How mobile is transforming banking

A report from The Economist Intelligence Unit

How mobile is transforming retail bankingRedefining banking to survive and thrive in a digital world

© The Economist Intelligence Unit Limited 20141

How mobile is transforming retail banking

Preface 2

Introduction 4

Mobile, a big player in an “omnichannel” world 6

A new competitive landscape 9

Moving beyond transactions 12

Conclusion 14

Appendix: Executive survey results 15

Appendix: Consumer survey results 22

Contents

1

2

3

4



Preface

Redefining banking to survive and thrive in a digital world explores how mobile technologies are transforming retail banking. While the rise of mobile computing will not eliminate web, physical and other paths to customers, people around the world are clearly embracing mobile—and banks need to do so as well. Indeed, if they fail to help shape the change, they risk being swept aside by newcomers who enable mobile-empowered consumers to reach their financial goals and dreams.

As the basis for this research, The Economist Intelligence Unit conducted two global surveys, sponsored by SAP. The first polled 111 retail-banking executives in June 2014 and the other polled 1,827 consumers in September 2014. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. The author was Dan Armstrong. Riva Richmond edited the report and Mike Kenny was responsible for the layout. We would like to thank all of the executives who participated, whether on record or anonymously, for their valuable insights.

Interviewees

Brad Jones, head of North Asia operations and Asia transformation at National Australia Bank

Ivan Mortimer-Schutts, East Asia-Pacific electronic and mobile banking specialist at the International Finance Corporation

Joshua Reich, chief executive of Simple

Jose Manuel Villas, head of the digital channel at Banco Bilbao Vizcaya Argentaria

Andres Wolberg-Stok, global head of emerging platforms and services at Citibank



The Economist Intelligence Unit conducted two global surveys on mobile banking, sponsored by SAP: one of 111 banking executives in June 2014 and the other of 1,827 consumers in September 2014.

The executive survey. Nearly half (45%) of respondents served in the C-suite or board of directors, while 17% were at vice-president or director level or ran business units. Outside the “general management” category, the key functional areas were strategy and business development, finance and marketing and sales. The survey attracted executives at banks large and small. A quarter (24%) hailed from banks with assets greater than $100bn; two-thirds (66%) had more than 100,000 retail accounts. Half (50%) described their footprint as either global or multinational, while 18% described themselves as regional and 31% as national. About one-fifth (20%) of respondents came from North America, 23% from Asia and 18% from Latin America. EMEA accounted for 21% of respondents, with most (19%) from Middle and Eastern Europe (a designation covering the countries from Switzerland and Germany on the west to Russia on the east).

The consumer survey. Respondents to the consumer survey were from five regions and 48 countries. All currently use mobile devices and have bank accounts. About 13% of respondents were from the US, with 6% each from Brazil, Mexico, Canada, China, the UK and France; no other country accounted for more than 4%. Emerging markets were well-represented, with 19% of respondents hailing from the BRIC countries and another 48% from a more broadly defined group of emerging economies. About one-fifth (19%) came from North America, 19% from Latin America, 23% from EMEA, 26% from Asia-Pacific and 14% from Middle and Eastern Europe.

The median survey-taker was in the 41-to-50 age group; the average age was 45. Men outnumbered women by a ratio of 57:43. In terms of income, respondents exhibited a dumbbell pattern: the largest group made more than $125,000 per year (14%), while the second largest made less than $10,000 (9%) and the third largest between $10,000 and $15,000 (7%). The average annual income of respondents was approximately $57,000. Most have smartphones (86%) and almost half have tablets (47%). A significant portion also uses a feature phone (22%)—a basic phone for calls and texts, with simple games and Internet connectivity.

About the surveys



Our grandfather’s retail bank was a columned building with tellers and velvet stanchions. Ours is fast becoming an icon among many on a tiny screen. The traditional bank represented solidity and permanence. The new bank is a portal into a dynamic new digital world.

As anyone who has witnessed rows of mesmerised commuters knows, mobile devices are becoming central to individuals’ interactions with each other and with businesses. Banking, like so many industries, has been swept up by the wave.

Both bankers and consumers expect the use of

mobile-banking technologies to grow rapidly, according to companion surveys of 111 bank executives and 1,827 consumers across five regions and 48 countries conducted by The Economist Intelligence Unit and sponsored by SAP.

Yet the surveys also show that, even as mobile interactions grow, other channels where consumers and banks connect will remain as important as ever. Many consumers still appreciate the feeling of stability that brick-and-mortar branches provide—and they will always need branches or ATMs to deposit and withdraw cash.

Branches, ATMs PC Call centre Mobile devices

Regional breakdowns on mobile channel use (% of executive respondents)

Now

In fiveyears

EMEA

Now

In fiveyears

North America

Now

In fiveyears

Middle and Eastern Europe

Now

In fiveyears

Latin America

Now

In fiveyears

Asia-Pacific

52

27

13

8

32

28

11

30

40

32

11

18

26

289

37

6024

88

38

26

10

26

67

18

69

46

21

6

27

53

20

12

14

35

26

8

31

Source: Economist Intelligence Unit survey, September 2014.

