Itinerant customers embracing mobile banking faster than military banks expected

Itinerant customers embracing mobile banking faster than military banks expected

Summary: Many banks treat mobile banking like an ancillary service channel, but it’s becoming the main game for USAA and Australia’s Defence Bank at an "incredible" rate, bank strategists say.

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Many banks treat mobile banking like an ancillary service channel, but it’s quickly becoming the main game for the highly-mobile customers of USAA and Australia’s Defence Bank.

The head of customer strategy for military bank United Services Automobile Association (USAA) admits to being “a little scared” after recently watching mobile banking services usage rocket past the levels initially expected by the end of 2015 — but he relishes the challenge as USAA and contemporaries like Australia’s Defence Bank embrace new technologies to keep the personal touch.

USAA's Eric Smith. Photo: David Braue
Eric Smith: USAA facing "an incredible amount of disruption." Photo: David Braue

“We’re in a period of unprecedented change and an incredible amount of disruption,” Eric Smith, associate vice president for member contact applications with the San Antonio, Texas-based bank told attendees at FST Media’s recent Future of Banking and Financial Services Technology conference in Melbourne, Australia.

More than 50% of USAA’s customer interactions are now being carried through its mobile app, Smith said — reflecting the itinerant nature of its more than 9.6 million military members and their families. For many of the two million new members USAA had added in the last three years, mobile is the primary form of communication with the bank.

"Despite all the churn that has occurred in financial services, for USAA this has been the most tremendous growth spurt we've ever had," Smith said. "They're great numbers, but at the same time they make us a little scared in terms of what the future may hold."

To meet current and future demand, USAA has been filling out its mobile app as a one-stop shop for all kinds of transactions — including the Deposit@Mobile feature allowing customers to deposit checks by photographing and submitting pictures of them, and the recent addition of a virtual agent called ‘Nina’ that enables natural-language queries using voice-recognition technology from Nuance Communications.

For a company built on creating, establishing and maintaining relationships, [mobile] creates a problem because 90% of your transactions are through digital means and not through the human touch.

– Eric Smith, USAA

Yet, while the mobile investment has helped the bank contain the cost of its burgeoning customer base, meeting customer needs exclusively by mobile has its downfalls.

For a company that made “a conscious decision” not to build a branch network because its members moved so frequently and widely, Smith said the shift has raised "concerns."

“It’s important [to keep building out the mobile experience]," he explained, "because some of our newer members are only interacting with us on mobile. But we don't want the quality of that relationship to get in trouble because of aggressive growth.”

Australia’s Defence Bank, which serves a similar demographic — albeit a smaller customer base of around 90,000 members — has been facing similar problems as it struggles to maintain customer intimacy in an era when technology increasingly threatens it.

USAA-MobileTakeup
Mobile banking (red bars) is rapidly becoming itinerant customers' preferred interaction channel. Source: USAA

“Transactions are now primarily online and mobile,” CEO John Linehan said, “and consistent with the American experience, mobile will overtake it shortly. But we don’t see it as siloed — customers will all come back to branches and cross-link through mobile, and all the structures you have will be across those areas.”

To maintain customer intimacy, in 2010 Defence Bank added video-based support to its ATMs and branch networks. This year, it added live video calling to its contact center and will eventually extend the service to customer mobiles.

Customer service representatives sit at purpose-built workstations with mirrors that project the customer’s video image directly in front of them, so they can look directly at customers as they walk them through transactions and upselling transactions.

Repeating the adage that older customers save and younger customers borrow, Linehan said the push to video was to “get older people in to fund our rapidly growing books with younger borrowers."

"We did that via adding video, because increasing use of consumer technology has paved the way for calling from their homes. It’s important to be able to service your members with every opportunity you can."

 

Topics: Banking, Apps, Mobility, Australia

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • Mobile Banking with USAA

    Why no app for Windows 8 phones. USAA you are dropping the ball on this one. All customers, regardless of the phone operating system they are using, should have full access to your bank and should be treated just like any other customer.
    pjespo