Aptus Consultants

• Many banks have launched SMS services as an initial way to use mobile to help keep their customers up to date with account information
• Mobile websites and apps have been launched to test effectiveness and provide a service to early adopters
• Fears remain around lack of relevance and intrusiveness
• Offering a mobile service as an added value to existing customers remains the channel’s primary purpose

Banks and insurance companies were some of the earliest adopters of mobile marketing and services and other industries can learn from their foray - not least the fact that customers value useful and accessible above sexy or innovative services. And there’s a lot at stake. PricewaterhouseCoopers forecasts the transaction value of mobile financial services will be around £6bn by 2012.

Sean Gilchrist, digital banking director at Barclays, says it has become vital to develop mobile services in response to increased consumer demand. “Eighteen months ago we started to see more customers coming to our website via a mobile browser and recognised we had to do something on mobile,” he says. Barclays subsequently launched a mobile site offering account access and an ATM locator.

Text banking services have also become increasingly commonplace. These range from the ability to find the nearest branch or ATM to getting an account balance. LloydsTSB’s recently introduced alerts that tell customers when their account reaches a specified limit. First Direct was one of the first to launch a text messaging service for its customers in 2001 and followed it in January this year with an iPhone banking app, which has been visited nearly 468,000 times to date.

First Direct’s head of emarketing Jenny Southwell says, “Any way to free up the call centre to take more detailed calls rather than just answering balance or transaction queries is a good thing. It helps satisfaction and retention, which is important given that a third of our new customers have had us recommended.”

Targeted texts

Using mobile as a marketing platform is still a case of trial and error, however. In 2001 First Direct began texting marketing messages to customers and including text-response prompts in press ads and direct mail literature. “We certainly can’t bombard people with messages like ‘Do you want a personal loan or a credit card?’, as that would put them off immediately,” says Southwell. “So we try to use highly personalised and targeted messages, such as when an insurance contract is up for renewal. The messages that work well are the highly targeted ones.”

Mary Carol Harris, head of Visa Europe’s Mobile Division, says it’s also putting targeting and relevance at the heart of its mobile marketing and has seen a positive response from younger consumers. Part of Visa’s strategy is to expand its brand campaign onto mobile. Last May it teamed with Vodafone on a two-week pilot campaign that sent 150,000 text messages to Vodafone UK customers travelling abroad to eight selected countries. Half an hour after receiving the statutory welcome text message from Vodafone, customers received a second giving Visa cardholders the chance to win a trip to the Beijing Olympics if they used their card abroad.

“We measured it via surveys and feedback to see if people found it intrusive and found some interesting segmentation,” says Harris. “Younger customers were more open to receiving this type of advertising on their mobiles and, across the board, about 30% of people said they were interested in getting promotional information as long as it was relevant to them.”

But it’s exactly this need for pertinence that has made Barclays cautious about using text marketing. Gilchrist says the bank has carried out a couple of test campaigns but hasn’t pushed it in a big way. “A text is a very instant thing. If we use it as a marketing tool, how do we make sure it’s relevant at the moment the customer receives it?”

Lloyds Banking Group is capitalising on the immediacy of the medium by using texts to alert those who have, for example, completed an online application form but missed something out. “Our philosophy is to use text as a service channel not an overt marketing channel, and we don’t text customers who haven’t used our text service before,” says Jason Bacon, head of digital marketing for Lloyds.

Extra information

Striking the balance between being effective and intrusive is a key challenge. Swiftcover was the first UK car insurance provider to offer car insurance quotes via a mobile site but is reluctant to risk text marketing. Marketing director Tina Shortle says the company doesn’t use text to advertise because it’s “mindful that our customers see SMS as a personal communication tool”.

But using text to add clear value can work. Direct Line Insurance, part of RBS, uses the platform to build its brand and strengthen customer relationships. “We mainly use mobile to stay in touch with customers - for example, when we’re en route to their broken-down car - plus for sending tips and advice, such as giving help to prevent burst water pipes in the winter,” says Hitesh Bhatt, Direct Line’s head of digital marketing. “Our current focus is on using mobile to enhance the customer experience.”

It’s not that the financial services industry doesn’t want to be more engaging with its mobile marketing, but as always the bottom line rules. “We do test things like MMS and Bluetooth and we monitor them very closely to make sure we’re getting the right return,” says First Direct’s Southwell. “MMS is very expensive to send so if we’re not getting the right response levels we keep playing around with it to make sure we do.”

The industry is cagey about how much budget will be allocated to mobile marketing in the future, with most banks saying it’s just part of their overall digital pot. Yet all agree mobile will play an increasing role. Harris says mobile is “very much” a part of Visa Europe’s marketing priorities and that getting Visa associated with the mobile channel is “core to its strategy”, while Southwell says First Direct has budget specifically allocated to mobile and is investing more in electronic channels as a whole.

Swiftcover is more revealing. “The ad budget for our .mobi site is minimal, mainly because the cost per click for mobile paid search is extremely low due to the lack of competition, and the inventory for banners is restricted,” says Shortle. “We piggyback our outdoor campaigns for car insurance, with a prompt to use swiftcover.mobi, particularly in commuter areas.”

Opportunity is also limited by technology. “Most mobile phones aren’t smart devices, which are what’s needed to see really sophisticated financial services being provided,” says Marc Trudeau, an analyst at ComScore.

Lloyds’ Bacon also believes it’s crucial not to get carried away by the hype. “At the end of the day we need to be there for the majority of our customers, giving them mobile services regardless of their handset. Ultimately it’s about helping customers manage their money.”