Introduction1



Many like the larger screens that their home computers provide. Still, most also want the convenience of paying for items and handling transactions on their phones.

This “omnichannel” world is diverse. Consumers are not uniform in their banking preferences: retirees in Mallorca, millennials in Seattle and villagers in Peru will each be inclined to use a different mix of branches, ATMs and online and mobile services.

But consumers around the world are clearly embracing mobile as a vital channel—and banks need to be there. In the EIU’s executive survey, 82% of retail bankers agree or agree strongly that in the next five years mobile will become the number one channel for millennials and younger consumers—banks’ future customers.

“Seventy percent of the Spanish population owns a smartphone. It is clear that customers are increasingly moving to mobile,” says Jose Manuel Villa, head of digital channels at Banco Bilbao Vizcaya Argentaria (BBVA). “We need to enable distinctive digital platforms, and that requires a

substantial investment in both talent and technology.”

Moreover, mobile services could help make developing countries and the underbanked and unbanked more accessible and attractive markets to banks. In emerging markets, approximately 1.2bn mobile users will use mobile money accounts by 2015, up from a negligible number in 2010, according to Ovum, an IT and telecom research firm. A 2014 Federal Reserve study, “Consumers and Mobile Financial Services 2014”, found that the unbanked make heavy use of mobile phones and smartphones and that almost 40% of the underbanked use mobile transaction services at a relatively high rate.

Bankers must develop their “omnichannel” strategies and watch the mobile horizon closely. We do not yet know how profoundly mobile commerce will change consumer behaviour—or whether banks will help shape that change or be swept aside by newcomers with financial products that help mobile consumers reach their financial goals and dreams.

Will banks help shape change or be swept aside by newcomers with mobile products that help consumers reach their financial goals and dreams?



Bankers and their customers agree on two things: Interaction via mobile devices will continue to grow quickly and traditional banking channels will not go away.

Tradition, inertia and screen size may largely explain why. Well over half (56%) of consumers who dislike mobile say that they simply prefer the PC and another 35% like ATMs better. About one-quarter of bank customers (26%) do not expect to visit branches less frequently, even if mobile banking improves. For now, almost all consumers need a branch sometimes—if only to get cash—and a few want a branch all the time.

Of course, these attitudes may well change as consumers gain familiarity with mobile services, electronic payments become more ubiquitous and apps become more intuitive. New technologies are emerging and digital commerce is growing in a world that is increasingly mobile. Retail financial services may not always live on a spectrum with mobile transactions on one end and traditional banking on the other. In a time of flux, new business models may emerge, and they may coexist with traditional models—or upend them.

Today’s bankers, most of whom have spent their careers in a world of branch banking, believe that branches will continue to be important. Three-quarters say branches are needed to facilitate conversations, engage customers and explain complex products. “There are things that happen in branches that are not immediately replaceable by remote approaches like online and mobile

banking,” says Andres Wolberg-Stok, global head of emerging platforms and services at Citibank.

This is also true in emerging markets, according to Brad Jones, Brad Jones, a specialist in mobile financial services in Southeast Asia who has worked with IFC, Visa and mobile payments provider WING Cambodia. “There will always be a need for the customer to be able to have some connection with the provider. Maybe it happens at the level of an agent who [visits homes and businesses with a mobile device and] is himself supported by a branch. Maybe it’s the ability to contact a call centre to address problems. The human channel engenders trust. Maybe your customer transacts through mobile primarily, but having a human to address issues such as fraud or security is critical.”

The multiplicity of channels persists because no channel is a perfect substitute for another. Accordingly, banks need to manage all channels to provide an optimal overall experience for the consumer. “Increasingly, users rightly expect to be able to do whatever they need to do on whichever device they happen to be using at that particular moment,” says Mr Wolberg-Stok.

Thus banks will have to invest significantly, not only in mobile systems but in integrating all their channels so customers can move seamlessly between them. Only 15% of respondents say that all channels are integrated now. But by 2019, three out of four banks expect to have achieved full integration.

Mobile does offer unique business value for both

Mobile, a big player in an “omnichannel” world2

❛❛ Users rightly expect to be able to do whatever they need to do on whichever device they happen to be using at that particular moment.❜❜Andres Wolberg-Stok, global head of emerging platforms and services at Citibank



banks and customers, however. By pushing low-value transactions to mobile, banks can greatly improve efficiency and service, which can help them grow their businesses significantly without higher operating costs, Mr Jones says.

“Somebody who wants a savings account and needs to withdraw $10 doesn’t need to come to a branch. That’s like using a cannon to kill a fly,” says Ivan Mortimer-Schutts, an East Asia-Pacific electronic and mobile banking specialist at the International Finance Corporation (IFC), part of the World Bank. “It’s out of proportion these days, because there are other tools at our disposal.”

