Canadian banks ramping up mobile initiatives

Canadians are increasingly embracing mobile banking and perhaps over time, just as it has with online banking, it'll overtake traditional branch banking. However likely or unlikely that may be, it's the very possibility that's driving financial institutions to experiment with new mobile banking initiatives as a means of providing customers with more avenues to get to their money.

More consumers are doing their banking from smartphones and personal computers than visiting a branch in-person, according to J.D. Power & Associates' recently released 2012 study on Canadian retail banking customer satisfaction

With no bricks and mortar branches to speak of, ING DIRECT Canada is one bank that's looking long with an eye on being ready to capitalize on the technology trend.

"Overall, we see a fairly seismic shift in what's happening," says Charaka Kithulegoda, CIO at ING DIRECT Canada in Toronto. "In the past 36 months or so, consumers — and this is making its way into financial services — are telling us what they want and how they want to use these services.

"The predominant usage now (of mobile banking apps by consumers) probably is toward looking at balances. But we're seeing an increase in email money transfers and bill payments."

Moving beyond bank balances

Steve Tyers, vice-president of eChannels strategy for CIBC in Toronto, agrees there's a mobile shift in play. He notes across all of CIBC's channels, mobile-based bill payments has jumped to 7 per cent from 5 per cent of the total pie since the start of this calendar year.

"We're calling this an inflexion point right now. This is a pretty exciting time in the worlds of technology and banking as banks don't launch new channels very often," he says. "With mobile, we see an opportunity to enhance our clients' experience and it gives us a way to build deeper relationships with them.

"Recently, we're seeing a lot of clients using mobile channels as a complement to other channels for their day-to-day banking."

Warren Shiau, director of research, technology and consumer insight, Leger Marketing in Toronto, says mobile banking is becoming more transactional among those who have adopted its use.

"Instead of just checking balances and doing little else, mobile banking is actually being used for banking purposes, such as paying bills, transferring money between accounts and so on," he says. "The main driver for this shift is smartphones and iPads being or becoming the main personal computing devices for many mobile banking adopters. As people move away from desktops and laptops, all the things they would do via Internet banking, they start to do via mobile banking."

Security continues to hinder growth

But security fears persist in the minds of consumers whenever a newish banking channel emerges. Canadians have collectively gotten over any hesitation related to online or telephone banking. Perhaps it's but a matter of time before mobile banking can be added to that list.

"It's a natural apprehension and it is very similar to when ATMs were introduced just outside a branch," Kithulegoda says. "We're experiencing the same thing moving from the online to the mobile channel. We play a major role in educating and ensuring we're transparent in the services and security that we provide and building that trust."

CIBC's Tyers agrees it's natural for new banking channels to raise security concerns but he adds his institution is so confident about the various security measures governing mobile-based banking that it guarantees its' customers' security.

"We feel we've mitigated the risks so that clients can be comfortable," he says. "I think the data around increased mobile-based bill payments that we're seeing shows the comfort level is there."

Social media and banking

Beyond its standard banking mobile app, ING DIRECT Canada says it will also soon roll out a Facebook application that allows its clients to view account balances, history, pending transactions, alerts and interest rates without having to leave Facebook.

"The way we look at it is it's about providing choice. We're not telling people that they have to bank via a social channel," Kithulegoda remarks. "Facebook is not an application, it's a platform and a channel. You interact with family and friends there, why treat your bank account differently? Your bank account should be one of your best friends in my opinion.

"On the Facebook application, we are not storing nor disclosing any information into Facebook. We're leveraging the same security that we have on our website and our mobile applications … we do understand that it's not for everyone."

Leger Marketing's Shiau says whether new social-based banking or mobile banking initiatives or apps succeed is a function of what people really want to do when they're engaged in social media-related activities.

"The problem is the mindset people are in when they're engaged in social media activities isn't really conducive to consuming advertising or to performing banking and business transactions," he suggests. "As a matter of convenience, I'm sure that a Facebook app that allows clients to view balances, etc., without having to leave Facebook will be convenient for some. But I don't think anyone would realistically be looking at such an app as a big growth driver."

More innovation to come

Canada's banks are reportedly working on rolling out a number of other mobile enhancements in the coming months, including mobile cheque deposit functionality and biometric identity verification.

ING DIRECT Canada's Kithulegoda says his bank will be launching a mobile cheque desposit pilot program this fall. But, the governing rules around depositing cheques have yet to change.

"Our pilot will still require users to mail a cheque in," he admits. "But you can still earn interest right away and you don't have to carve out the time to mail the cheque to us or go to an automated banking machine.

"When the rules change, we'll be ready to respond very quickly."

Using an individual's biometrics to login to a bank account instead of a PIN is likely also forthcoming.

"I think mobile cheque deposits are going to be really big — everyone wants this to succeed because it'll cut down on 'in-process' time by significant amounts," Shiau says. "Biometric identity verification might be bigger in the sense of providing perceived security, even if consumers don't sign-up for it themselves. But how many people actually use the fingerprint reader on a laptop? It's a great security feature, no doubt there."