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David Hagen, Scivantage
David Hagen, Scivantage
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Online Brokerage: The Mobile Imperative

Meeting Investor Expectations in a Wireless World

David Hagen
As smartphone and tablet technology advances at breakneck speeds and mobility becomes an increasingly larger part of the professional sphere, online brokerage firms are introducing mobile applications that offer users real-time access to live financial markets 24/7 and the ability to make trades from anywhere in the world. Where mobile investment applications were once a distinguishing feature, they are rapidly becoming an investor expectation, every bit as essential as a Website.

The increased use of mobile technology by retail clients also increases the pressure on financial advisors to keep up. Having the most up-to-date information available when the customer inquiry reaches the advisor can make an important difference in a client relationship. Because of this, brokerage firms are employing mobile devices as a way to give representatives in the field access to real-time client data while they are away from the office.

A New Era for Mobile Brokerage

While wireless application protocol (WAP) sites have had a presence in the brokerage world since the 1990s, earlier versions were very one-dimensional. Lacking the level of functionality and ease-of-use that investors would find most appealing, they were slow to gain meaningful traction.

Today, however, mobile web technology has evolved to a point where it supports a much richer experience. And where the impetus for earlier versions was rooted in the brokerage houses themselves, today's enhanced platforms are being driven to a large extent by investor demand for greater access and control.

As investment institutions contemplate those expectations, it would be a mistake to think of mobile applications as merely transactional tools. According to IDC Financial Insights, "The future of digital services will not be about transacting; instead, it will be about interacting with clients--meaning low-value, transaction-based services will be standardized and commoditized. Digital services will instead provide more analytic and reporting capabilities, more user-controlled customization and more self-service capabilities."

The mobile marketplace is rewarding the investment industry's early adopters. In the three months after launching its mobile BlackBerry trading application, E*TRADE saw its trading activity in the mobile channel soar by 139 percent.

In this new era, financial advisors may serve to benefit the most from the growth of mobile technology. Those who quickly and effectively embrace its customer service and relationship management benefits will be able to offer more value-add services and deliver greater levels of service to all of their clients. Savvy advisors are using mobile applications to access and manage important client information such as balances, performance, gains/losses, asset allocations, earned income and cash flow to know exactly where their clients stand and what guidance to offer them.

Advisers can also load crucial support documentation, such as meeting agenda, past portfolio performance reports, and financial plans onto an iPad or tablet and access them throughout the course of a client meeting. Mobile devices can put the most essential client information at an adviser's fingertips, including immediate access to the firm's CRM system to refer to historical notes from a phone conversation or schedule a future appointment, instead of deferring these tasks after the meeting.

The access to trading and order management from a mobile device also allows advisors to take emergency trades should market or client events require these actions.

Mobility is Mutually Beneficial

There are many benefits to implementing and enhancing mobile capabilities--for firms and their customers.

Customers gain:

  • Anywhere-anytime access. As the mobile revolution continues to unfold, consumers will demand this level of access from almost any entity they do business with.
  • Control. Ready access also makes it easier for customers to manage and monitor their wealth, whether they're working with a financial professional or investing on their own.
  • Confidence. In an investment environment marked by heightened volatility and continued economic uncertainty, investors with ready access to their investments gain a heightened sense of confidence.

Mobile solutions also benefit the investment firms that embrace them.

  • Client attraction and retention. No matter if an institution serves its customers through investment professionals or directly, mobile capabilities will play an ever-greater role in gaining new business and maintaining existing relationships.
  • Increased trading. As vividly demonstrated by E*TRADE's experience, customers with greater access to their accounts generate more transactions.
  • Lower service costs. The more access customers have to their accounts, the more they can self-serve and the fewer demands they place on investment professionals and contact centers.

A Mobile History

Today's wireless world is far different from the one we knew just a few years ago. Two trends are acting as powerful, world-changing catalysts:

  • The rapid expansion of 3G technology and the emergence of 4G networks -- which lets consumers use speech and data services simultaneously while enjoying faster data transmission.
  • The explosion in the development of mobile applications--which essentially turn digital devices into hand-held PCs

Innovations got us to this point and will likewise shape our future. The BlackBerry set the initial standard, only to see Apple's iPhone completely reset consumer expectations for wireless devices. Today, Android architecture is fueling Google's entry into the smartphone market. Meanwhile, Apple's innovative iPad is making its presence felt, with more than 7.3 million units sold in the last quarter alone, greatly exceeding analysts' estimates and reshaping the mobile technology market. When it was unveiled, some predicted as few as 2 million units -- just weeks later, an Oppenheimer analyst predicted it would instead reach 10 million.