Meanwhile, these routine, commodity mobile transactions and products like mobile wallets can become gateways to deeper relationships and the sale of higher-value-added services like loans. Indeed, mobile offers advantages that extend to higher-value transactions as well, including real-time alerts and seven-day-a-week, 24-hour-a-day customer service.

Loyalty—created or destroyed?Banking executives remain divided about whether mobile will affect customer loyalty. A plurality of 39% predicts it will increase attrition, with bankers in Asia-Pacific and Middle and Eastern Europe registering the most concern. But one-third of total

respondents (33%) say attrition will decline and the rest (28%) are not sure.

The first group of executives believes mobile will fray the bonds that bind them to customers. They think customer churn will rise because mobile will increase commoditisation (70%), reduce barriers to entry (63%) and make switching easier (74%). They also worry that a diminished human connection will hurt interaction and engagement.

The second group believes that if mobile helps them provide an easier, faster banking experience, customers will not want to leave (83%). These bankers tend to believe many customers prefer self-service and that allowing them to serve themselves at the time and place of their choosing will encourage them to stay and that mobile will reduce providers’ costs and, thus, lead to lower costs for customers.

But anytime, anywhere self-service is already becoming a basic—banks will have to offer more than account balances, transactions and bill payment, Mr Wolberg-Stok says. “If you can explore new types of services as well as providing more convenience, then you have a chance to leverage mobile to really create differentiation.”

For instance, Citi’s mobile “Snapshot” feature enables customers to view deposits, credit-card balances and recent transactions without having to


How will the migration of customers to mobile banking affect customer attrition? (% of executive respondents)

Why will attrition decline? (% of respondents)

Attrition will decline Not sure Attrition will rise

33 28 39

Banks will have more ways to differentiate themselves

Banks will predict the customers likely to leave and make offers to keep them

Greater efficiency will allow banks to lower costs for customers

Many customers will prefer self-service over interacting with personnel

Banks will gain scope for personalisation

Banks will build loyalty with innovative features

Banking will become easier and faster

Why will attrition rise? (% of respondents)

Security concerns will rise

Human interaction will decrease

Barriers to market entry will fall, leading to more new providers

Basic banking services will become even more commoditised

Switching to new providers will become easier

36

47

53

56

61

61

83

30

37

63

70

74

❛❛ If you can explore new types of services as well as providing more convenience, then you have a chance to leverage mobile to really create differentiation.❜❜Andres Wolberg-Stok, global head of emerging platforms and services at Citibank



log into their accounts. The app sends notifications when checks clear, balances fall below a set threshold and payments come due.

Many bankers see personalisation and innovation as important retention tools (61%). Simple, a digitally native and millennial-friendly US bank recently purchased by Spain’s BBVA, is so convinced of this it only accepts new account applications from prospective customers with smartphones. The bank lets customers customise their accounts with budgeting and goal-setting tools, “smart” transaction tagging, and instant account updates to their smartphones.

Simple’s mobile interface lets consumers name their goals—be it a “Paris vacation” or “buy a

house”—and save for them over time by subtracting from their “Safe to Spend” discretionary funds. “We see what customers are saving for. If they’re saving for a down payment on a house, we’d love to be there to underwrite that mortgage at some point in the future or to offer student loans or do a variety of other things on the credit side of the house,” says Joshua Reich, Simple’s CEO.

Two different world views, two different results; both are plausible and, in fact, both may come true. Some banks will use mobile to differentiate and get customers seeking more personal and comprehensive services. Others will provide generic solutions and retain customers satisfied with a commodity experience.



The mobile invasion is forcing banks to navigate a complicated world of new partnerships and rivalries. Transactions must be easy, convenient and relevant and take place securely on any device in any location. In response to these competitive mandates, an array of alliances is emerging among payment processors, financial institutions, mobile-network operators and retailers.

For example, under the Yaap partnership in Spain, Santander, Telefónica and LaCaixa have collaborated to create virtual showrooms for retailers and a payment service. Yaap is an open platform where any store, including small retailers with limited online presences, can reach hundreds of thousands of potential customers via a mobile app

with discounts, offers and loyalty programmes. Yaap Shopping aims to become Spain’s largest customer-loyalty network. A second service, Yaap Money, is a peer-to-peer-service that enables anyone to send funds from one mobile device to another.

To better understand the new competitive landscape, the EIU asked bankers to identify rivals and potential partners. It found that traditional rivals remain—large, established banks were clearly entities to be feared (83%)—while other types of companies occupy less clear ground.

