The Great Mobile Banking Retention Delusion

The Federal Reserve Bank released its annual study on mobile banking, and some of the findings are a bit hard to stomach. The Fed asked:

What business benefits have been achieved since offering mobile banking?

More than eight in 10 banks said customer retention:


First off, that’s an interesting way to word the question. I would have asked “what business benefits have you achieved as a result of offering mobile banking?”

The way the Fed asked the question the benefits achieved could have been the result of the economy improving if a bank had started offering mobile banking right when the economy started to improve. But I’ll assume respondents answered the question from the perspective of what results were achieved from offering mobile banking.


I’m not buying the answers, though. Marketers find it nearly impossible to attribute a change in retention to any one action or offering. Maybe what these banks are seeing is that customers who use mobile banking have a higher rate of retention than customers who don’t. That may be true, but it doesn’t prove that mobile banking caused the higher rate of retention.

In addition, although nearly half of respondents said they’ve achieved increased efficiency from offering mobile banking, just 29% said that they’ve actually reduced costs by offering mobile banking. That means there are a lot of banks with unrealized productivity gains.

But it’s probably a moot point. Eight in 10 banks said that they have less than 20% of their customers actively using mobile banking. With so few people actually using mobile banking, what impact on overall retention—or operational costs, for that matter—could  mobile banking really be having?

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The regional differences in claimed benefits are interesting, as well.

While more than 80% of the banks in the Atlanta, Boston, and Dallas regions–and nearly 90% of the banks in the Richmond, VA region–claimed retention benefits, only 65% of banks in the Minneapolis region said they’ve seen an improvement in retention as a result of mobile banking.

In fact, 22% of the Minneapolis-area banks said they’ve seen no benefits from mobile banking, roughly three times the percentage of banks in the Atlanta and Dallas regions who have realized no benefits.

Maybe Minnesotans like to get into their cars when it’s three below zero and drive down to their banks to check their account balances. If you have another explanation, I’m all ears.

The Fed report speculated:

Those FIs finding “no benefits” may be offering mobile services for competitive reasons alone, or are too new to mobile to see benefits as yet.

That makes no sense. If you’re offering a service for “competitive” reasons, and other banks have realized certain benefits, then you should be realizing those benefits, as well.


There’s something else that bugged me about the Fed’s findings. When asked what the most common reasons preventing customer adoption of mobile banking were, 70% of bankers said “lack of customer awareness.”

Oh come on now, how big of a rock do you have to live under to not know what mobile banking is, and whether or not your bank offers it?


Bottom line: I’m not arguing that banks shouldn’t offer mobile banking. What I am arguing is that:

  1. Mobile banking is infrastructure. It’s a platform for which other things—things that could actually produce an ROI or business benefit—can happen, and
  2. Proper measurement techniques are needed to isolate and quantify the impact of investments. I’m just not buying that many of the banks surveyed have those techniques in place.

But hey–if you need to dazzle your senior management team with BS in order to get more funding for the mobile channel, don’t let me shatter your mobile banking retention delusions.

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