As consumers gravitate to mobile devices, financial services firms are introducing a wave of smartphone and tablet applications for their retail and institutional customers. The likes of Fidelity Investments, E-Trade, TD Ameritrade and Morgan Stanley, among others, have been developing mobile apps that take advantage of technology innovations in the consumer space.
"When you look at [financial services] mobile platform strategies, consumers and the end investors are really starting to drive most of these trends," says Ed O'Brien, SVP, head of business technology development, for Fidelity Institutional Wealth Services, the RIA custody unit at Fidelity Investments. "We're seeing [financial] advisers more quickly adopt and even expect these technologies. ... They want to do things like trading [on the go]."
According to O'Brien, Fidelity is introducing mobile apps on its WealthCentral platform, a workstation for registered investment advisers. "It's not just being able to look at an account and get information," he says. "It's going to run more of their business remotely wherever they need to be." And advisers expect these capabilities to integrate with their existing applications, O'Brien adds. "Mobile devices are so intelligent, the expectation is that they will support integration," he explains, noting that WealthCentral provides advisers with integrated reporting, CRM and workflow tools.
Part of the reason for the mass adoption of smartphones in financial services is that the devices are vastly improved from the clunky mobile phones of the 1990s. The current surge in mobile apps from brokerage firms is related to smartphone's larger screens for accessing the mobile web, asserts Brad Strothkamp, Forrester Research VP and principal analyst. While Strothkamp acknowledges the current boom in mobile banking and investing, he predicts the space will "really take off" when, "You start getting applications that are really unique to the mobile device that can't be done with the computer."
A Lifestyle Choice
Already, financial services firms are taking advantage of specific features in smartphones, such as built-in cameras, to offer unique applications that can't be experienced on a desktop. For example, Fidelity in May rolled out Money Movement, a service based on proprietary technology that allows Fidelity clients to pay bills, transfer money and deposit checks using the iPhone, iPad and Android devices. "A lot of money is going into the [mobile] money movement space and remote check processing, and it's all because of the sensors [on mobile devices]," says Joseph Ferra, chief wireless officer for Fidelity Personal Investing. Ferra adds that built-in GPS capabilities also unlock the potential for location-based services via smartphones, which will enable financial firms to develop services that are more targeted to individuals' lifestyles.
It is this consideration of consumers' lifestyles that will drive the third phase of mobile adoption, according to Ferra. The first to adopt mobile, he explains, were the technology curious -- techies -- who enjoyed the technology no matter how clunky it was. The second phase of adoption was based on need -- users who adopted wireless as an inferior substitute for the web. "Now we're in the third phase, which is lifestyle -- those who prefer to use wireless wherever they are," says Ferra.
Another reason that brokerage firms are jumping on the smartphone and tablet bandwagon is the reality that mobile apps eventually could replace the desktop PC. Nicole Sherrod, managing director at TD Ameritrade, told WS&T earlier this year that TD Ameritrade research projects that wireless devices could surpass PCs as the gateway to brokerage accounts as soon as 2013. The online broker recently added iPad and iPhone apps to its suite of mobile offerings. "We make sure on the iPhone that the client is able to see every product, that everything is priced and they can trade it," Sherrod said.
Commuting: Research on the iPad
Of course, convenience is one of the top factors propelling mass adoption of mobile, and that's especially important to investors, says Forrester's Strothkamp. When Morgan Stanley rolled out its research application for the iPad about a year ago, for example, the firm conducted extensive market research on how customers were using mobile devices.
According to Barry Hurewitz, managing director, Morgan Stanley, the company realized that its customers were using tablets while commuting to work. "It became very clear that clients are spending more time, particularly around their commuting and before the market opens, using new devices," he told Wall Street & Technology in a video interview, adding that the financial services giant believed an iPad app would make its content easier to access around that crucial time before the market opens.
The firm's analysts track 2,800 companies on which the iPad app receives updates in real time, Hurewitz related. "The most important actionable research comes out before the market opens," he explained. According to Hurewitz, clients use the tablet to scan headlines and look for actionable research. Then, when they get into the office, clients may call their Morgan Stanley sales traders or analysts for additional insights.
While the research app is intended for institutional investors -- mainly portfolio managers -- who are clients of Morgan Stanley, the apps mass distribution via the iTunes app store has given it wider exposure. Since its launch in August 2010, nearly 60,000 people have downloaded the Morgan Stanley research app for free, and more than 12 percent of clients are using their mobile devices to access Morgan Stanley research globally, the firm says.
Noting that they use tablets differently than they use smartphones, Fidelity's O'Brien says financial advisers, once slow to adopt new technologies, are embracing iPads because the tablets are good for reviewing documents and for showing clients their portfolios in face-to-face conversations. "They need the information on the smartphones to do transactions, and they need the information on the tablet for interactive discussions with their clients," he says.