Epsilon’s 5 & 5 - Consumer Bankers Association5_mobile ebook_… · Epsilon’s 5 & 5 for financial services 5 trends and insights to watch for in mobile. 2 A mere few years ago,

5 trends and insights to watch for in mobile1epsilon.com

Epsilon’s 5 & 5 for financial services5 trends and insights to watch for in mobile

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A mere few years ago, mobile was an up-and-coming consideration. But things have changed rapidly since then. Smartphones are now the norm rather than the exception and it’s truly the time of the mobile consumer.

Consumers are bombarded with offers to download and use applications that provide not only tangible benefits such as convenience and saving time or money, but also emotional benefits such as facilitating family reunions. Applications extend across all walks of life, from shopping, fitness and games to tracking driving habits and controlling home energy consumption.

Technology has also evolved, making it easier than ever to take advantage of the benefits of mobile. Once the purview of smartphones and tablets, consumers can now enjoy the mobile experience through watches, eyeglasses and even clothing.

5 trends and insights to watch for in mobile

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But despite all this growth and opportunity, many of our marketing teams are struggling to figure out how to actually integrate mobile into their multichannel customer marketing strategies..

Many industries, such as financial services, are looking to develop ways to leverage mobile capabilities. The goal is to use mobile to attract new customers, but also to engage and cement relationships with current customers. The challenge lies in the execution. To be effective, you’ll need to determine how to develop innovative ways to leverage the technology and your data and turn that into an excellent mobile experience for your customers.

This e-book will help you break down the barriers and start making progress toward your mobile goals. We’ll discuss five trends and five insights about mobile integration that will guide you in optimizing your mobile strategy and connecting with your customers.


5 trends and insights to watch for in mobile4

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One: Mobile banking is not a fad; it’s here to stay

The financial industry—as a whole—has been a fairly late adopter of mobile technology. Many factors have contributed to this slow adoption, including:

• technology investments• security concerns• compliance issues• privacy regulations

But beyond these higher-level issues, we’re still seeing a strong reliance on traditional customer communication channels such as branch networks, direct mail and contact centers. In fact, even the largest financial institutions are still struggling with capturing and storing customer email addresses, which impacts your ability to send timely and trigger-based communications to customers.

Mobile applications started out pretty conservatively, first offering basic services like sending account alerts and allowing customers to check balances. In retail banking, it has evolved to offer the ability to deposit checks, transfer funds, pay bills and even to apply for loans and mortgages.

This heightened functionality has led to a dramatic increase in the adoption of mobile banking. A recent report indicates that for the first time ever, weekly usage of mobile banking surpassed branch visits with 30 percent of US adults using a mobile banking service versus 24 percent who visited a branch.1

This increase in mobile adoption and usage is leading to higher expectations from your prospective and current customers. You, in turn, must increase your investment in mobile banking technology as a means of meeting and exceeding these expectations.

12015 Mobile Banking, Smartphone and Tablet Forecast, Javelin Strategy & Research, January 2016

We forecast that 65 percent of consumers will make a mobile payment in 2019 versus only 8 percent in 2014.

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In 2016, the forecast for mobile payment transactions is $27 billion. The forecast increases to $142 billion for 2019.

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Two: Initial adoption does not automatically lead to sustained usage and engagement

Industry statistics indicate that use of mobile banking can definitely fuel customer retention. For example, a Fiserve study of mobile banking users revealed that members of large credit unions who used mobile banking services had an attrition rate of 4.9 percent versus 13.4 percent for members who were not enrolled in mobile or online channels.2

However, studies on mobile payment usage indicate that users do not always sustain their mobile behavior patterns. Data from Statista indicates that from 2014 to 2015, usage of mobile payments for certain categories of goods and service such as grocery stores and quick service actually declined.3 This leads to the question of whether the mobile payment experience continued to deliver on its initial promise.

To continue to engage, you must deliver on customers’ expectations. Consumers expect the mobile experience to provide unique and relevant benefits, be easy to use and continue to deliver fresh content with expanded capabilities. When customers are monitored and nurtured through the mobile engagement lifecycle, they can become some of the most profitable customers. Fiserve found that mobile banking also lead to an increase in product holdings and debit and credit card usage, as well as lower attribution.4 As a result, these mobile users generated higher average revenue than non-users.

Since customer expectations don’t always align with your capabilities, the path to optimization isn’t clear. Strategies are still in their infancy and best practices are still being defined. To be effective, you must continue to test and refine your strategies to fully engage the mobile customer throughout their mobile journey—from opening an account to downloading the app to continued usage. The consumer must be included as a component of this strategic planning. Leveraging data around usage, adoption, attrition and optimization are critical to efficiently prioritizing the right mobile investments.

