Leveraging Mobility in Consumer FinanceBanks that deploy mobility solutions effectively can not only reduce staff workload but, more importantly, improve lead generation and conversion as well as the market perception of their brand. The result is increased sales and long-lasting relationships with customers

Executive SummaryMobile technology is increasingly making its presence felt across the banking sector. In terms of revenue, the mobile banking market is growing at a compound annual growth rate (CAGR) of more than 35%1 (more than four times faster than the overall banking market) and is expected to reach $670 billion by 2015.2 The spread of smart phones, which offer several unique advantages such as portability, anywhere anytime accessibil-ity, size, unique id and geo-positioning ability, is driving banks to offer mobile features. Banks are beginning to realize that this is a permanent shift in consumer communication and transactions, and therefore not having a mobility app today is akin to what it was not to have a Web site in the early 2000s.

Most banks, however, are still trying to get their arms around what this means for them, how the larger banking sector is reacting or will react and what they should be doing. Based on our experience of working with banks and the mobility workshops we have conducted, we think most banks understand that mobility has the potential to revolutionize customer experience in the consumer finance space. However, this realization is not reflected in their strategizing. Banks can offer a range of features over mobile to enhance customer experience, reduce front-

office, middle-office and back-office workload, cross-sell and up-sell products, deepen relation-ships and increase stickiness.

This paper focuses on the trends in, and the use of, mobile banking in the consumer finance space and the typical challenges in implement-ing a mobility solution. It proposes a high-level approach to build a roadmap for implementing a mobility solution.

Consumer Finance: Standard and Emerging Mobility OfferingsWe analyzed and mapped the mobility offerings of the top banks and lenders in the consumer finance space across the process life cycle and noted some trends (see Figure 1):

• Sales and promotion: Most lenders offer standard sales and promotion features such as rate and payment calculators, product comparison summary, product details, branch/dealer locator, etc. These features help pro-spective customers explore product options, the corresponding monthly obligations, tenures, interest rates, down payments, etc. Some lenders offer emerging features such as integrating borrower registration with the basic features mentioned above to maintain a record for each borrower, which in turn facilitates

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lead conversion. Other emerging/advanced features include guides to buying properties and vehicles, guides to student loan programs, providing property listings in the customer’s area of choice, etc.

• Application through fulfillment: Mobility fea-tures offered in this space have mostly been limited to sending alerts for key loan status updates or reminders, as this is a middle-/back-office-focused activity for banks. How-ever, some lenders provide advanced features such as checklists for documents to be submit-ted, the ability to upload documents through image capture (similar to check deposit), the ability to lock rates through mobile apps and push alerts for document verification status changes.

• Loan servicing: Standard features in the loan servicing/administration space include balance information, due date reminders, auto-pay notifi-cations and account views. These basic features offer customers convenience and mobility while helping lenders reduce outbound and inbound call volumes, reduce downstream collection efforts and promote transparency. Advanced features that some lenders offer include rate reset/payment change alerts and the ability to change basic demographic information.

Benefits for Banks and CustomersFor banks, the benefits of mobility include cost savings through reducing workload across the front, middle and back office, improved lead man-agement and pull-through and brand/perception building. The front-office workload is reduced through improved lead management and conver-sion, and borrower registration through mobile. The middle-office workload is reduced through mobile status updates and document management. The back-office workload is reduced through automated alerts, borrower updates and account views. Push alerts and modification of borrower demographics via mobile apps help the bank communicate with customers regularly and reduce the call volumes to the back office. Payment reminders help reduce defaults by careless borrowers and save down-stream collection efforts. These features not only provide operational efficiency but also help build the brand. They improve brand perception by pro-moting transparency and attracting customers through features that are intuitive and user-friendly such as calculators, product comparisons, etc.

Customers benefit through improved, effective and timely communication, easy access to infor-mation on products, rates, homes, dealers and loan programs “anywhere — anytime.” They can view loan terms and lock rates on the go with zero latency.

Figure 1

Consumer Finance: Standard and Emerging Mobility Offerings

Benefits

Sales and Promotion Loan Administration/Servicing

Application Through Fulfillment

Emerging Features

Standard Features

Process Value Chain

• Borrower registration.• Guide to buying property/vehicles.• Guides for student loan programs.