Exactly half of retail bank executives see virtual banks, or banks that do not have physical branches, as rivals, while three in 10 view them as potential partners. Bankers are almost evenly

A new competitive landscape3

Primarily a potential partner Neither a rival nor partner Primarily a potential rival

Mobile phone providers

Social media firms (eg Facebook)

Big retailers (eg Walmart)

Internet retailers (eg Amazon)

Online payments firms (eg PayPal)

Personal financial management firms

Internet banks

Big retail banks

Many potential partners and a few big rivals(% of executive respondents)


71 14 16

60 25 15

54 20 26

51 24 25

46 12 42

41 24 35

30 19 50

12 5 83



divided on the threat from digital-payments companies like PayPal and firms that advise on personal financial management; a similar split exists for personal financial advisers.

The rest of the world is rich with potential partners: Mobile-phone companies (71%), social-media firms (60%), large brick-and-mortar retailers (54%) and Internet retailers (51%) are viewed primarily as potential partners.

This view, however, is less accepted in Europe, the Middle East and Africa (EMEA), where 65% view virtual banks as significant rivals, 61% worry about payments services and 48% see retailers as future competitors. Some 17% disagreed with the statement “Our customers trust us with their money more than they would trust an Internet company,” more than triple the percentage in the Americas. However, 68% of EMEA respondents view

social-media companies as potential partners.To fully realise the full potential of mobile to

empower customers, banks will need to ally themselves with other members of the mobile and retail ecosystem. These partnerships must be much more than marketing initiatives; to have real business impact, they will have to be ambitious efforts to create and offer open platforms, as Yaap is attempting to do, where data are integrated and user experiences are seamless—and customers get something new that is of real value.

Mobile employeesAs mobile capabilities for customers gain currency, banks are likely to see the virtues of also providing bank employees with more mobile capabilities—to operate smarter, drum up new business and compete in the marketplace.

EMEA

Asia

MEE

Latin America

North America

Percentage of bankers who disagree with the statement:“Our customers trust us with their money more than they would trust an internet company.” (% of executive respondents)


17

16

10

5

5

Internet-only banks

Online payments services (eg, PayPal)

Large retailers (eg, Walmart, Tesco)

Personal financial management companies

Mobile phone service providers

EMEA banks are most likely to see threats to their franchises To what extent do you see these entities as potential rivals?(% of executive respondents)


65

61

48

39

22

As banks become more virtual, mobile and focused on customer experience, how will the roles of employees at your bank change over the next five years (% of executive respondents)

Real-time mobile will help them identify opportunities, cut risk and improve services

They will speed up approvals and processing

They will go to customers rather than customers coming to the bank


84

69

50

An array of alliances is emerging among payment processors, financial institutions, mobile-network operators and retailers.



A large majority of bankers believe that mobile services can help employees identify opportunities, reduce risk and improve service. Seven out of 10 (69%) think mobile for employees will help speed up approvals and processing. And half see bankers going to customers rather than customers coming to the bank—a trend that is already in full swing in emerging markets, where banks are enlisting local agents and arming them with tablets to support rural customers.

So far, however, banks have not focused as sharply on mobile capabilities for employees as they have on capabilities for customers. While half of survey respondents say they are above-average in developing mobile capabilities for customers, only one-third say that about their capabilities for executives and one-quarter indicate such about capabilities for employees in the back office. Customers come first, executives second, the front office third and the back office last.

Well below average for the industry

Below average Average Above average Well above average for the industry

Online capabilities for customers

Mobile capabilities for customers

Mobile capabilities for managers and executives to aid service-related decision-making

Mobile capabilities for customer-facing branch employees

Mobile capabilities for customer-facing employees who visit customer locations

Mobile capabilities for back-office employees to aid service performance

In your effort to improve online and mobile experiences for customers, how would you rate your organisation on the quality of these operational elements? (% of executive respondents)


5 14 32 36 14

6 21 32 32 9

8 20 38 27 7

9 21 41 24 5

6 25 39 25 5

12 23 41 21 5

Customers come first, executives second, the front office third and the back office last.



For customers to embrace mobile fully, banks must offer a more compelling experience, which means going beyond the basics.

The bar is high. Seven out of 10 (69%) retail bankers say that consumers expect banks to provide the same quality of experience big Internet companies provide. The nightmare scenario for banks is the spectre of distintermediation at the hands of the “mobile wallet disruptors”—Google, Facebook, Amazon, Apple and PayPal—whose reach into the consumer market dwarfs that of even the largest banks.

Sensing the danger, banks are planning to significantly expand mobile capabilities for customers over the next five years.

A large majority currently offer the basics: mobile access and management of accounts, information about products and bank and ATM locations, and alerts, transfers and payments.

Banks in the Asia-Pacific region are furthest ahead; those in Middle and Eastern Europe are furthest behind.

But five years from now, the emphasis will shift to more advanced features like spending analyses and wealth-management capabilities (78%), opening new accounts (76%), personalised offers (75%) and mobile wallets (74%). Again, Asia-Pacific is in the lead and Middle and Eastern Europe lag.

