Numerous analyst reports have
recently highlighted what many in the industry already knew: 2011
will represent a tipping point in the mass adoption of mobile
financial services. But is the financial services industry truly
prepared for this game-changing event?, asks James
Richards.
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Juniper
Research recently predicted that one in five mobile users will use
some kind of financial service on their device by 2013. However,
this adoption will not be without its challenges and the risk
associated with mobile, as perceived by many banking customers, is
one of the most significant to overcome.
In order to ensure 2011 delivers on
its promise, it is crucial banks offer mobile applications that
deliver a high-quality customer experience within a secure
environment.
The problem is the necessary
security techniques often make a mobile application too cumbersome
which turns away many potential users and dilutes the value of this
interactive channel.
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By GlobalDataDrivers impacting mobile
adoption
Proving the business benefits of
delivering a mobile banking service, IE commissioned a YouGov
survey that found that one in four of Generation Y (aged between 18
and 34) would improve their opinion of their bank if it offered
mobile phone banking services.
A separate IE poll of the financial
services industry itself demonstrated UK bank executives are tuned
into these customer needs. 36% rated increased customer
satisfaction as the primary driver for investing in mobile
services.
However, banks and consumers are
wary about the security challenges that must be navigated.
According to KPMG, 79% of global consumers are concerned about
potential unauthorised access to personally identifiable
information (KPMG, Consumers & Convergence IV,
2010).
Financial institutions that are
developing their mobile banking strategies must weigh up the
different routes to market. Two approaches are ‘apps’ and mobile
web – both of which have their own advantages and drawbacks.
Choosing the right
format
Apps allow organisations to provide
a highly tailored and valuable service to their customer base. Apps
are viewed by many as the preferred approach for providing the
richest mobile experience to the end consumer and one which
represents the greatest potential for innovation.
On the other hand, the major
benefit of mobile web is its wide range of accessibility – any
device which can connect to the internet can access mobile web
pages. This means it is easier to support from an IT perspective
but the trade-off is a less rewarding end user experience.
When it comes to security, mobile
applications can cryptographically secure your data which means
that all a user needs to do is prove that they are authorised to
use the app with a simple but secure password. This delivers a
straight-forward and relatively rapid check for the consumer but
one that is also very secure.
It’s not all about the App
Store
Mobile security also varies
significantly between different platforms. The most prevalent
platforms that are driving the adoption of mobile apps are RIM
(Blackberry), iPhone, Windows Mobile and Android.
Blackberry is more traditionally
associated with the business user and is, therefore, subjected to
the potential of usage restriction by corporate IT departments,
whereas iPhone and Android are rapidly becoming the defacto choice
for the consumer.
There are currently no mobile app
security standards across the industry and as a result, each
platform has its own requirements for banks seeking to launch
financial services applications.
For example, applications being put
forward for the AppStore for Apple undergo stringent security tests
and can be cryptographically signed by both the vendor and Apple
itself, whereas on the Android platform, there currently isn’t a
trusted distributor of applications.
It is important to consider the
various security requirements and factor them into the mobile
development project timeline. Some financial institutions are
opting to roll out one app at a time to make the process easier,
reflecting the challenge that in-house teams currently have in
terms of the right resource to deliver their mobile strategy.
However, this approach is not ideal
as it means the service is not available to the widest pool of
customers.
Balancing user experience
with security
How a bank asks its customers to
identify themselves and then check they are who they say they are
is critical to both security and the user experience.
There are multiple approaches
around customers supplying various inputted credentials but banks
need to be careful that the process is not too complex as this
increases the likelihood that customers will revert to other
banking channels. Instead, security must be balanced with the end
user experience; for example, relatively light authentication to
simply check a balance but more additional layers added for tasks
such as paying a bill or transferring money.
Maintaining customer security in
the event that a customer loses their mobile device is also an
important factor.
The future of mobile
banking
It is clear the threat of malicious
activities aimed at mobile consumers will never go away and that
these threats should be tackled pro-actively.
However, mobile applications and
services may be more secure than many realise and in the case of
smart phone apps, they offer a degree of security in advance of the
online world. Spreading this message will be crucial if the
anticipated widespread adoption of mobile financial services in
2011 is to become a reality.
James Richards is director of
mobile at IE
