Banking online using an iPhone or Android to check account balances, pay bills, and deposit checks is a current hot topic of discussion in many board rooms. Consumers and businesses are quickly migrating banking tasks away from the traditional brick and mortar branch to more convenient on-demand, 24/7, bank anytime-anywhere services that fit today’s fast paced lifestyles. A recent study conducted by the Independent Community Bankers of America (ICBA) revealed that more than twice the number of community FIs now offer mobile banking compared to just two years ago. Plans to implement mobile banking by 2014 are expected by 44 percent of the community banks polled. But, for many FIs this is a challenging time. Keeping up with competition to quickly deploy services like mobile banking may create strategic challenges and short change existing processes and standards.
As many community FIs eagerly add mobile banking to their repertoire of e-banking services, a lack of direction for regulatory compliance initiatives, challenges to mitigating the risk of potential transaction loss and controlling administration costs top the lists of concerns for community bank technology and information security management teams. It’s also clear that we may not see specific mobile banking guidance for a while (if ever).
Some FIs attempt to capitalize on existing strategies and standards and will update the typical (one or two page) Internet Banking Policy, internal systems focused Network Policy, or create a standalone mobile banking policy. Unfortunately, this narrow approach will not provide the proper framework for implementation and management of the unique mobile online banking environment for customer facing technology based services.
Successful deployment and ongoing mobile banking management requires a paradigm shift in strategy – an enterprise-wide electronic channel strategy. Luckily, federal standards do exist. The FFIEC IT Examination Handbook, E-Banking Booklet organizes e-banking into services, service components, and service delivery channels. Also, this strategy complements other FFIEC guidance for Risk Management of RDC, and the recent (June 2011) Supplement to Authentication in an Internet Banking Environment.
Advancing Strategic Goals
The framework outlined in the FFIEC E-Banking Booklet spells out that not every bank product feature and not every bank customer is a viable candidate for electronic/mobile delivery, and that features and customers should be risk ranked for consideration. Initial steps to developing strategy include determining which markets and customer segments can and should be served through mobile banking channels, surveying customers to determine what transactions and features/functions would be appealing through mobile and estimate projected usage, and identify which customer-facing transactions are most likely to migrate from branch delivery to electronic channels and in what volumes. This process should be repeated for all electronic delivery channels (including older channels such as ATMs and IVR/voice response unit (VRU) systems), and should be integrated into one coherent, enterprise-wide electronic channel strategy.
By implementing a comprehensive approach, institutions gain a competitive advantage as overall cost of services are reduced, customer retention increases and new customers are gained, and value-added service opportunities grow fee income. This framework also appropriately sets the stage and provides a logical strategy for near future opportunities such as mobile bill payment, P2P and other e-banking services.
Have you considered an enterprise-wide electronic channel strategy?