2Mobile Banking Adoption: Where is the Revenue for Financial Institutions? Fiserve, Inc., 2016 3Statista, 20164Mobile Banking Adoption: Where is the Revenue for Financial Institutions? Fiserve, Inc., 2016

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Three: Mobile is part of an omnichannel customer centric strategy

Those who deploy mobile successfully treat it as part of their omnichannel customer centric strategy. Mobile should not be considered a panacea for all customer contacts or managed as a stand-alone channel. Instead, the mobile strategy should be complementary to and integrated with traditional banking channels such as direct mail, email, call centers and branches.

Your mobile organizational structure should reflect this integrated strategy. While you may have technology teams responsible for development and deployment of the infrastructure, the team’s work should be guided by the overall customer and business strategy, not raw technology capabilities. The strategy should be customer focused, not product/technology focused.

The role of the mobile technology team is development of capabilities focusing on fulfilling the customers’ expressed and latent needs and optimizing the customer experience, not on building capabilities that will beat the competition without ‘wowing’ the customer. Your mobile capabilities must be customer centric to drive business results and profitability. The financial institutions that are aligning to this integrated model have a head start in assuring the best customer experience and strongest customer adoption.

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Four: Mobile is evolving as a critical channel in driving preference for and usage of loyalty programs

Retail has set the stage for increasing consumer awareness of and driving expectations from mobile. From applications that allow consumers to compare prices and features of goods to the delivery of real-time information and offers through location and beacon technology, the retail industry has elevated consumer expectations for mobile applications. The challenge is that consumers don’t consider that different industries have different approaches to mobile. They see what retail stores are offering via mobile and expect those same capabilities to be universal.

Retailers are also encouraging consumers to use mobile technology through the use of incentives and loyalty initiatives. They are delivering discounts to the customer’s phones and allowing them to pay for purchases with their program’s loyalty points.

The financial sector is lagging behind in determining how to leverage mobile to increase the value of their loyalty programs. While many have provided their customers with access to their rewards balances and enabled the ability to redeem from a website of defined reward options, real-time reward offers and redemption options are limited. In an era where customer enrollment in loyalty programs is increasing but engagement is decreasing, usage of loyalty points as a real-time payment option can certainly serve as an issuer point of differentiation.

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Five: Security concerns remain an impediment to mobile adoption but technology is beginning to change the landscape

The security of mobile transactions and behavior remains a hotly debated topic and for some consumer segments, has been an impediment to adoption. Consumers are very concerned about the safety and security of their data.

Will security continue to be an obstacle to the channel’s growth and development?

The answer is definitely yes for some customers but the degree of impact may decline over time. Technology, such as fingerprinting and voice recognition, is creating additional layers of security versus passwords. In addition, similar to the credit card industry, analysts are creating behavioral risk models where the objective is to identify mobile behaviors that might signify fraudulent use. Educating customers on these activities should help to alleviate security concerns of using mobile tools.

In addition, mobile users value other mobile features that, over time, may help to minimize security worries. As mobile functionality expands and provides benefits such as convenience, easy access to data and cost and time savings, consumers may be willing to tolerate the risk because these innovations make their lives easier.

62% 59%

62 percent of non-users stated that concern about the security of the technology was a reason for not using mobile banking.

59 percent of non-users stated that concern about the security of the technology was a reason for not using mobile payments.

Consumers and Mobile Financial Services 2015, Board of Governors of the Federal Reserve System, March 2015

http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201503.pdf

http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201503.pdf

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Five insightsHow to take mobile integration to the next level.

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One: Mobile lifecycle management must be in the forefront of a customer-focused strategy

As already mentioned, trial and initial adoption are important metrics for managing mobile engagement. However, adoption does not mean continuous engagement. For example, a study by Mintel indicated that even among millennial women ages 18-24 who download multiple applications, only 46 percent said they regularly use the applications.5 Research by Kissmetric indicates the average app loses 77% of users within the first three days and within 30 days, it has lost 90% of users. Retention for banking apps is slightly higher at 36% after 90 days.

Thus, to ensure customer engagement and perceived value, customer management strategies formobile should

• follow a customer lifecycle management model similar to that used in the current financial services environment.

• address strategies to motivate download, trial (initial use), adoption (ongoing use) and retention.

• measure and include strategies to incent usage of the full array of mobile functionalities.

These functionalities range from informational access such as checking balances or payment due dates, to informational storage such as scanning receipts and depositing checks to conducting transactions such as bill payments and funds transfers and finally to mobile payments. The lifecycle approach should also consider the customer’s device. Understanding device usage is important for delivering the right messaging whether marketing related or servicing, at the right time. For example, consumers may associate mobile apps strictly with mobile phones. Communications to incent download and trial could also be tailored to tablet users.

For current customers, the lifecycle model should be relationship-oriented not product-oriented. If the customer is engaged with using the mobile apps for one product, you should educate the customer about applications for other products.