Latin American banks are most likely to see themselves as becoming a hub for services beyond traditional banking, for example, legal advice and insurance. Within the next five years, 85% of Latin American respondents expect to offer nontraditional services, compared with about 59% for all other regions.

The strategy looks wise. According to the EIU survey, large numbers of consumers want help from

Moving beyond transactions4

In which areas of money management could you most improve, and in which would you most like help from your bank (% of consumer respondents)

Managing it

Spending it

Earning it

Saving it

Investing it

Areas for improvement Areas wanting help from banks


72 43

64 44

58 53

55 61

50 75

74 4468 4559 5455 6050 75



their banks to manage, spend, earn, save and invest their money.

In general, however, the more they think they need improvement, the less they think their banks can help; the less they think they need improvement, the more they think their banks can help. For instance, 72% of consumers rank “managing money” as an area where they could most improve, but only 43% think their banks can help them manage their money better. Likewise, 64% cite spending as a key area of improvement, but only 44% say their banks can help.

Consumers believe that banks can be most helpful to them in saving and investing: 61% say banks could help them save better, while three-quarters say banks could help them invest more wisely. But fewer consumers think they need help in this area.

Mobile offers a way to change consumer views about banks’ inability to help them with spending and budgeting decisions. Consumers are joined to

their mobile devices as they spend money out in the world—and popular nonbank financial applications, such as Mint and Level Money, focus on these areas where many consumers see banks falling short.

The good news is that large numbers of consumers are open to getting help with their personal finances from their banks. This suggests that a lot of opportunity exists for innovative services—mobile and otherwise.

Simple has a feature called “block card” that helps its customers enforce personal limits on their spending.

“Usually you want zero friction; when you’re buying coffee in the morning, want to give your order and spend the money instantly,” says Mr Reich. “But if you’re trying to control your spending, you may want friction. You may want to set limits at certain times of day, with certain merchants or for spending over a certain dollar amount.”

Many consumers are open to getting help with their personal finances from their banks. This suggests that a lot of opportunity exists for innovative services—mobile and otherwise.



Mobile is quickly becoming a vital banking channel, but even banks that have developed addictive mobile experiences cannot afford to neglect other channels.

A few banks have pursued a model based on digital and call-centre services and partnered with ATM networks to provide cash. But that is not an option for most banks—and it is not necessarily good business. The face-to-face conversations with agents, whether in branches or at businesses and homes, provide value for customers and more fee income for banks.

“The idea of ‘omnichannel’ is that you need to employ absolutely every available channel in your package,” says Mr Wolberg-Stok of Citi. “You need to make sure that customers can reach you on the channel of their choice at any given time.”

Mobile may also offer important new business opportunities. For a large segment of the population, mobile will become the platform of choice for personal financial management. The

Apple and Android app stores are already packed with mobile apps for record-keeping, budgeting, financial education and decision-making. But few of these services are offered by financial institutions.

“Banks and their regulators are going to have to embrace technology-driven innovation. Otherwise it will simply happen by stealth, driven by players outside the industry,” wrote Peter Sands, chief executive of Standard Charted, in the Financial Times in 2013. “Too much of the debate about banking is about not repeating the mistakes of the past. We risk missing the opportunity to make banks much better in the future.”

If the violent shocks to the retail and publishing industries have anything to teach us, it is that disruption can happen much faster than we expect—especially when the product can be easily digitised. Few things are more easily digitised than money. Banking’s mobile revolution may be closer than we think.

Conclusion

❛❛ Banks and their regulators are going to have to embrace technology-driven innovation. Otherwise it will simply happen by stealth, driven by players outside the industry.❜❜Peter Sands, chief executive of Standard Charted



Appendix: Executive survey results

Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses.

Branches, ATMs PC Call centre Mobile devices

How do customers primarily conduct transactions at your bank? Provide percentage estimates so that each column adds up to 100%(% respondents)

NowFive yearsfrom now

54

24

10

12

30

9

26

35

Are these four channels managed separately in your organisation—each in its own silo—or are they integrated? Select one in each column.(% respondents)

Each of the four channels is managed separately

Some are integrated, but not all

All four channels are integrated (ie, we have “omnichannel” capabilities)

NowFive yearsfrom now

30

55

15

75

18

7



It is the top priority

It is one of its major priorities

It is not a major priority

It is not considered important

How does online and mobile banking rank in terms of strategic priorities for your organisation? (% respondents)

24

67

8

1

Cost-cutting opportunities

Competitive differentiation

Keeping up with competition

Maintaining customer satisfaction

Other

Why is online and mobile a high priority? Select the top two. (% respondents)

38

51

39

52

2

Well below average for the industry

Below average Average Above average Well above average for the industry

Online capabilities for customers

Mobile capabilities for customers

Mobile capabilities for customer-facing branch employees

Mobile capabilities for customer-facing employees who visit customer locations

Mobile capabilities for back-office employees to aid service performance

Mobile capabilities for managers and executives to aid service-related decision-making

