More and more, banking goes mobile

Why sell the company?

It’s an opportunity for us to have a global platform for our work issues and have the resources of a global company supporting us. We weren’t for sale. They came and tracked us down.

What will happen to your operations in Boston?

We haven’t made any decision about branding or use of the Mercatus name. We’re going to be hiring additional people. And we’re going to be based in Boston.

You do a lot of research on financial services. What have you found?

The most interesting thing going on in financial services today is how mobile is changing the way consumers interact with banking and investments. Consumers are using their mobile devices to access their bank accounts, move money, and pay bills.

Isn’t that what consumers have been doing for years on personal computers?

It’s what they have been doing online, except what mobile does is change the time and place. So rather than doing it at home at night when you are trying to put the kids to bed, you can do it on the train going into work. What’s interesting in the research is how important mobile banking capability has become to consumers.

Customers are switching banks because of it?

We are absolutely seeing customers switching banks. We are seeing consumers decide where to go based on mobile and we are seeing customers change where they bank based on mobile.

What banks are benefiting?

The big winners today are Bank of America, JPMorgan Chase, and Wells Fargo.

What matters most in picking a bank?

It’s convenience, it’s price, and it’s service. The products are pretty common among providers. Convenience is where the innovation always takes place. You’ve seen that in ATMs, online, and, today, one would argue, in mobile.

Would you expect banks to continue closing branches?

There is no question that retail branches are the most expensive part of banking. You are going to see banks be able to reduce the amount of branches because consumers don’t require them as much.

You mentioned price is a factor. How easy is it for consumers to compare the cost of banks?

Unfortunately, not as easy as it should be. And consumers don’t comparison shop as often as they probably should. With the new disclosure requirements, it will be easier and the Internet also makes it a lot easier. What we tell our clients is the more straightforward and transparent you can make your pricing, the better. That’s what consumers want.

Who’s doing a good job?

Ally is a good example. ING is a good example. Schwab is a good example.

The examples you mentioned are not traditional banks.

Right. Nontraditional providers have two advantages. They have a big cost advantage because they don’t have all the infrastructure. The second thing is they don’t have a long history of complex fees being part of their revenue. It’s like a clean sheet of paper.

You also mentioned reputation can affect a bank’s market share.

The industry broadly is challenged by pricing practices that consumers just don’t understand - whether it is overdraft protection, check posting order, how much you charge for a wire transfer. All the pricing practices have led to an erosion of consumer trust that needs to be rebuilt. Consumers are less concerned about financial collapse than they are about their monthly checking statement.

Are people socking away more money for retirement? People are certainly trying. Unfortunately, not everyone is fortunate to have the income to support their savings ambitions. And it’s going to stay that way until the economy recovers. The average contribution is actually down.

You’ve worked a long time for Boston financial institutions. What have you noticed locally?

With the mergers and acquisitions, there have been many changes. Boston remains a rich talent pool for the financial services industry both in the number of people who work at these global financial companies. There’s great interest in the Boston market among all the financial service providers.