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A study by Mintel indicated that even among millennial women ages 18-24 who download multiple applications, only 46 percent said they regularly use the applications.

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5Mintel Reports – Mobile Apps, US, October 2015


Lastly, this lifecycle approach should also be applied to prospects, or non-customers. If prospects are applying for a financial product on a mobile device, the application must be easy to use, as short as possible and designed to educate prospective customers as well as promote the benefits of the product and the banking relationship. Apply the lifecycle approach to acquisitions by defining and addressing various stages such as attract, educate, promote, apply and fulfill. Indicating the channel of application is also important to flag as this can indicate an initial preference for communication.

The lifecycle approach will require you to rethink the metrics you’re using to monitor customer behavior and evaluate mobile campaigns. While you still need to measure traditional email and mobile metrics such as open, click through and conversion rates, you also need to overlay new metrics to measure progress within each stage of the lifecycle.

These new metrics could include:

For the lifecycle management program to be successful, you should also ensure that the metrics are included in business performance goals. Furthermore, there should be shared accountability for the goals across the organization. Technology, product and marketing all should have a stake in mobile’s success.

Customeruser rates

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Two: Continued innovation is key to increased adoption and usage

Just implementing mobile isn’t enough; your focus on mobile innovation must continue. Innovation must be based on a solid understanding of consumers’ expressed and latent needs, expectations and behavior. Speak with your current and prospective customers to discover:

• How do your customers feel about the current user experience? What do they like? Dislike?

• How can existing mobile applications be improved? What other features do they want?• What new banking functions could be developed that customers will perceive as

valuable and deepen their relationships with your company? • How do the experiences and functionality opportunities differ by segment?

In addition to customer research, you must also analyze operational and customer data to understand:

• How are customers/prospects using the app? • Where are the hurdles/stopgaps in the user experience?• How do customer profiles differ among those who download but don’t use, trial users

only and the deeply engaged?

The environment for mobile applications is highly saturated. Your customers need a reason to adopt and engage with your mobile applications. Therefore, this dialogue and data analysis must be continuous not only to keep mobile innovation at the forefront of the organization, but also to keep abreast of changing consumer attitudes, especially among different segments. As some segments become more accepting of mobile banking, they may be more likely to expand their use of applications beyond simple actions like checking balances. It’s your ongoing responsibility to ensure that the customer experience is seamless, especially for segments who may not be as adept at mobile.

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Similarly, current engaged users will continue to demand new and improved applications. It is critical to understand expectations and to explore how applications from other industries can be applied to enhance the mobile experience for heavy mobile adopters. And apps are never one-and-done; they require constant updating and innovating. Be sure you have the resources and team to continue satisfying your customers and meeting their expectations.

As you build your databases with information about mobile users, non-users and the mobile experience, you can then harness this rich data to spur innovation by identifying new functionality and process improvement opportunities. In addition, leverage the data on customer response and usage to build targeting and propensity models to increase the efficiency of marketing campaigns.

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Most frequently used mobile banking app features6

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6eMarketer, U.S. Mobile Banking App Users, February 2015


Three: Technology can facilitate the integration of mobile into an omnichannel customer centric strategy

There is often debate about whether mobile is a strategy in itself or another execution channel for a customer centric strategy. We believe it’s both. Mobile is not an island; it will not address all customer issues, deliver all services or be the best communication option for everyone. You must rely on the entire array of mobile, digital and traditional channels to serve all segments of your customer base. In addition, regulatory constraints make it impossible for mobile technology to accommodate all financial transactions such as security trades. Mobile, therefore, must be integrated with and complemented by other communication and customer transaction channels.

At the same time, you must also have a solid internal strategic plan to guide technology development and the resources needed to execute the customer centric strategy.

• Develop the technology to look across customer platforms to ensure tracking and messaging are captured across channels from direct mail to contact center interactions to email and to mobile.

• Assure that your databases document all customer inbound and outbound touches. It should also include promotional history such as customer responses to communications/campaigns and any stated customer communication preferences.

• You can then leverage this data to develop a customer centric communication and cross-sell strategy—as well as a contact management strategy—that balances growth objectives with the cadence and frequency of messages.

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Four: Delivering of real-time rewards and offers can help spur adoption and engagement

Rewards are part of many loyalty programs, particularly in transaction-based products such as payments. However, often customer engagement and redemption in these programs is low, especially in generic reward programs not tied to a co-brand. Program awareness may not be top of mind or the customer may not have sufficient points to redeem for a reward that they consider to be valuable. Although you may be reluctant to encourage redemption due to cost concerns, numerous studies have demonstrated the value of redemption in deepening the customer relationship and reducing customer attrition. If you don’t encourage redemption as part of the customer lifecycle management program, you are missing a valuable opportunity to engage with your customers.