In your effort to improve online and mobile experiences for customers, how would you rate your organisation on the quality of these operational elements? (% respondents)

5 14 32 36 14

6 21 32 32 9

9 21 41 24 5

6 25 39 25 5

12 23 41 21 5

8 20 38 27 7



Which mobile features can your customers use now, and which do you expect to support five years from now? (% respondents)

Access and manage accounts (eg, savings, transactional, credit, loans)

Find information on products, services and branch and ATM locations

Make transfers, payments and deposits

Receive alerts

Open new accounts

Apply for loans or credit

Access advanced services (eg, financial-management tools, wealth-management services, spending analyses)

Make and manage investments

Access and manage mobile wallets

Receive personalised products and services (eg, based on profile, history, location, circumstances)

Use advanced security features (eg, biometrics, two-factor authentication)

Access non-traditional services (eg, legal, insurance)

Now Five years from now

91 52

85 54

72 61

83 52

27 76

28 75

20 77

32 70

31 73

19 74

32 66

13 63

How have the rise of online and mobile services affected your bank’s overall servicing costs in the last five years? How will they affect them in the next five years? (% respondents)

Significant increase

Moderate increase

No change

Moderate decrease

Significant decrease

Don’t know

Last five years Next five years

17 30

46 24

15 7

16 13

4 22

1 4

Low-income consumers in developed countries

Low-income consumers in middle-income countries

Low-income consumers in developing countries

Young consumers in developed countries

Young consumers in middle-income countries

Young consumers in developing countries

Which of the following customer segments will retail banks become more adept at serving due to declining costs? Select all that apply. (% respondents)

43

57

51

68

65

51



They will go to customers rather than customers coming to the bank

They will speed up approvals and processing

They will be supported by real-time mobile information that helps them identify opportunities, reduce risk and improve service

Other

As banks become increasingly virtual, mobile and focused on customer experience, how will the roles of employees at your bank change over the next five years? Select all that apply. (% respondents)

50

70

84

6

Net interest income

Customer fees and commissions

Third-party fees, commissions and advertising revenue

Dividends on minority interest

Traditional service offerings

Non-traditional service offerings (eg, legal, insurance)

How do you expect the transition to service delivery through mobile and other digital screens to affect your bank’s revenue from the following sources over the next five years? Select one in each row.(% respondents)

Revenue will rise Revenue will fall No change/impact

57 10 33

50 34 16

54 18 29

24 16 60

32 49 19

46 15 39

57 10 33 50 34 16 54 18 29 24 16 60 32 49 19 46 15 39

Large, established retail banks

Internet-only banks

Mobile phone service providers

Large retailers (eg, Walmart, Tesco)

Social media companies (eg, Facebook)

Internet retailers (eg, Amazon)

Online payments services (eg, PayPal)

Personal financial management companies

Other

Which of the following types of entities do you see as potential rivals and which as potential partners to your bank’s retail franchise? Select one in each row.(% respondents)

Primarily a potential rival Primarily a potential partner Neither a rival nor partner

83 12 5 50 30 19 16 71 14 26 54 20 15 60 25 25 51 24 42 46 12 35 41 24 20 20 60



Attrition will rise

Attrition will decline

Not sure

How do you believe customer attrition will be affected by the migration of customers to mobile banking? (% respondents)

39

33

28

Switching to new providers will become easier

Basic banking services will become even more commoditised

Barriers to market entry will fall, leading to more new providers

Human interaction will decrease

Security concerns will increase

Other

Why do you believe attrition will rise? Select all that apply(% respondents)

74

70

63

37

30

2

Banking will become easier and faster

“Banks will gain scope for personalisation using customer data”

Banks will be able to build loyalty by providing innovative features

Many customers will prefer self-service over interacting with personnel

Greater efficiency will allow banks to lower costs for customers

Banks will get better at predicting which customers are likely to leave and making offers to get them to stay

Banks will have more ways to differentiate themselves

Other

Why do you believe attrition will decline? Select all that apply(% respondents)

83

61

61

56

53

47

36

8



Disagree strongly Disagree Neither agree nor disagree

Agree Agree strongly

The wealthier the customer, the less likely he or she is to be an active user of mobile banking

The poorer the customer, the more likely he or she is to be an active user of mobile banking

Mobile will be the number one channel for millennial (and younger) customers

Branches are necessary to facilitate conversations, personally engage customers and provide the best venue for explaining complex products to customers

We are very good at using mobile customer transaction data to develop promotions and targeted offerings

Consumers expect banks to offer the same personalisation and ease of use as large Internet companies

The more widely adopted mobile banking becomes, the harder it will be to get earnings from float

Mobile and online banking capabilities are not the reason why most of our customers choose us

Our customers trust us with their money more than they would trust an Internet company

In your effort to improve online and mobile experiences for customers, how would you rate your organisation on the quality of these operational elements? (% respondents)

