November 20, 2011

Wichita banks roll out their mobile options

Intrust Bank, the area’s largest bank, is rolling out its first mobile banking product, about four years after the bank-by-cellphone concept was introduced by Bank of America.

Intrust Bank, the area’s largest bank, is rolling out its first mobile banking product, about four years after the bank-by-cellphone concept was introduced by Bank of America.

The idea that Intrust is late in rolling out a new delivery channel seems to run counter to recent history. Intrust, which has $3.7 billion in assets and is the largest bank headquartered in Kansas, was one of the first area banks to offer online banking in the 1990s.

But the reasons for its tardiness in joining the newest bank technology trend underscores an issue other financial institutions face: No two cellphones are alike. Reaching the most customers means having a product that works across the spectrum of phones and tablets out there: smartphones, feature phones and phones and tablets with Apple, Android and Windows software.

“We could have jumped on board a couple of different times with vendors and whatever solution they had at the time, but it was never quite right for us,” said Lisa Elliott, Intrust’s marketing and advertising manager, who is helping to oversee its launch of mobile banking. “Yes, we’re finally rolling out a mobile banking product, but it covers all the bases.”

The mobile banking trend is not something financial institutions should bypass, executives and experts say. Customers are using the technology in larger numbers and at a quicker pace than they did online banking. Institutions that are late in implementing the product risk losing customers or attracting new ones.

“We’ve seen it influence folks’ decisions on where to place their money,” said Tim Daley, a senior consultant at Cornerstone Advisors, a Scottsdale, Ariz.-based financial institution consulting firm.

Elliott said Intrust is just now beginning to launch the product – which is free to its customers – after doing a soft launch several weeks ago, first to employees and then to customers through its Facebook page.

She said one of the myriad challenges with launching the product was waiting on Apple and Google to make the bank’s iPhone and Android apps available in their respective “stores.”

“When you submit something to the Apple and Android markets … you don’t know when it’s going to (be available),” Elliott said. “We wanted to make sure once it was available in the stores we had sufficient time to test.”

She said the product will work across a number of smartphones. For customers without a smartphone, the product has a text component so customers can access mobile banking by texting.

“I definitely feel this is worth the wait,” Elliott said.

Compared with its peers, Intrust has a higher-than-average number of customers who use online banking. Bank officials expect the same from its mobile banking, once Intrust begins heavily marketing it.

“I think when we go public … we’ll really see people jump on board,” Elliott said.

Quick acceptance

That’s a reasonable expectation based on Bob Corwin and Bob Thurman’s experience.

Corwin is CEO of Meritrust Credit Union, which at $735 million in assets is the state’s largest. Meritrust is also one of the area’s first locally based financial institutions to offer mobile banking, beginning in 2008.

But Corwin said that offering was less user-friendly and was not adapted well to the smaller screen of a phone. Three months ago, however, Meritrust rolled out an iPhone app, followed a month ago with an Android app. He thinks the addition of the two apps will probably lead to a substantial increase in the number of Meritrust customers using mobile banking, which totaled 2,000 at the end of September.

“The … two apps are so new it’s too early to tell how much of a bump we’ve seen or might see,” he said. “I would not be a bit surprised that in six months we see 5,000 users.”

Meritrust has 70,000 members.

Wichita-based Credit Union of America, the state’s second-largest credit union, did a soft launch of mobile banking in June, followed by a full-fledged launch about a month ago.

Thurman, CUA’s president, said between June and the end of October, CUA has enrolled 1,400 mobile banking users.

“We think that’s going to pick up again with some more of the marketing,” Thurman said.

The $391 million-asset credit union has a little more than 38,000 members.

“I think we’re probably on a faster pace than what we would have guessed,” he said of the number of members signing on to mobile banking. “The acceptance is coming pretty quick.”

He added that CUA has added some new members because of its mobile offering.

Daley, the consultant, said he’s not surprised by the rapid adoption of mobile banking that CUA is seeing. He said mobile banking has changed the model of customer product adoption.

“The adoption rate has quickened,” Daley said.

For financial institutions, that means the decision-making window has narrowed.

Executives used to have “36 to 60 months to make a decision,” Daley said. “It’s now kind of a 24-month time window.”

Cost, however, should not be a barrier. Daley said the costs for a financial institution to provide mobile banking are coming down because more institutions are offering it. He said there is not a magic number for what it costs an institution to offer mobile banking because pricing is determined by asset size, number of customers using it and transaction volume.

A branch killer?

The possibilities for mobile banking have not been exhausted.

Corwin thinks it’s a matter of time before customers who use their phones to check balances, transfer money between accounts and pay bills will also be able to use them to pay for merchandise in stores.

“That’s not available yet but there are tests being conducted,” he said.

One service that is coming closer to reality is using a camera-equipped phone to capture an image of a check and deposit it into a checking or savings account. The industry calls it remote deposit.

“That makes this channel even more viable for people,” he said.

Neither Corwin nor Daley think mobile banking will make branches obsolete. A branch, they said, still serves as a financial institution’s primary sales center. It’s where institutions can up sell customers on new products and services, help them open new accounts and resolve customer problems.

“I believe that the configuration and design and functionality of what we call traditional branches is likely to change pretty substantially” Corwin said. “If today 80 percent of the space in a branch is devoted to transactions and 20 percent to sales and service, that’s going to flip-flop.”

Daley agrees.

“Ninety percent of products and services sold by any financial institution still occur in the branch,” he said. “We don’t actually see (mobile banking) being a substitute channel. It’s (an) additive (channel).”

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