These ongoing technological advances have sparked two booms:

  • A huge leap in wireless web browsing. 3G/4G technology has vastly improved the mobile browsing experience, bringing it much closer to the browser experience of a PC. The spike in browsing is fueling greater and greater demand for content and functionality.
  • An incredible surge in mobile apps. Apple's App store, still shy of its third birthday, already boasts an inventory of more than 300,000 apps -- many of which are focused on finance.

Constantly Connected

For a sense of what the mobile revolution will mean to the investment industry, it's helpful to look at its progress in banking.

Celent predicts that, by the end of 2010, most of the top 50 retail U.S. banks will offer some level of mobile banking, with 18 million Americans actively using that service.

Looking to the future with an insight that's equally relevant to investment firms, Celent notes that as the banking industry approaches mobile saturation, competition will be defined by innovation. Put another way, mobile access itself will soon be a feature that consumers take for granted--what will differentiate financial institutions is the quality of what they offer in a mobile environment.

"Today's connectivity is but a shadow of what is coming. In the next five years, consumers will move past wired and wireless access to 'anywhere' access, an immersive, connected experience blending the best of both worlds," says Yankee Group analyst Carl Howe.

Recognizing the coming tidal wave of mobile financial services transactions, large corporations are making significant investments in mobile technology. IBM recently announced the launch of a $100 million mobile services research effort, while Nokia and Qualcomm collectively invested $280 million in companies that are developing mobile financial technology.

"The proliferation of mobile devices and smartphones symbolizes a pervasive, networked consumer market, revolutionizing many aspects of the consumer lifestyle, including finance. [We] believe that mobility will be a major disruptive force in the financial services industry," says TowerGroup.

Its potential for disruption may be magnified by the recent financial crisis, which prompted many institutions to slash IT budgets just as the adoption of mobile technology was reaching a critical tipping point. According to TowerGroup, 2009 witnessed the worst-ever decline in IT spending by U.S. financial services firms.

While this departure from the recent pattern of 4 to 6 percent annual growth may have been forced by extraordinary circumstances, it may nonetheless expose firms to a grave risk of falling behind in the mobile marketplace.

Despite what's at stake, some observers expect many firms will be slow to act. "There will continue to be under-investment in IT in the financial services sector because organizations continue to take a tactical approach to investment, rather than a strategic approach," said TowerGroup analyst Bob McDowell in an interview with ComputerWeekly.

Developing a Mobile Brokerage Game Plan

Before devising a mobile technology strategy, investment firms should carefully consider the breadth and depth of their offerings, taking into account the diverse needs of their clientele.

First, it's important that your approach is focused on working equally well across the various mobile platforms that your customers use. When institutions unveil a solution that only works on one device, customers who've chosen other devices feel neglected and "passed over." In an era where consumers will increasingly feel entitled to wireless account access, such disappointment will likely send them into the marketplace to see if competitors are better positioned to meet their expectations.

A mobile strategy should also recognize that customer expectations vary according to their investment profile. A customer who routinely executes 10 trades a week will have markedly different expectations compared to a convenience customer who only trades 10 times a year. Since active traders are so important to profitability, they'll be the focus of stiff competition as firms vie to offer them the most compelling mobile trading platform.

In their haste to keep up -- or catch up -- with the industry, firms should guard against discounting the importance of aesthetics. Since clients are justifiably wary of phishing scams and identity theft schemes, it's critical that mobile investment applications present a look and feel that's a seamless extension of each individual institution's brand and online presence.

Of course, it's not enough to present investment customers with robust, multifunctional applications--it's equally critical that those applications work reliably. That's especially true in an environment where competing financial institutions are only a click away.

That simple truth is underscored by a recent Gomez consumer survey focusing on mobile websites. Gomez found that:

  • Two out of three consumers had problems accessing websites from their mobile phones in the previous 12 months
  • 85 percent said they were only willing to try a mobile site two times or fewer if it didn't work the first time
  • 40 percent said web problems would prompt them to visit a competitor's site.

About the Author: David Hagen, Senior Vice President and Chief Marketing Officer (CMO), is responsible for Scivantage's global inbound and outbound marketing functions, with primary emphasis on building value in the company's brand and developing integrated marketing programs that drive growth across all products and services. In that role, Mr. Hagen oversees all brand management, demand generation, and product marketing, as well as product positioning, client acquisition and retention, public relations, telemarketing and integrated marketing communications designed to reach financial services customers worldwide.

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