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Wednesday, 06 November 2013 19:02

Small business owners turn to mobile banking apps for convenience

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When it launches a mobile banking app by the end of the year, West Michigan Community Bank will become one of the smallest players to join one of the banking industry’s largest trends.

The app will enable West Michigan Community Bank’s retail customers to deposit a check, check account balances and transaction histories, transfer funds, and pay bills through their smartphones or tablets that use either the Apple iOS or Android platforms.

To Phil Koning, a banker for nearly 40 years, offering a mobile app for customers to do their banking is a must. He cites American Banking Association research that shows 8 percent of customers select mobile banking as their preferred method to do their personal banking.

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While not a large number, that 8 percent “is enough to get everybody’s attention” and will only grow.

“If you look at the statistics, it’s a delivery channel which we have to get involved in. There’s so many ways people can touch the bank, and they want to use all of them — and one of them is mobile,” said Koning, who’s personally testing the bank’s new mobile app.

“If you’re going to effectively compete in the marketplace, you need mobile banking,” he said. “Being a small bank, we haven’t had a lot of demand for it, but we certainly realize it’s the future.”

That future, according to an industry outlook, is huge.

Boston-based research firm Aite Group late last year predicted that mobile banking in the U.S. will triple between 2012 and 2016, growing from 33.0 million users last year to a projected 47.7 million in 2013 and then to 96.1 million within three years.

 

Results from a recent American Banking Association survey show the 8 percent of respondents who now prefer mobile banking as the method they most often use to manage their accounts grew from 6 percent a year earlier, the only category to increase in popularity.

Mobile banking apps began to emerge less than a decade ago as the latest evolution from the introduction and adoption of past technologies, from Internet banking that began in the late 1990s, to telephone banking in the 1980s and even ATMs that were first introduced in the 1970s.

The technology started with retail customers and has spread to new versions designed for small businesses.

The Hudsonville-based West Michigan Community Bank, which has seven offices in Ottawa and Kent counties and nearly $200 million in assets, will look at rolling out a mobile app for its small business customers.

“It all depends if we have demand,” Koning said.

Small businesses nationally have been slower to adopt the technology than consumers, relying primarily on bank branches or Internet banking, according to Chicago-based research firm BAI. Less than 25 percent of the small businesses responding to a BAI survey earlier this year said they used mobile banking, and just 8 percent use the technology to pay bills.

At The Bank of Holland, about half of retail customers currently use mobile banking. The bank is now looking at possibly launching a mobile banking app for small businesses in 2014.

“We just want to figure out the actual needs for our clients,” said Kelly Osdras, cash management officer at The Bank of Holland. “It’s just a matter of when and making sure we have the right app and systems in place.”

About 44 percent of the customers at First National Bank of Michigan in Kalamazoo, both retail and commercial, now use a mobile banking service that launched about a year ago. More and more customers have been asking for the service.

“It’s a convenience, and customers today want convenience,” said Scott McQueen, FNB’s vice president of operations.

Although mobile banking has a high growth potential, McQueen views it as a complementary service for now. Many FNB customers use it along with Internet banking and conducting transactions at the banks’ four branch offices.

“We have some customers who only use that, but I think it’s supplemental in nature,” McQueen said.

Mobile banking via a smartphone or tablet also may not work for every client. The larger the business, the less likely an owner is to use a mobile banking app and the more likely he or she is to be reliant on branch offices.

“Mobile banking may not be a solution for them unless they are a smaller business with a less complex banking relationship,” McQueen said.

Banks that already offer a mobile banking service for small businesses are now looking to upgrade their app.

Two years after it launched mobile banking, Founders Bank & Trust in Grand Rapids is working to implement remote capture in 2014 to allow clients whose customers pay them by paper check to deposit the money into an account by taking a picture of the check with their smartphone camera, said Nancy Jesko, vice president and retail group manager. Person-to-person payments also are coming, Jesko said.

Just as with past technologies, bankers say both mobile and Internet banking have allowed them to serve customers without requiring them to come into the branch, although banking offices aren’t going away anytime soon. The technology, however, allows small banks such as Founders Bank & Trust to compete for customers without making costly investments to develop new branches.

“We need branches in the community, but we don’t need brick-and-mortar on every street corner for (customers) to do their banking with us,” Jesko said.

The role of the branch is changing, however.

West Michigan Community Bank’s Koning believes that within five years, the ratio where 80 percent of the business at a branch office is for customer transactions and 20 percent goes to sales and services will reverse.

“The transactions are going to be done on the Internet and your mobile phone,” Koning said.

Mercantile Bank of Michigan implemented upgrades last month to make its app easier to navigate, to integrate a single login for the app and Internet banking, and to add functions for paying bills and cash management that include person-to-person payments through PayPal.

The Mercantile Bank mobile app has provided small business owners functions such as approving payroll remotely, said Mike Kroft, a vice president and the bank’s manager of e-banking services.

Small business owners who use the mobile banking app primarily cite the ability to do their banking from the road if they are away from the office a lot, Kroft said. For those clients, offering a mobile app is an “absolute” must, he said.

“The reality is that we are all more mobile, and the demands from customers are that they want to have access at their fingertips,” Kroft said.

Some of largest banks in the nation have been developing mobile banking for corporate clients.

Among the top 50 U.S. banks the Aite Group surveyed this year, 32 percent said they now offer a corporate mobile banking app and 8 percent planned to roll it out by the end of 2013. Another 56 percent said they were in the strategic-planning stage and planned to launch the service in 2014.

Remote deposit capture for checks itself is a technology that’s grown rapidly since its introduction less than a decade ago. Kristin Timmer, a treasury manager at Huntington Bank, estimates that three-quarters of commercial customers — typically retailers that still receive a lot of paper checks — now use remote capture to avoid having to step out of the office to make a deposit.

Even people across the street from a branch are using it, she said.

“Today, we have widespread adoption,” Timmer said.

Read 5377 times Last modified on Wednesday, 13 November 2013 13:25

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