Mitek Archives - Page 14 of 14

The latest Online Banking Report: 2011 to 2020 Online & Mobile Banking Forecast is now available. It was mailed over the weekend to all OBR subscribers. It’s also available online here. There’s no charge for current subscribers; others may download it immediately for US$495.

The report includes our latest 10-year online & mobile banking and bill-pay forecast. While our reading of the tea leaves is unlikely to be perfect, it seems clear that the demand for online banking in the United States has reached a plateau (note 1); in fact, we are likely within a year or two of online banking penetration peaking and slowly heading down.

How could that be? Mobile of course. In fact, through the end of 2020, we project an increase of 40 to 45 million U.S. households using mobile banking, to a total of nearly 60 million. During the same period, online banking penetration is actually expected to drop by a few million households.

If we are right, sometime near the end of the decade mobile banking will surpass online (note 2), although by then, the two will look pretty similar.

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After more than doubling in 2010, we expect continued strong growth of around 40% compounded annually through 2020.

__________________________________________________________________

Top innovations & trends of 2010
__________________________________________________________

The report includes a summary of the top ten innovations or trends during the past year (in alphabetic order):

In-statement merchant rewards goes from zero to 100 financial institutions
Loan preapproval wizards reduce uncertainty for applicants
Location-aware mobile services for banking debut
Mobile banking goes mainstream
Mobile capture removes the paper from commerce
Mobile payments gains real momentum
Online personal financial management (outside of the bank) struggles
P2P lending solidifies its niche
Social media proves it can have real impact in financial promotions
Transaction streaming and sharing gain a foothold

__________________________________________________________________

New entrants on the list of the top 43 innovations of all time
__________________________________________________________________

Each year we rank the top online/mobile innovations of all time (North America). There are a total of 43 products listed from 42 unique companies:

15 banks
5 credit unions
9 non-bank financial services companies
13 technology companies

The class of 2010, which was unusual for being all technology companies rather than financial institutions (note 3):

Blippy for its automated transaction-sharing network
Cardlytics for its merchant-funded in-statement online rewards service
Finsphere for its location-aware fraud-targeting service, PinPoint
Mitek Systems for its mobile photo bill pay

————————-

Notes:
1. The penetration of online banking into U.S. households is relatively flat going forward. However, because each households accesses a larger number of financial accounts, growth at individual financial institutions is still growing on average.
2. Forecast is for the United States. Mobile has already surpassed all types of banking in some developing countries.
3. Perhaps this can be explained by the necessary focus of financial institutions on getting through the global banking crisis beginning in 2008.

For the second time in three years, Mitek completely wowed me on the floor at BAI Retail Delivery. In 2008, I was amazed to see them deposit a check with their mobile phone; this year, the trick was similar, but with a bill.

Mitek CEO James DeBello demonstrated the new systam to me at their booth (press release). He grabbed a bill from a pile, took its picture via the Mitek iPhone app, and sent it off via 3G connection to servers which read the characters through OCR and queued it up for payment. The billing and payment-due info was presented in an easy-to-read table for the user to verify before hitting the “pay” button (see screenshots below). I coveted it for my checking account … now.

Analysis
While the deposit of a paper check has a little more of a “wow” factor (as in wow, I don’t have to go to the branch anymore), the mobile scan-and-pay of a bill is actually far more useful. The potential market for mobile deposit-capture is limited by the shrinking number of personal checks in use, especially by iPhone-wielding early adopters. I’d guess the total U.S. market for mobile deposit is no more than 10 to 15 million households and shrinking.

And even though paper bills will eventually be eliminated by Doxo or someone, they are still a fact of life for just about everyone with a checking account. And even if consumers start accepting ebills from their major payees, most will still have a few paper bills every month for at least another decade or two.

So not only is the market for photo bill-pay about 10x that of mobile deposit, but the service also solves a peskier problem for most end-users: getting bills paid on time, something that has far more financial consequences than processing the occasional paper check gathering dust in the drawer.

And for financial institutions, photo bill pay provides several important benefits:

Helps get customers started with online bill pay by eliminating the data-entry task of setting up new billers
Helps convert customers from other bill pay providers by eliminating much of the conversion hassle of re-establishing payees at a new bill pay service
Provides a tangible, value-added mobile service to differentiate from the competition
Provides a fee-revenue opportunity from either monthly subscriber fees and/or expedited payment fees

The downsides:

Cost
Tech support/customer service
Potentially harder to wean customers off the paper bill, if it’s so convenient to just point-and-shoot to get it paid

Bottom line: Without knowing costs, what type of back-office integration hurdles the app faces, or even personally testing the user experience, I can’t say for sure how popular it becomes. If the scanning is finicky, it could be a non-starter. But, if it works like it did in the demo, Mitek may have figured out how to finally eliminate the data entry from the electronic bill payment process, a HUGE win.

1. Main screen 2. Scan with mobile camera

3. Verify data (3 screens)

Note: For more info on mobile banking, see our mobile banking series in Online Banking Report.

Finovate Blog

Mitek

New Online Banking Report Available: Online & Mobile Banking Forecast through 2020

Why Mitek’s New Photo Bill Pay Could be a Way Bigger Deal than Mobile Deposit