The notion that technological change is ever accelerating, and that keeping up is a prerequisite for success, even at small community banks, was a key theme of the American Bankers Association's annual convention this week.
Four years after the height of the financial crisis, the convention showcased an industry less preoccupied with stabilizing itself and adapting to new regulations — and more interested in looking toward the future. Sessions on social media, mobile banking, and the next generation of payments were all well attended by bankers, and a recurring joke among the presenters at those sessions was that their slides were outdated as soon as they wrote them.
Generating particular buzz were the expected revolution in digital payments and the impact that remote check deposit is expected to have on the growth of mobile banking.
"I think the key takeaway for us as financial institutions is that mobile is not an alternative channel," Louise Clynes, group vice president of digital money movement at SunTrust Banks (STI), told an audience. "It is in fact a primary channel today."
She presented data showing that while mobile devices currently provide the smallest channel for retail banking, far behind online banking and branches, they are also the fastest growing channel.
Perhaps more important to bankers, Clynes said that banks have strong bottom-line reasons to market their mobile banking systems. She pointed to data showing that customers who use mobile banking are 32% more profitable than other customers- in part because they make more transactions, and mobile transactions are cheaper to process than some other payment methods.
Clynes also highlighted data suggesting that as customers use mobile banking more frequently, their loyalty to the bank increases. "Everything they need is in that device, and there's no reason to go anyplace else," she said.
She predicted that the ability to make a deposit on a smart phone is going to cause the use of mobile banking to skyrocket.
"That's like the Holy Grail. That is the one service that is causing switching," Clynes told the audience. "And if you're not already using mobile deposit, or planning to, that's a huge risk."
During a session on payments, the focus was less on how banks must adapt to compete with each other, and more on how their traditional lines of businesses are under increasing threat from outside the banking industry.
Josh Gilbert, a principal at First Annapolis Consulting, told bankers that they should be making plans for how to facilitate peer-to-peer payments. At the same time, he acknowledged that the market is still relatively small — electronic peer-to-peer payments are estimated to be an $80 billion-$120 billion market — and said that banks should not feel the need to roll out a product now.
Among the firms working in the peer-to-peer payments realm are the largest commercial banks, MasterCard (MC), PayPal, Amazon, and smaller companies such as Dwolla and Clover.
"So there's a lot of activity in this space," Gilbert said. "Is it going to be offered by the banks, or is it going to be offered by somebody else?"
Gilbert argued that mobile payments have the potential to disrupt slow-moving banks, and said institutions that are not moving forward on mobile banking may be caught flat-footed.
At the same time, Gilbert noted that it is not at all clear what the mobile payments space will look like, as heavyweights including Google and the major payment networks are still looking to establish industry standards. "We like to joke about the coming wallet wars," he said. "But in practical terms, there's been very little adoption of wallets by consumers."
Elsewhere, there were two sessions on the use of social media by banks — one for beginners, and the other for institutions that are further along.
Matthew Wilcox, director of marketing and interactive services at Zions Bancorporation (ZION) in Salt Lake City, made the case for social media as an effective form of marketing, saying that Facebook, Twitter and YouTube are all useful channels for engaging with customers.
He also gave advice on how to overcome skepticism regarding social media among the older generation of bank executives. Negative information is already being spread about banks online, and using social media allows institutions to present a more balanced picture, he said.
The three-day convention even included a session where bankers got advice on how to manage the rapidly expanding number of social media platforms in their lives outside the workplace.