Independent Banker - September 2017 - 73

full range of mobile payments: P2P,
bill pay, POS pay and mobile account
transfers, among others.
According to Richard K. Crone, a
mobile payments strategist and the
head of Crone Consulting, LLC, " The
biggest mistake community banks
make when developing a mobile payments
strategy is not integrating it
into their existing infrastructure. "
Crone says that the fi rst step in any
mobile payments strategy involves
conducting a service interaction
analysis. This provides objective
measurements and top-use cases and
touchpoints in every channel and
function of the bank. The resulting
data provide management and the
board of directors with objective
measurements to guide strategy and
decision-making.
Jeff Casey, chief digital offi cer
of First Financial Bank, N.A., a
$6.93 billion-asset community bank
in Abilene, Texas, felt strongly about
gathering the right data and interpreting
that data in light of the bank's
mobile payments strategy.
" We thought mobile was going to
be very transformational, and not
just as an extension of online banking
channels, " says Casey. " We worked
to identify what transactions we
were seeing online and in the branch
and which we could transfer over
to mobile. "
Casey admits that the level of detail
that went into the analysis and the
effort it took to gather the data from
disparate channels and analyze it in
an apple-to-apple comparison structure
were formidable challenges. For
First Financial Bank, working with a
consultant saved time and money in
the long run.
" ICBA Bancard has agreements
with consultants that banks can
retain at a discounted cost, " points
out Giorgio. " Also, most of the core
processors who have digital services
can provide support. "
Thomas P. Ormseth of Wintrust
Financial, a community bank in the
Chicago area with assets of approximately
$26.9 billion, went a different
route when creating its mobile strategy,
choosing instead to develop the
plan in-house, working closely with
its customers and vendors.
" We continually meet and talk
about where we need to be, " says
Ormseth. " Currently, we have a
three-year plan to stay competitive
in the mobile space and to meet customers'
needs.
" [Because] we compete with larger
banks, we don't have the budget to
go down fi ve different roads to see
what works with customers, " he
" Nonbank providers
are cannibalizing
our clients, and if we
don't start delivering
competitive digital
products, including
mobile, that trend will
continue. "
-TINA GIORGIO, ICBA
points out. " We have to get it right
the fi rst time. "
Wintrust staff members talked
with the bank's customers and
tried to understand their thought
processes regarding mobile. They
also conducted customer surveys.
Ormseth admits that getting it right
also involved a little bit of intuition
and close partnerships with the community
bank's vendors.
" It had to fi t who we are as a community
bank and make things easier
and more effi cient for our customers, "
he says.
With such a massive investment
of time and effort, what's the return
on investment? How can community
74%
of consumers made at
least one mobile payment
in the past 12 months
banks turn a profi t from mobile?
The bottom line is they can't-at
least not directly.
" You're not going to make money
off of mobile payments themselves, "
says Giorgio. " It's not an accepted
practice to charge for mobile. " But
you will experience cost savings in
check-processing costs and costs
associated with other channels, she
says. " That's a big value add. "
Cross-selling opportunities
According to a new PwC digital
payments study, consumers who use
self-service channels, such as mobile,
report a greater need for a range of
fi nancial products. The study tracked
behavior for those who primarily
used online or mobile banking and
those who used human channels,
along with various combinations.
Bottom line? Digital users tend to buy
more fi nancial services products.
The study also notes that customers
who use mobile or digital services
are less expensive to serve than clients
who require direct support from
bank staff. Digital customers generate
higher customer lifetime value (CLV)
for their fi nancial institution.
While community banks may not
profi t directly from mobile payments,
they will realize reduced
costs, enhanced revenue potential
and a broad customer base that
includes high-income millennials and
Generation Xers, which will ensure
long-term growth and stability for
years to come.
Mary Yerkes is a writer in Washington, D.C.
independentbanker.org
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