Kyle McNamara

Today, I made my first purchase from my mobile phone – a $4 used book through Amazon.com, from a seller I’d never heard of. I was in the backseat of a car, on my way to dinner, kicking myself for not having gone to Borders earlier in the day, and just like that, the order was placed.

Yet I recently read that most consumers are still not willing to use their phones for mobile banking because they are concerned about the security of their data:

According to recent research from Unisys, 71% of all consumers surveyed in 14 countries will not consider using a mobile device to bank or shop online. The issue, for the most part, comes to trusting the technology. The research reveals that more than half of all respondents do not trust their mobile devices to provide a secure transaction and currently only 9% use these devices to conduct transactions involving credit-card payments, money transfers, and deposits.*

At the same time, more money is being invested in mobile banking. These systems are really expected to catch steam by 2010, and over the last few weeks, both Citibank and Bank of America rolled out new mobile offerings.

I recently did some research on applying behavioral economics to improve the success of online offerings, and some of the success factors I’ve seen for online offerings are:

1. Limit Available Choices. When consumers are faced with too many choices, they may be overwhelmed and may fail to complete a transaction. You don’t need every aspect of your online offering to be available on a phone, so limit it to key transactions, such as balances, recent activity, transfers, and payments. Citibank doesn’t allow you to add payees to your bill payment account through a mobile device (which is also a security feature). When I use a Wells Fargo ATM, they give me one-touch access to my most common transactions (e.g., withdraw $100, no receipt). Look at your customers’ most frequent transactions, and the ones that they are most likely to want to execute from their phone on the train ride home, and only offer the top few.
2. Provide a Familiar Interface. Customers may be dissuaded from completing a transaction if they are uncertain as to how it will be completed. To reduce this uncertainty, you can add cues throughout the process to guide them through – think of the 3-step “Quote. Buy. Print” process offered by Esurance. Services like PayPal and Google Checkout provide a common interface that people are used to – this allows them to store their personal data at a site they trust, and not expose it to an unfamiliar merchant. My $4 book was from a third party I didn’t know, and I was hesitant to give them my payment information; but because they were selling it on Amazon, and the Amazon interface and payment process was familiar to me, I was comfortable completing this transaction.
3. Secure the Transaction. One of the most common reasons people don’t shop online is that they are concerned about credit card and identity theft, so businesses need to make sure to provide an adequate level of security. In addition to using familiar services like PayPal and Amazon, transaction-level security must be provided. Citibank’s mobile service uses 128-bit encryption, which is comparable to existing internet service, and Bank of America offers a “$0 Liability Online Banking Guarantee” that ensures customers are not responsible for unauthorized transactions.
4. Demonstrate the Benefits. People are naturally resistant to change, so getting customers to use your online offering requires highlight benefits that they will realize in the short-term. Sure, it’s convenient to access your accounts while killing time, but what else is in it for me? Many banks offer SMS alerts when balances run low or strange activity is detected – perhaps that feature must be initialized from a mobile banking session. Wells Fargo waives the cost of online bill pay when you maintain a minimum balance; perhaps banks could also waive it if a customer pays one bill per month from their mobile phone. Or maybe custom offers can be sent to my mobile once I’ve activated the service.

* Source: Consulting Magazine, July/August 2008.