Mobile has the potential to heighten customers’ redemption activity and the perceived value of your loyalty programs. By adopting the retail model and allowing customers to redeem points real-time at the point of sale for the entire or partial purchase amount, you can build loyalty and customer engagement. Furthermore, you can combine the customer’s real-time redemption data with your customer’s profile to deliver relevant offers that will increase the value of your product and brand for the customer.

But beware of considering loyalty only in the context of your points program. Mobile can be used to deliver recognition messages to highly-valued customers. The same holds true for offers. As part of your loyalty program benefits, partner with merchants to deliver real-time point-of-sale offers such as discounts or bonuses like free desserts at restaurants. When combined with location services apps, there is a huge potential to deliver offers to the customers when they are in the vicinity of a merchant, thus enhancing customer value.

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Although the payment schemes offer real-time mobile point-of-sale redemption programs to their customers, most financial institutions haven’t yet adopted these programs in large numbers. An exception is U.S. Bank with their Real-Time Rewards redemption program for FlexPerks Visa cardholders. The program includes a mobile application that allows customers to set redemption preferences based on purchase amount and merchant category. When the customer makes a purchase that meets their pre-defined criteria, they receive a text message in real-time providing the option to apply their FlexPoints to pay for the purchase, thus enabling redemption for almost any FlexPerks Visa transaction made anywhere in America.

Investment in mobile applications that offer a way for customers to engage and use your loyalty program points may motivate more customers not only to use mobile applications but also to deepen their relationship with you.

Redeeming rewards. Simple as a text.

Earn 500 Bonus FlexPoints!

1. Make almost any purchase with your FlexPerks Visa Card

2. Receive a text to redeem FlexPoints forthat purchase

3. Simply reply,“Redeem”

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Five: Consumer education can encourage customer engagement as well as allay security concerns

Think about investing not only in innovation, but also in communicating these innovations and educating your potential and current customers on mobile’s benefits. Many companies, in the quest to establish competitive differentiation and a first-in-market status, focus solely on developing the most technologically-advanced functionality, while giving only lip service to developing a rich and compelling selling proposition and customer communication plan. Be sure to allocate sufficient budget for customer education and usage incentives to create comfort and stickiness.

As technology evolves to improve device security, it will behoove you to invest in initiatives to educate your customers about the improvements. The exact messaging should be highly targeted by segment. For example, less tech-savvy customers may be very concerned about data security and how others may gain access to their personal data either through the bank or their own device. For this segment, your message could focus on your commitment to maintaining the integrity of the database. For millennials who may be more concerned about device loss, the message could focus on safety measures around this issue. Discover Card’s recent Freeze It campaign is an example of a campaign targeting this insight.

It is important that the messages be positioned as education rather than sales promotions. In addition, they must be honest to inspire and maintain customer trust. Be authentic in your communication efforts. The customer must receive the impression that you’re doing everything you can to protect your customers in communication efforts.

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Conclusion

Now that you understand some of the key trends and considerations around mobile, it’s time to evaluate your current strategy.

Find out what’s working and not working? Is your strategy supporting your business objectives? What are your metrics on downloads, adoption and ongoing engagement? What apps seem to be engaging customers? Which ones are not meeting your goals? Conduct customer research to find out why and mobilize your organization to listen to the voices of your customer.

Leverage these insights to optimize your mobile strategy and get ready to benefit from increased engagement from your mobile-friendly prospects and customers. To learn more about how we help financial institutions like yours navigate the complex waters of mobile integration, contact an Epsilon representative.

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About Epsilon

Epsilon® is an all-encompassing global marketing innovator. We provide unrivaled data intelligence and customer insights, world-class technology including loyalty, email and CRM platforms and data-driven creative, activation and execution. Epsilon’s digital media arm, Conversant, is a leader in personalized digital advertising and insights through its proprietary technology and trove of consumer marketing data, delivering digital marketing with unprecedented scale, accuracy and reach through personalized media programs and through CJ Affiliate, one of the world’s largest affiliate marketing networks. Together, we bring personalized marketing to consumers across offline and online channels, at moments of interest, that help drive business growth for brands. Recognized by Ad Age as the #1 World’s Largest CRM/Direct Marketing Network, #1 Largest U.S. Agency from All Disciplines and #1 Largest U.S. Mobile Marketing Agency, Epsilon employs over 8,000 associates in 70 offices worldwide. Epsilon is an Alliance Data company. For more information, visit www.epsilon.com and follow us on Twitter @EpsilonMktg.

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Documents

Epsilon’s 5 & 5 - Consumer Bankers Association5_mobile ebook_… · Epsilon’s 5 & 5 for financial services 5 trends and insights to watch for in mobile. 2 A mere few years ago,