17 44 17 20 2

8 39 20 25 7

1 7 10 51 31

5 9 12 53 21

5 29 28 32 6

8 22 47 22

3 17 36 33 12

3 17 23 48 9

2 9 11 42 36

Under $500m

$500m-$1bn

$1bn-$5bn

$5bn-$10bn

$10bn-$25bn

$25bn-$50bn

$50bn-$100bn

Over $100bn

What is the value of your organisation’s total global assets in US dollars? (% respondents)

14

7

10

12

15

5

13

24

Board member

CEO/President/Managing director

CFO/Treasurer/Comptroller

CIO/Technology director

CMO/Marketing director

Other C-level executive

SVP/VP/Director

Head of Business Unit

Head of Department

Manager

Which of the following best describes your title? (% respondents)

2

14

7

5

5

11

20

7

15

13



Customer service

Finance

General management

Human resources

Information and research

IT

Legal

Marketing and sales

Risk

R&D

Strategy and business development

Other

What are your main functional roles? Select no more than three. (% respondents)

15

27

32

2

5

7

3

24

23

4

40

7

Asia

EMEA

North America

MEE

Latin America

In which region are you based?(% respondents)

23

21

20

19

18

Retail banking

What is your primary industry?(% respondents)

100

Yes

Are you familiar with mobile technology trends in retail banking?(% respondents)

100

United States

India, Mexico, Singapore

Poland, United Kingdom

Brazil, Italy

Austria, Canada, Germany

China, Spain, Switzerland

Argentina, Australia, Colombia, France, Middle East and North Africa, Russia

Africa, Indonesia, Japan

In which country/region are you personally based? (% respondents)

16

8

7

6

4

3

2

1

Under 5,000

5,000 to 10,000

10,000 to 20,000

20,000 to 40,000

40,000 to 70,000

70,000 to 100,000

Over 100,000

Approximately how many retail accounts does your bank have? (% respondents)

7

4

7

5

6

5

66

Global

Multinational

National

Regional

Other

Which of the following best describes the geographic scope of your bank?(% respondents)

18

32

31

18

2



Appendix:Consumersurvey results

Percentages may not add to 100% owing to rounding or the ability of respondents to choose multiple responses.

Under 21

21 to 25

26 to 30

31 to 35

36 to 40

41 to 50

51 to 60

61 to 70

Over 70

How old are you? (% respondents)

0

5

10

13

13

24

18

14

2

Male

Female

Are you male or female? (% respondents)

57

43



Under $10,000$10,000 to $15,000$15,001 to $20,000$20,001 to $25,000$25,001 to $30,000$30,001 to $35,000$35,001 to $40,000$40,001 to $45,000$45,001 to $50,000$50,001 to $60,000$60,001 to $65,000$65,001 to $70,000$70,001 to $80,000$80,001 to $90,000

$90,001 to $100,000$100,001 to $125,000

Over $125,000

What is your annual income in US dollars? (% respondents)

9

7

6

5

6

5

5

5

4

6

4

3

4

3

4

7

14

The percentage of transactions I conduct now

The percentage of transactions I expect to conduct five years from now

If you use a bank, how do you primarily conduct transactions currently? How do you expect toconduct transactions in the future? Provide percentage estimates so that each column adds up to 100%.(% respondents) Branches, ATMs PC (eg, website) Call centre Mobile device(s)

36 46 4 15

28 44 3 25

I can bank any time I want

I can bank any place I want

I do not have to wait for service (eg, on a line or on hold)

Mobile banking provides easy access to my account records

I do not want to travel to a branch

I prefer self-service to interacting with bank employees

My bank does not have a nearby or convenient branch

Digital is the only way my bank does business

Mobile banking is more secure

Other

What are your primary reasons for using mobile banking?Please select the top three. (% respondents)

77

54

36

36

33

19

12

3

3

2



I prefer to use my PC

I do not trust the security of mobile banking

I prefer to use the ATM

I do not like to use my phone in public (eg, for security reasons)

I prefer to use a bank branch

My mobile phone is not capable

I prefer interacting with bank employees

My phone is too hard to use

My bank does not offer mobile banking

Other

Why don’t you use mobile banking?Please select the top three. (% respondents)

57

43

35

27

24

10

8

6

3

4

Yes

No

If you could bank using your mobile device easily and safely, would you visit a branch less often? (% respondents)

74

26

I have used my mobile device to do this

I have not used my mobile device to do this but would be willing to

I have not used my mobile device to do this and would not be willing to

Don’t know

Access and manage accounts (eg, savings, transactional, credit, loans)

Find information on products, services and branch and ATM locations

Make transfers, payments and deposits

Receive alerts

Open new accounts

Apply for loans or credit

Access advanced services (eg, financial-management tools, wealth-management services, spending analyses)

