Mobile Banking: Why small banks are better innovators
May 25, 2010
Interesting meeting at Mobile Monday Boston last night. The panel was impressive, consisting of distinguished leaders in mobile banking business, research and academia. The provocative discussion centered around a global perspective of mobile financial transactions, with keen insights to the cultural differences in the acceptance of mobile banking. The panel, sparked by a participatory audience, provided insight to the relative complexities that our free market system imposes on the creation of a ubiquitous system for fast and secure cashless transactions; issues that don’t exist in countries with one dominant (or sanctioned) player that can decide and set the standard across all facets of the transaction.
Along a similar thread, the panel pointed out that some of the best innovations in mobile banking come from the smaller banks… a bit counter-intuitive when you consider the deep resources and millions of customers served by the national financial services firms. The reasoning is simple though, and when you look at a few key facts, it makes perfect sense:
- Small banks have pressure to provide similar service levels as the big banks; in fact, they need to differentiate themselves from the big guys by providing a better and more flexible level of service.
- The cost of core mobile technology infrastructure is no longer out of reach for smaller enterprises, particularly true when you consider that it only has to scale to support tens of thousands of users… a tiny population when compared to the millions served by the national/global institutions.
- Focused mobile solutions companies can provide turn-key mobile banking to local/regional banking sector… solutions that provide core capabilities as well as extensible platforms that can be innovated upon. All of these factors bring the ability for small banks to implement mobile solutions that are reasonably on par with their massive counterparts.
- All that said, the real key to small bank’s ability to innovate faster than the deep-pocketed mammoth financial institutions is in their diminutive size. Decisions can be made in a day instead of a quarter, there is typically only one committee that needs to be satisfied, making the internal selling process easy.
Combining pressure to compete, access to core technology and nimble management creates an environment with a high pace of innovation; innovation that the big banks can take notice of and put into their process machines and eventually deliver to those of us who prefer to bank with the bigs.
Mobile Monday Panelists that drove the discussion included:
Matt Calman – Senior Vice President and R&D Executive, Bank of America. Matt also leads the MIT Center for Future Banking.
Marc B. Keller – Senior Vice President of Consumer Banking Transformation, Bank of America. Marc is also involved as the Executive in Residence at MIT’s Center for Future Banking.
Chris Musto – General Manager Financial Services, Keynote Competitive Research, Keynote Systems Inc.
Bill Hartman – Director of Research, Essential
Aaron MacPherson –Practice Director with IDC Financial Insights