Bank of America Corp (BAC), Mobile and Beyond: How Banks Are Catering to Tech-Savvy Customers

Technology has become an integral part of daily life for most people. And with greater technological capabilities comes steeper demands from users. With a dramatic shift in customer preferences, banks are trying to keep up with that demand — and some are falling short. Though some are slow to catch up, there are plenty of options for banks with vision to give customers what they want.

One app to rule them all
The smartphone has changed everything. With people carrying around the equivalent of a mini-computer in their pockets, it’s only natural that a demand for easier banking options grows from the continued developments in convenient apps. Back in the 1990s and early 2000s, bank branches were viewed as an essential piece of the banking puzzle, with the FDIC reporting in 2007 that a convenient branch location was one of the most important factors for customers as they decided where to put their money. Now, the same principle applies to mobile and online banking.

Looking at Bank of America Corp (NYSE:BAC) as a case study, with the rest of the Big Four likely to have similar results, the numbers demonstrate the vastness of consumer demand. Once the bank realized that half of its customer deposits were made with its network of ATMs, and not at a branch, there was an internal shift to refocusing attention to more convenient options for customers. Out of the top 25 banks in the nation, 16 offer mobile check deposits — B of A included — and it’s this option that currently can make or break a bank’s app.

B of A reported that 100,000 checks are processed through its mobile deposit feature each day, with the second-quarter tally reaching 11.7 million. And with a 28%  year-over-year increase in mobile banking users, future deposits could far outpace what the bank has seen yet.

U.S. Bancorp (NYSE:USB) is looking beyond check deposits, with the hopes of developing voice recognition software for its mobile app — upping the convenience factor yet again. But USB isn’t thinking only of the customers, as the bank has initiated a 50-cent fee for each mobile check deposit. This new fee would be a big boon for the banks (as long as customers don’t revolt), since the average cost of processing a check via mobile apps is only 10 cents, according to Javelin Strategy & Research, a California-based company that rates banks on their mobile apps.

With US Bancorp’s new fee strategy in mind, the importance of mobile apps and online banking cannot be stressed enough for the banks to prosper in the future. Both cost savings and fee generation will greatly help the banks as other traditional banking features, like branches, become less and less used by customers.

Leaving traditional behind
And two businesses are focusing all of their efforts on the new trend. BofI Holding, Inc. (NASDAQ:BOFI)s operates BofI Federal Bank, an Internet-based bank that has only one branch. The operations are online and provide the services that most commercial banks offer to customers: depository accounts, loans, and financial management services. By limiting its customers to online and mobile banking, BofI does cut out some types of customers that do need bank locations (small businesses, etc.), but its cost structure is greatly reduced by the lack of physical locations.