• Rate & payment calculators.• Product comparison.• Offers and product details.• Interactive — branch, loan officer, dealer locator.

• Alerts for major loan status updates (SMS).• Approval and disbursement notifications (SMS).

• Application document checklist.• Rate lock.• SMS triggers on document verifications and status changes.• Document snapshot and upload.

• Basic borrower demographic info amendments.• Alerts for rate reset and payments (SMS).• Investor reporting alerts.

• Reduced middle office involvement.• Reduced missed payments and delays and call volumes for reminders.• Reduced collection effort downstream.• On-the-move outstanding balance.• On-the-move payments and reduced call volume for payments.• Reduced back office involvement for payments.

• Borrower gets upfront idea of required documents.• Check loan terms on the move.• Quick turnaround on rate lock.• Reduced call volumes on status checks.• Keeps borrower engaged with status of documents verification.• Promotes transparency.

• Anytime-anywhere access to relevant information — products, comparison, locators, etc.

• Due date reminders (SMS).• Balance information.• Fund transfer to loan accounts.• Other reminders (SMS).• Mobile banking — account views, payments.

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Challenges in Mobility AdoptionThe typical challenges associated with mobility adoption include security concerns, standardiza-tion and interoperability challenges, usability, device strategy and securing business buy-in (see Figure 3). Security challenges include security of data exchange, login and guarding against virus/hacking attacks. While security concerns are easily

addressed through technological solutions such as data encryption and digital signatures, other features such as PIN authentication and session timeouts can address concerns over loss/theft of mobile devices. Interoperability across platforms, in the event the user changes mobile device, can be addressed by offering apps across the three most widely used platforms (iPhone, Blackberry

Figure 2

Benefits of Offering Mobility Features

Cost savings by reduced workload

across front, middle and back office

• Reduced workload on front office through leads, registration and product/offer comparison.

• Reduced workload on middle office for status updates and document management.• Reduced workload on back office through payments, updates and document publishing.

Brand/perception building

• Customer attraction: User-friendly interface enables borrowers to perform various functions.

• Promotes transparency through various features such as product comparisons and application, document verification status, etc.

Improve lead management and

pull-through

• Better lead to application routing and management.• Real-time help to borrowers.

Figure 3

Challenges of Implementing Mobility

Security

Usability

Device Strategy and Deployment

Business Buy-in

Standardization and Interoperability

• Data access, integrity and confidentiality.• Authentication and non-repudiation – ensuring source authenticity. • Protection from cloning, hijacking, malicious codes.

• Interoperability issues: lack of standards across platforms and carriers.• Multiple fragmented versions offered by different stakeholders.• Different standards and technologies across the organization.

• Lack of simplicity impeding user acceptance. • Unfavorable user experience: small screen size, keypad and slow network speeds.• Lack of universal acceptance of mobile payments at POS.• Multichannel integration.

• Device-agnostic vs. device-specific approach.• Manage platform diversity.• Mobile Web, hybrid and native apps.

• Clarity on roadmap and approach.• ROI difficult to calculate and quantify.• Long-term investment.

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and Android). Usability in terms of user interface and flow, as well as acceptance, for example of mobile payments, is another challenge that can be mitigated by providing an easy-to-use, intuitive app that requires minimal data entry and text.

Mobility benefits usually accrue over a period of time and can be difficult to quantify. Therefore the biggest challenge for mobility adoption is securing buy-in from the business. Even if the business is willing to invest in a mobility solution, the larger organization usually lacks the expertise to lay out a comprehensive mobility solution roadmap that includes the proposed features, technology, implementation plan, etc.

Roadmap for MobilityWhile defining the roadmap to implement various mobility features, it becomes all too easy for banks to lose their way given all the possible features they can offer. A structured and com-prehensive approach is required to lay out a well-defined and definitive roadmap that takes into account the bank’s internal resource and budgetary constraints, the technology and com-petitive landscapes, the current features offered, the complexity of the proposed features as well as the features offered by competitors, the potential impact on the business and the business drivers. For example, a lender that originates loans primarily through retail channels would require very different features compared with one that originates through wholesale channels. An analysis of the bank’s current offerings is necessary to understand the bank’s maturity in terms of mobility. A bank with a very basic mobility presence (only products and interest rates) might choose to implement just a basic rate

and payment calculator and some alert features rather than embracing a full feature set or adding advanced features. Needless to say, such an initiative requires considerable budget and resource allocation to achieve the desired impact.

