Editor's note: For banks and credit unions the impact of the new mobile banking regulations includes reaching more underserved consumers and providing more convenient services.
In an effort to help alleviate the lack of equal access to mobile financial services and products across the country, the U.S. House of Representatives in late January passed a bill that would allow banks and credit unions in every state to collect and keep consumers’ driver licenses and personal identification card information. The legislation would also permit mobile banking apps to use those forms of identification for customer verification.
The Importance for Banks and Credit Unions
With the number of bank branches dwindling, mobile platforms and digital banking are even more integral when providing consumers access to basic financial services, such as checking and savings accounts. This rollback of mobile banking regulations enables financial institutions (FIs) to offer these services while, at the same time, making access to them more convenient for their customers and members. Additionally, as noted by the Credit Union National Association, this step also allows FIs to remain more competitive with FinTechs that are saddled with fewer regulatory requirements.
Future Growth and Innovation in Mobile Banking
Increased customer access and choice helps banks and credit unions expand both their volume of transactions and breadth of services. Fewer (or more streamlined) mobile banking regulations mean that financial institutions can focus more on continuous innovation in their mobile platforms. Consumers will enjoy new and improved products, features and functionality, including better account opening, the latest options for biometric authentication, advances in artificial intelligence and capabilities enabled by the Internet of Things (IoT).
Give Consumers What They Want
According to research, actions such as those taken by Congress are consistent with the overarching desires of consumers when it comes to how they wish to do their banking. Novantas’ 2017 Omni-Channel Shopper Study noted three major shifts in consumer banking behavior that align with this potential regulatory change and the importance of FIs’ digital focus and commitment to innovation in banking technology:
- A significant shift from branch dependence to digital preference;
- A redefinition of the drivers of bank consideration and purchase; and
- An increase in demand for digital account opening.
Findings by other researchers offer specific indicators regarding consumer preferences. According to CACI International Inc., the typical consumer will visit a bank branch just four times a year by 2022, down from approximately seven today. For younger millennials, the branch visit frequency is projected to drop by two-thirds during that time span. Citing the “Amazon shopping experience” effect, the study asserts that consumers increasingly want a similar user experience when purchasing financial products online.
As to the future, all indicators point to more of the same with transactions being generated from an increasing number of end points in homes, vehicles and devices yet to be introduced. Consumers want convenience, control and security – in that order. They are willing to allow use of their personal and financial data to achieve these first two desires while expecting the latter as table stakes from their FI. Certainly, non-trivial in terms of execution, but a fact of life for all of us in the financial services industry now and for the foreseeable future.