surely become available for business banking. Wisconsin banks that have introduced mobile service for consumers also have plans to introduce mobile banking to businesses in 2013 or shortly thereafter.
How will this apply to running businesses? Will business customers have the same mobile functionality as retail customers? What are the necessary security measures?
Since it’s important for businesses to have mobile banking service on their radar, we spoke to area bank executives to find out what they can expect when their banks roll out this service.
13 million reasons
Rose Oswald Poels, president and CEO of the Wisconsin Bankers Association, said she’s amazed at what consumers can do with their smart phones. The most robust mobile banking operation enables consumers to capture a picture of an endorsed payroll check and electronically deposit it just by submitting that photo, which was not only inconceivable a few years ago but represents a tremendous convenience.
“With mobile banking, it depends on the level of sophistication of not only the product the bank is offering, but also what your personal phone is capable of doing,” she said. “The technology is pretty amazing in terms of what it can do.
“Some people consider mobile banking something that you can do by accessing the Web from your phone, getting onto a bank’s website, and transferring money that way. You can do that from a PC or a phone, if you can get at the Internet with your phone.”
At the moment, there is still more demand for mobile banking on the retail side, which is why banks have chosen to introduce that service first. The American Bankers Association conducted a survey of bank members and found there were nearly 13 million mobile users who were using banking apps in 2011, a 45% increase over 2010. The vast majority of them download these apps for personal use, but there are still a fair number of banks that have rolled out such services to business customers.
“I do think the demand is much greater from consumers, but again, nationally in 2011, about 60% of the banks offered mobile banking to consumers, and about 50% offered it to business customers,” Oswald Poels said.
While there are a number of different vendors, many Wisconsin banks look to the Milwaukee-based Fiserv for its mobile banking product, Mobility. Fiserv also has a person-to-person payment product, enabling people to move money from their account to another person’s account with the individual’s email address or mobile phone number.
If mobile banking’s growing popularity among individual consumers is any indication, Oswald Poels expects more banks to move these services to the business realm. “I think it will definitely grow,” she opined. “In terms of how many banks are offering mobile banking services, it’s 60% to consumers in 2011, as opposed to 20% two years before that. So we saw a dramatic jump from 2009 to 2011, and I think you’re going to see another pretty significant increase for 2012 and 2013.”
She isn’t as convinced that its growth among business customers will be as rapid, given the natural limitations involved with offering it to private enterprises. “It’s always more complicated for a bank when it deals with a business customer who typically has more than one authorized signer compared to a personal account, where there are at most two people typically accessing that account – a husband and wife, for example, or simply one individual,” she noted. “There is certainly greater risk in offering any kind of electronic service, whether it’s online banking or mobile banking, because the banks ultimately have some liability that they need to be aware of to make sure it’s only an authorized person conducting a transaction.
“But again, some of that also is that businesses prudently want greater controls over their bank accounts, and want to prevent fraud on their side of the equation, too. There is naturally less of a tendency to move so quickly in a direction like mobile banking for a business, compared to an individual.”
Business on deck
State Bank of Cross Plains introduced mobile banking for retail customers in May of this year, and is looking to make it available to business customers as early as next year. Customers choose from three mobile banking options: SMS text messaging, a downloadable application for Android and iPhones, and a Web browser version.
Betty Nonn, vice president of operations for State Bank of Cross Plains, said the bank should be able to offer the same features and functionality to business customers that it does to retail customers. They include the ability to confirm wire transfers, approve funds transfers, and establish different access levels for individual users.
In terms of customer acceptance, Nonn said the early returns are encouraging, as people use it to inquire into any of their personal accounts, view their statements and transaction activity, view check images, and transfer funds. If they are currently set up for the bank’s bill-paying system, they can pay bills through the mobile app.
“I know what’s coming from a business standpoint, when we roll that out, is when a business owner is traveling and one of the office people wants to transfer funds, he or she could approve that transfer if they wanted that extra level of security,” Nonn explained. “They could approve a transfer over the mobile phone app, they could approve a wire transfer with the extra functionality they would have.”
Extra functionality and extra prudence. Under this service, Nonn said business owners would be able to set up unique access rights for each of their employees, so they could limit one person to inquiry only, and give another employee full access.
While State Bank of Cross Plains hasn’t received a lot of inquiries from interested businesses, it is getting some. The bank has a lot of small business customers who probably don’t do a lot of traveling abroad, where an online banking service would come in handy, but they are starting to become more mobile. “We also have a lot of small business construction types with contractors in the field, and online banking could be good for them for getting a balance alert, or deciding to transfer funds,” she noted. “A lot of that they could do while they are on the go.”
As with all online banking, security will be provided through encryption and steps taken to ensure that funds don’t get transferred fraudulently. “With some of the setup you go through in registering a specific phone, and the types of transfer they can do via mobile device, there isn’t a lot of chance of shipping money out of the bank through the mobile phone with another form of verification, so it knows the type of device, the phone number, and the carrier,” Nonn explained. “They receive the multifactor image, similar to what they do with Internet banking, and then they have a password to input.”
The evolution of mobile banking on the retail side has grown parallel to the interest in overall mobility. Nonn, acknowledging a much greater need on the personal side, said around the time that smart phone use started to explode, the bank suddenly was getting phone calls from customers interested in banking through their phones. They were trying to log in and use the bank’s standard Internet banking on their cell phone, and most of the time they could do it, but it wasn’t built for that.
“It wasn’t sized properly,” Nonn acknowledged. “It still allowed quite a few of our customers to bank online, but from a convenience standpoint, we wanted to make it simpler for the customer.”
Associated Bank is another institution that has introduced mobile banking for retail customers, and plans to launch a business service, perhaps sometime in 2013. Laura Kahl, senior VP-director of e-commerce marketing for Associated Bank, said an integrated retail service was developed in conjunction with Fiserv Mobility. The due diligence process involved a request for proposal, interviews with prospective vendors, and various customer referrals.
The result was a service that has downloadable applications accessed through the user’s iPhone Web browser. Customers can review balances and their transaction history, transfer funds, pay bills, and sign up for and receive alerts to receive a notification either by email or text message. “If they have a low balance and want to be alerted when they reach a certain low threshold in their account, they can,” Kahl explained. “They would receive an actionable alert so they could text back and order a transfer of $200 from their savings or checking account to cover any balance issue.”
They can also receive a transaction alert, notifying them whenever a check is deposited or a withdrawal is made, and they can set up alerts that remind them to pay bills and then do so by phone in a matter of seconds. They also can use the service to find a branch or an ATM with the help of their smart phone’s GPS system.
Fraud is prevented through a variety of methods, and the mobile service features the same level of encryption as Internet banking. Associated provides a variety of preventive information to customers, starting with how to choose a secure password. Users can put a pin mark on their mobile device that prevents unauthorized access. If they lose their device, or if it’s stolen, they can access the bank’s online system on their PC or laptop and quickly deactivate it.
While a business launch is planned in 2013, Kahl said the bank would like to take more time addressing customer needs. “We want to provide all the same things, in terms of features and functionality, that users can do on their consumer banking platform,” she stated. “The main driver was technology adoption across the board, with people continuing to adopt digital channels. Whether it’s on the Web or mobile devices, we are seeing a lot more people adopt mobile phones.
“A lot of people in the banking industry are starting to offer those features and functions, so that also really drove us there.”
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