Implementation Approach

Defining the mobility implementation roadmap should include identification of a complete list of consumer finance features, determination of the business impact of each feature and estimation of the corresponding implementation cost to help decision-makers prioritize the features that are to be implemented.

The complete list of features should include features across all process areas, with details about what each will offer to the customer as well as the corresponding benefits to the bank. Determination of the business impact of the feature will be based on its potential benefits, the competitive landscape, the business model and business drivers. An estimation of the implemen-tation effort should take into account the existing technology landscape, the current features and their complexity. The final step in the process will be prioritization of the proposed features based on business impact, implementation cost and the internal resource and budgetary constraints.

The implementation prioritization depends on the trade-off between business impact and imple-mentation effort. The easy wins are obviously those with high impact and low implementation effort. The next set would require deeper thinking by management, after considering the potential business benefits and the budgets available.

Figure 4

An Implementation Blueprint

Determine complete list of features that can be offered

Prioritize based on business impact and effort

Determine technology choice and implementation effort

Determine business impact based on the importance in the process

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ConclusionBy leveraging mobility effectively, banks can offer features that provide anytime-anywhere banking to their retail customers, thereby ensuring positive user experiences and thus increasing customer satisfaction and loyalty. Further, banks can use mobile channels to increase their sales and marketing capabilities and reduce the workload on their front, middle and back office. Mobility features that can enable the above range from standard features such as rate and payment calculators, product comparisons, branch/dealer locator and loan status updates to advanced features such as guides to buying properties and vehicles, student loan program guides, property listings in the customer’s area of choice, document checklists and document approval status updates. The benefits of mobility include cost savings from reduced workload, improved lead management and pull-through and improved brand perception.

Delivering all these features does not come without its own set of challenges. The biggest challenge is securing internal buy-in and preparing the business case so that the various stakeholders within the organization can come together and invest in mobility as a communica-tion channel of the future. Even if an organiza-

tion is willing to invest in a mobility solution, it may lack the expertise to lay out a comprehen-sive mobility solution roadmap that includes the proposed features, technology, implementation plan, etc.

Some of the challenges that can be mitigated by working with an expert technology partner include security concerns, standardization and interoperability, usability, device strategy and securing business buy-in.

A long-term mobility plan requires consider-able budget and resource allocation to achieve the desired impact. Banks need to put together a definitive roadmap after considering their internal resource constraints and budgetary constraints, the technology and competitive landscape, current mobility features being offered, complexity of the proposed features, business impact and business drivers.

However, the potential rewards in the form of improved lead generation and conversion, improved market perception and brand strength and reduced workload are well worth the effort. Moreover, mobility is no longer a choice but an imperative!

Footnotes1 http://www.temenos.com/news-and-events/news/2011/temenos-announces-first-go-live-with-arc-mobile-

its-new-solution-to-address-the-rapidly-growing-mobile-banking-market/.

2 http://juniperresearch.com/viewpressrelease.php?pr=250.

About the AuthorsAshish Shreni is a Principal Consultant with Cognizant Business Consulting and has worked for over 13 years in the banking and insurance space on projects spanning business and IT strategy, business process optimization and complex project execution. His core focus area is consumer finance. He can be reached at Ashish.Shreni@cognizant.com.

Sanjit Bose is a Consulting Manager with Cognizant Business Consulting. He has over nine years of experience working with leading banks in project management, business process optimization and consulting engagements. He can be reached at Sanjit.Bose@cognizant.com.

About Cognizant’s Consumer Finance PracticeCognizant’s Consumer Finance Practice employs over 70 subject matter experts and analysts and 5,000-plus associates, and has successfully delivered over 500 large and complex engagements across originations, secondary markets, servicing and loss mitigation in the U.S. and UK and throughout Europe. We offer consulting, IT, BPO and IT infrastructure services across all functional areas. Consumer Finance Mobility Strategy is an offering designed and developed by Cognizant to help lenders define and implement mobility solutions for consumer finance LOBs.

About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 150,400 employees as of September 30, 2012, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

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