March 25, 2015 | Ken Hans
Freemium Mobile Banking Apps – Would You Pay for Your Bank’s Value Added Services Delivered through the Digital Channel? I Would.
An article on www.pymnts.com entitled ‘Pay to Use Your Banking App? Most Say No Thanks’ that showed only about 25-33% people would actually be willing to pay $3/mo access charge for their mobile banking app. As a consumer banking customer, I would agree with the majority consensus, or the 66-75% of people here, in that I would not care to be ‘taxed’ a monthly fee. Particularly for a level of service (i.e., keeping my mobile banking app operational) that has become table stakes service in the world of consumer banking. I personally put an exceptionally dubious eye on these types of generalist charges that I would incur in perpetuity. The biggest beef for me is that I can’t directly tie back to the specific value I am getting (or will get in the future) for this charge, all the while the cost to me continues to add up every month. So over three years would I be then willing to pay over $100.00 for the ‘privilege’ to access my bank accounts on my mobile app? Looking at cost-to-value in this context, my answer would be an emphatic ‘No!’
That said, a presentation I attended, by Virginia Heyburn of @Fiserv at the Virginia Bankers Association’s March Retail Banking & Marketing conference, indicated evidence of customers’ willingness to pay for personalized value added services. For one, some industry statistics are showing approximately 50% of consumers a) would be open to having their bank proactively recommend products and services for their specific financial needs and b) are interested in both real-time and future analysis of their personal spending. What does that mean to me? It means that there’s an opportunity for banks to have meaningful conversation with their customers via the mobile and digital channel by delivering value added services to those customers. Secondly, there has been evidence of consumer banking customers being willing to pay fee-based services in mobile and digital, largely for added convenience in conducting specific financial transactions. The biggest evidence of this is in certain banks charging for consumer mobile remote deposit capture services.
So what shape could mobile banking value added services take the form of? Beyond the Mobile Banking 1.0 era (i.e., the ‘me too’ mobile banking apps that all have today’s basics: balances, history, simple bill pay, ATM/branch locator, mRDC, etc.), banks are continually evaluating how to provide differentiating value to their customers via the mobile and digital channels. And with this, banks are also considering how to monetize this differentiating value. Areas under consideration are items such as mRDC (providing same day fully available check balances), same day bill pay, more robust (and easy) p2p, and quick funds transfer to avoid overdraft fees.
As a consumer banking customer, would I pay for this? You bet I would. How about the rest of the free consumer banking world? I think that most others would too. For when paying for something ‘in app’ that a) is a conscious choice tied to b) a heightened convenience with a c) frictionless payment vehicle (i.e., ‘click yes and we’ll automatically charge your account’), human nature has demonstrated that this tight knit combination lends itself to consumers willing to part with dollars for immediate convenience. Think of it in terms of the popular (and lucrative) ‘Freemium’ mobile app model: the app is free, but there are ‘in-app’ products that range from $0.99 and up. So app makers get consumers over the initial app cost barrier, then put in the fee-based app sweeteners as the consumer engages the app more and more. Apply this paradigm to mobile banking. If my bank were alerting me to and offering me added convenience services that provided me things such as enhanced access to funds or faster bill pay vehicles to avoid penalties, would I click on ‘yes’ to pay, say a buck, for those things, from time to time? Maybe not every time, but I’d bet there would be enough occasions where I’d both be appreciative of the offer from my bank to give me a value added service and more than willing to pay it.