As Mobile Matures, USAA Plots Its Next Steps

USAA Federal Savings Bank traditionally has occupied an unusual position that almost requires it to be an early adopter of digital financial services. Its military-heavy customer base always is on the move and often in geographic circumstances that don’t allow multi-channel banking.

As such, the San Antonio-based institution had to add Web and mobile-banking services such as payments and deposits before most other banks did. That makes the $99 billion-asset institution an inadvertent window into the future, allowing a view into the frontier of digital financial services and its accompanying growing pains.

This week, the bank reported a dramatic spike in mobile use. The number of times the bank’s customers used USAA’s mobile tools grew 127% in 2011, and customers downloaded the bank’s mobile and Apple Inc. iPad apps 1.6 million times. They also used USAA’s apps more than 2.5 million times to shop for a new vehicle and auto insurance, nearly a 50% increase from 2010.

The bank says that nearly half its customers own a smartphone, and the nature of their military jobs is rapidly creating an environment in which the smartphone will be the entire point of contact for the majority of the bank’s customers.

USAA recently announced the availability of person-to-person payments on its Android app, enabling customers to pay most others with an email address or mobile phone number. The bank plans to add this service to the Apple iPhone in the next couple of months. Other new features include a USAA rewards credit card that enables users to view and redeem points via their mobile device.

Moving ahead, the bank, which has a mix of browser, Android, iPhone and Windows apps, plans a new marketing and sales strategy that will specific to the mobile channel. It’s also plotting expansions to its mobile payments aimed at simplifying user experience.

Mobile banking continues to grow. And with more banking customers upgrading to Internet-enabled mobile phones and smartphones, as well becoming more familiar with mobile banking products, continued growth is expected. New features such as P2P payments and rewards programs should provide additional ways for customers to embrace mobile banking.

For those seeking more information on the mobile banking channel, Mercator Advisory Group has recently written two reports on the topic, with others to follow.

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