MBA Best Mobile Banking Presentation

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Mobile Banking - Should you do it or not?

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  • P2P – peer to peer
  • The CEO Mobile service provides mobile versions of reports and services available on the Commercial Electronic Office® (CEO®) portal. With this service you can do all this and more:Initiate, approve, or reject wires View account balances Monitor cash flows in up to 20 accounts Manage fraud protection services Administer users and reset passwordsSecurityCEO Mobile sessions and data transmissions are safeguarded by 128-bit SSL (Secure Socket Layer) encryption.AccessIf you are authorized for reports and services on the CEO portal, you automatically are authorized to receive the CEO Mobile service versions as well. No set-up or implementation is required, and most smartphones are supported. To learn more about the CEO Mobile service, contact us.
  • FFIEC - Remote Deposit Capture Risk Management GuidelinesFIL 84-2004 Guidance on Instant Messaging FIL 8-2002 Wireless Network Risk ManagementATMIA - Best Practices for Mobile Phone Banking Security GuidanceWith the number of US online banking households now utilizing mobile banking jumping from 1% in 2007 to 35% in 2010
  • MBA Best Mobile Banking Presentation

    1. 1. Michigan Bankers<br />Bankers Education Summit & Trade Show<br />Mobile BankingRaj Patel, PartnerPlante & Moran<br />April 2011<br />
    2. 2. Introduction & Overview<br />Customer channel evolution<br />Landscape & trends<br />Should you do it?<br />Security & regulations<br />Closing thoughts<br />1<br />
    3. 3. Customer Channel Evolution<br />
    4. 4. Customer Channel Evolution<br />2<br />High<br />Branch<br />Transaction Maturity<br />Mail<br />Low<br />Customer Interaction<br />High<br />(Size of Bubble = Relative Importance to Customer)<br />
    5. 5. Customer Channel Evolution<br />2<br />Branch<br />Transaction Maturity<br />Mail<br />Phone<br />Customer Interaction<br />(Size of Bubble = Relative Importance to Customer)<br />
    6. 6. 2<br />Branch<br />ATM<br />Transaction Maturity<br />Mail<br />Phone<br />Customer Interaction<br />(Size of Bubble = Relative Importance to Customer)<br />Customer Channel Evolution<br />
    7. 7. 2<br />Branch<br />Internet<br />Banking<br />Transaction Maturity<br />ATM<br />Mail<br />Phone<br />Customer Interaction<br />(Size of Bubble = Relative Importance to Customer)<br />Customer Channel Evolution<br />
    8. 8. 2<br />Mobile<br />Branch<br />ATM<br />Internet<br />Transaction Maturity<br />Mail<br />Phone<br />Customer Interaction<br />(Size of Bubble = Relative Importance to Customer)<br />Customer Channel Evolution<br />
    9. 9. Mobile Banking <br />Landscape & Trends<br />
    10. 10. Terminology<br />3<br />Mobile Banking: <br />Use mobile device to connect to a financial institution to view account balances and transactions, transfer funds between accounts, pay bills, receive account alerts, deposit checks, etc.<br />Mobile Payments<br />Use mobile device for purchase or other payment-related transaction at point of sale (proximity) or via internet (remote)<br />May be conducted via SMS, MMS, mobile Internet, downloadable application, contactless or barcode technology<br />Process and settle over traditional banking networks (credit, debit, ACH), mobile carrier or other third party network<br />
    11. 11. Forms of Mobile Banking<br />4<br />SMS (Short Message Service): Send & receive text messages & alerts <br />90% of US phones<br />Limited to 160 characters<br />Uses existing carrier infrastructure<br />Less security, no encryption<br />WAP (Wireless Application Protocol): Browser access via mobile phone to Internet content<br />60% of US phones<br />No downloads required<br />For online banking customers<br />Small screen, slower data Transmission, expensive data plan<br />Downloadable Smartphone Application: User friendly apps customized to smart phone type<br />30% of US phones<br />Blackberry, iPhone, Android<br />Faster navigation, easy setup , more secure<br />Involves custom application development<br />8.1 million users<br />35% increase<br />18.6 million users<br />58% increase<br />10.8 million users<br />120% increase<br />Source: comScore<br />