Make and manage investments

Access and manage “mobile wallets” (ie, digital versions of wallets containing items like credit cards, coupons, tickets, membership cards that are accessed via smartphones)

Receive personalised products and services (eg, based on profile, history, location, circumstances)

Use advanced security features (eg, biometrics, two-factor authentication)

Access non-traditional services (eg, legal, insurance)

Which mobile banking features have you used? Which would you use if they were available? (% respondents)Mobile feature

54 21 21 4

50 28 17 5

48 25 23 4

52 27 15 5

11 38 42 8

11 38 44 8

16 40 34 10

19 37 35 9

20 42 28 9

16 41 33 10

16 46 26 12

12 42 33 13



Strongly agree Somewhat agree Neither agree nor disagree

Somewhat disagree Strongly disagree

I trust my bank to keep my accounts secure

I trust my bank to keep my personal data secure

I trust my bank and would be reluctant to switch to another bank

How would you rate your level of trust in your primary bank to provide online and mobile services?Please select a response on a scale from “Strongly agree” to “strongly disagree” in each row. (% respondents)

41 43 12 3 2

36 43 13 5 2

27 36 29 6 3

Tracking, alerts and analysis about where and how I spend money

Personalised information to provide me with more valuable banking services

Advice related to financial products (eg, mortgages, credit cards, insurance, investments, credit scores, legal services and real estate)

A “mobile wallet” that lets me easily manage bank and loyalty accounts (ie, digital versions of wallets containing items like credit cards, coupons, tickets, membership cards that are accessed via smartphones)

Travel services, including currency conversion

Personalised suggestions on how to get more value from my spending

Personalised suggestions on how I can better manage my money

Customer service via Facebook or other social media

Access to legal, tax or other professional non-banking services

Which of the following online and/or mobile banking features do you use?Please select all that apply. (% respondents)

57

49

31

30

29

19

19

11

11

Highly valuable Somewhat valuable Minimally valuable Not valuable at all I have not used this feature

Personalised information to provide me with more valuable banking services

Tracking, alerts and analysis about where and how I spend money

Personalised suggestions on how to get more value from my spending

Personalised suggestions on how I can better manage my money

Advice related to financial products (eg, mortgages, credit cards, insurance, investments, credit scores, legal services and real estate)

Customer service via Facebook or other social media

A “mobile wallet” that lets me easily manage bank and loyalty accounts (ie, digital versions of wallets containing items like credit cards, coupons, tickets, membership cards that are accessed via smartphones)

Access to legal, tax or other professional non-banking services

Travel services, including currency conversion

How valuable are these features to you?Please select one in each row.(% respondents)

45 41 9 2 2

53 38 8 1 1

48 34 15 2 2

43 42 11 3 1

34 49 11 3 2

36 36 18 8 2

55 34 8 2 1

41 42 10 4 4

39 41 15 2 3



How does your bank protect your account from unauthorised access through your mobile device?What authorisation features would you like to have that you do not have currently?Please select all that apply in each column. (% respondents)

Username and password

Questions that only I can answer

Voice authentication

Fingerprint scan

One-time code sent via text message

Encryption

Other

Security features I have now Security features I would like to have

94 6

78 22

11 89

9 91

63 37

49 51

45 55

In which areas of money management could you most improve, and in which would you most like help from your bank?Please select the top two in each column. (% respondents)

Managing it (eg, budgeting, planning, paying bills)

Spending it (eg, making wise purchases)

Earning it

Saving it

Investing it (eg, making money with money)

Areas in which I could most improve Areas in which I would most like help from my bank

72 43

64 44

58 53

55 61

50 75



US

Brazil, Canada, China, France, Japan, Mexico, UK

Australia, Germany, India

Africa, Argentina, Colombia, Indonesia, Middle East/North Africa,Russia, Singapore, Switzerland

Austria, Czech Republic, Poland, Spain

Italy

In what country do you live? (% respondents)

13

6

4

3

2

1

Feature phone (ie, a basic phone for calls and texts, sometimes with simple games and Internet capabilities)

Smartphone (eg, iPhone, Android, Windows Phone, BlackBerry)

Tablet

I do not use a mobile device

What kind of mobile device do you use?Please select all that apply. (% respondents)

22

86

47

0

Yes

No

Do you use a bank to handle personal financial matters? (Note: A bank would provide you with a savings and/or checking account.)(% respondents)

100

0

Yes

No

Do you have one or more insurance policies (eg, health, life, disability, auto, renters, homeowners)?(% respondents)

100

0

Asia-Pacific

EMEA

Latin America

North America

MEE

Embedded Data Field: Region(% respondents)

26

23

19

19

14



Whilst every effort has been taken to verify the accuracy of this

information, neither The Economist Intelligence Unit Ltd. nor the

sponsor of this report can accept any responsibility or liability

for reliance by any person on this white paper or any of the

information, opinions or conclusions set out in the white paper.

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How mobile is transforming banking

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