    12. 12. Mobile Banking Landscape<br />5<br />All National banks, most regional and many community banks offer mobile banking services<br />National banks offer downloadable applications, SMS and WAP/browser-based mobile access (Triple Play)<br />Community banks and credit unions may implement their core processors’ mobile packages<br />Community banks usually start with basic, information-based services Branch & ATM locators, transaction history, balance inquiries<br />Payment or transaction services are usually Phase 2<br />Most banks do not charge for mobile banking <br />
    13. 13. 2010 ICBA Survey<br />6<br />The ICBA & Plante Moran Technology Survey results for Mobile Banking from 895 Community Banks from June 2010:<br /><ul><li>15% of Community Banks already have Mobile Banking available to customers
    14. 14. Another 47% of the respondents plan to have it available within the next 24 months!</li></li></ul><li>Features Offered by National Banks<br />7<br />Source: Javelin Strategy & Research, July 2010<br />
    15. 15. Features used by Consumers<br />8<br />Source: Javelin Strategy & Research, July 2010<br />
    16. 16. Mobile Remote Deposit<br />9<br />Use phone’s camera to capture front & back images of check & send to bank for deposit<br />Expected high adoption rate with consumers and small businesses that process low check volumes<br />Reduces Bank’s paper check process costs<br />Less reliance on branch<br />USAA first to offer m-RDS<br />(Deposit@Mobile for iPhone & Android)<br />Chase Quick Deposit – July 2010<br />BoA to launch with iPhone in 2011<br />
    17. 17. Mobile P2P Payments<br />10<br />Mobile P2P allows bank customers to send funds to recipient accounts at another bank or to a PayPal account using a mobile phone<br />Senders register to activate mobile phone and send via email address or mobile phone number of recipient<br />Transactions usually settle through ACH<br />Very few banks offer mobile P2P<br />A few are partnering with 3rdparties to offer online and mobile P2P (e.g. CashEdge, PayPal or Obopay)<br />Replaces cash and checks for informal, low dollar payments between people you know<br />Popmoney by Cash Edge <br />Popmoney allows bank customers to "Pay Other People" (POP) anywhere, at any time, using only a recipient's email address, cell phone number or bank account information.<br />Offered directly from within the bank's current online or mobile banking applications, Popmoney provides simple, convenient and secure email and mobile payments directly from a customer's bank account. <br />
    18. 18. For Businesses<br />11<br />Banks originally focused on consumer mobile banking <br />Corporate/small business markets offer new bank opportunities<br />Businesses want ability to monitor transactions, transfer funds, receive account alerts, with assurance that system is secure <br />Examples<br />Treasury/Cash Management<br />Wells Fargo CEO Mobile<br />Wall Street Systems Treasury on the Move<br />Financial trading<br />e-Trade Mobile Pro<br />Small Business credit card acceptance<br />Business T&E<br />40% of executives surveyed in 2010 would consider mobile banking for their businesses<br />
    19. 19. Contact Less Payments<br />12<br />
    20. 20. What else ……<br />13<br />
    21. 21. Mobile Banking <br />Should you do it?<br />
    22. 22. Key Decisions<br />14<br />Why are you doing it?<br />To stay competitive<br />Customers are asking for it<br />What services are you going to provide?<br />SMS<br />WAP<br />Smart App<br />Demographic study<br />% of customers that would use this channel<br />Current statistics on mobile usage<br />Cost for implementing mobile banking<br />Evaluate current vendors<br />Existing core banking vendor<br />
    23. 23. US Mobile Banking Users Forecast<br />15<br />Source: Federal Reserve Bank of Boston<br />
    24. 24. Could you lose customers?<br />16<br />
    25. 25. Other Stats<br />37% of all applications downloaded on iPhone, Blackberry and Android were banking/finance related applications<br />In 2010, three out of four users are happy with their mobile banking experience (FIS study)<br />'We are seeing mobile deployments by banks accelerating in 2011, with our clients growing mobile users by 35% monthly,' said Douglas Brown, senior vice president of FIS. <br />In 4thQtr 2010, 30 million Americans accessed their bank, credit card or brokerage account from a mobile device. Up 54% from same quarter in prior year<br />17<br />
    26. 26. Demographic Analysis<br />18<br />Reference Group<br />Relatives & Friends<br />Sociability<br />Bank clerk / marketing<br />Usage Pattern<br />Speed of use<br />Ease of use<br />Contains all banking services<br />Independence from time and place<br />Demographics<br />Gender<br />Age<br />Marital Status<br />Education<br />Income<br />Profession<br />Technology Perception<br />Mobile phone services<br />E-mail<br />Internet<br />Security Constraints<br />Mobile banking is reliable<br />Electronic channels are reliable<br />
    27. 27. Demographic Analysis<br />18<br />Source: a research study from Finland<br />
    28. 28. Demographic Analysis<br />18<br />Reference Group<br />Relatives & Friends<br />Sociability<br />Bank clerk / marketing<br />Usage Pattern<br />Speed of use<br />Ease of use<br />Contains all banking services<br />Independence from time and place<br />Demographics<br />Gender<br />Age<br />Marital Status<br />Education<br />Income<br />Profession<br />Technology Perception<br />Mobile phone services<br />E-mail<br />Internet<br />Security Constraints<br />Mobile banking is reliable<br />Electronic channels are reliable<br />
    29. 29. Operating Cost / Transaction<br />19<br />Cost per Transaction<br />
    30. 30. Vendors<br />20<br />ClairMail<br />Clickatell<br />Firethorn Mobile<br />FIS<br />Fronde Anywhere<br />Harland Financial Solutions<br />Jack Henry - goDough<br />M-Com <br />recently purchased by Fiserve<br />mFoundry<br />Monitise Americas<br />Mshift<br />Sybase 365<br />Tyfone<br />Yodlee<br />
    31. 31. Mobile Banking <br />Security & Regulations<br />
    32. 32. Preventive Measures<br />21<br />Banks<br />Secure (encrypt) communication channels: SMS, browser based, downloadable apps<br />Assign security levels & user authentication based on payment type, transaction value, number of daily transactions, etc.<br />Set transaction limits<br />Know your vendor: ensure mobile apps have built-in safeguards to limit security breaches in case device lost or stolen<br />Apply due diligence for new customers by authenticating account number and user name<br />Educate consumers on security policies and tools<br />
    33. 33. Preventive Measures<br />22<br />Consumers<br />Set strong passwords, install anti-virus software on smart phones<br />Know the developer before downloading applications<br />How well have they tested the app? <br />Is it certified?<br />Do not store sensitive data on mobile phone<br />Receive mobile alerts on potentially fraudulent transactions <br />About a year ago, owners of Android smart phones began downloading mobile banking apps from Google's Android Market. The apps cost about $1.50 each and connected users with about 40 major banks, including Bank of America and Wells Fargo. There was only one problem: <br />The banks hadn't put them there."<br />
    34. 34. Regulatory Guidance<br />23<br />What guidelines are regulators currently offering?<br /><ul><li>FFIEC E-Banking, Appendix E: Wireless Banking
    35. 35. Risk Implications: Transaction / Operations risk and Strategic Risk
    36. 36. Message encryption
    37. 37. Password Security
    38. 38. Wireless Vendors
    39. 39. Product & Service Availability
    40. 40. Disclosure & Message Limitations
    41. 41. Other related guidance includes:
    42. 42. FFIEC - Remote Deposit Capture Risk Management Guidelines
    43. 43. FIL 84-2004 Guidance on Instant Messaging
    44. 44. FIL 8-2002 Wireless Network Risk Management
    45. 45. ATMIA - Best Practices for Mobile Phone Banking Security Guidance</li></li></ul><li>Closing Thoughts<br />24<br />The demand for Mobile Banking is growing at a rapid pace<br />Two biggest deterrents to enter Mobile Banking<br />Cost to implement<br />Security unknowns<br />Given the current economy, now might be the best time to invest<br />Mobile banking will keep you competitive, increase deposits, decrease cost to service and increase margins<br />If implemented properly, Mobile Banking can be more secure than Internet Banking<br />Take advantage of your branches to provide customer training – the more comfortable they are, the more they will use it.<br />Do expect to see guidance (and regulatory auditors) soon<br />Make sure you optimize your web pages for the mobile web!!!! <br />
    46. 46. Thank You!<br />Raj Patel, Partner<br />Plante & Moran<br />Tel: 248-223-3428<br />E-mail: raj.patel@plantemoran.com<br />

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