The Changing Mobile Landscape in Financial Services

Ojas Rege
Ojas Rege | March 27, 2014
Market Trends
Mobile Strategy
Mobile Landscape in Financial Services

In March 2014, the Ponemon Institute published a study with far-ranging implications for the future of IT in the financial services industry. The study, called “The Changing Mobile Landscape in Financial Services,” surveyed over 400 IT professionals from financial services companies across all major sectors of the industry, including banking, insurance, and brokerage. MobileIron sponsored this research with the goal of understanding how mobile technologies were being adopted in financial services and how CIOs could make these initiatives successful.

The study found that the accelerating mobile demands of business units and end users are triggering a tidal wave of disruption that is shifting financial services CIOs to a new model of enterprise IT. Mobile is presenting operational, governance, and time-to-market challenges that traditional IT approaches were not designed to address.

Below are the major shifts highlighted in the study.

Infographic: The Mobile Tipping Point

2014 is the Year of the Mobile Majority

50 percent of respondents expect that the majority of their employees will be using business email and apps on mobile devices in the next 12 months. BYOD initiatives are also growing, with the percentage of personally owned smartphones and tablets in their organizations expected to increase from 40 percent to 49 percent in the same time period.

These statistics represent a substantial demographic shift in the use of mobile at work. Mobile is not just for executives and salespeople anymore. As mobile demographics expand, mobile user requirements and expectations will also expand beyond those of the BlackBerry era.

CIO opportunity: In the new model of enterprise IT, all employees should have the ability to access business data on a smartphone or tablet. Forward-thinking CIOs will develop a phased strategy for making each core business process available with a mobile-optimized user experience and will establish training and communications programs that can scale to serve their expanding user populations.

Employee Productivity is Driving BlackBerry Migration

Respondents expect BlackBerry to lose almost one-third of its market share in financial services over the next year. 44 percent of the mobile devices currently in use in financial services are BlackBerry, and this is expected to decrease to 30 percent in the next 12 months. 49 percent of respondents expect to have zero BlackBerry devices in their organization 12 months from now.

The primary driver of BlackBerry migration, however, is not concern about BlackBerry’s financial stability as a company. According to the study, the top three motivations for migration are all user-driven:

  1. Employee productivity
  2. Employee demand
  3. Availability of applications

The most important lesson of BlackBerry migration is that employees will expect IT to be responsive in meeting their mobile productivity demands, and they will go around IT if they do not get the tools they need.

CIO opportunity: In the new model of enterprise IT, migration will be the norm, not the exception. The lifespan of devices, apps, and even operating systems will be measured in months or years, not decades. Forward-thinking CIOs will develop an iterative security framework that can maintain security posture without sacrificing innovation or responsiveness.

Mobile is Replacing the PC

69 percent of respondents say their CIO believes smartphones and tablets will replace most desktops and laptops. This transition is already underway in organizations like pharmaceutical field sales. However, because financial services is in the very early stages of this shift, it is interesting that respondents believe a steep decline in demand for the PC is inevitable.

However, only 38 percent of CIOs are confident that they can address the risks posed by smartphones and tablets. This gap is not surprising, because these platforms are not always well understood by IT leadership, though this is certainly changing.

New risks will emerge for mobile, but many of the traditional vectors of data loss are mitigated by the sandboxed security architectures of mobile operating systems. The security approach required for mobile is very different from that required for the PC.

The application approach required for mobile is also very different. Financial services CIOs have also invested more than 25 years in the development of traditional PC applications and services. The transition from PC to mobile is not just a simple shift in form factor. It is a disruptive change from keyboard to touch interface, monolithic to atomic applications, and single-OS to multi-OS environments.

CIO opportunity: In the new model of enterprise IT, user experience will be the litmus test for employee adoption. Forward-thinking CIOs will ensure their teams are skilled in mobile user experience design and application development. They will use consumer apps as their design standard. They will also redefine risk profiles and center security models around mobile architectures to ensure traditional Windows security approaches are not applied to platforms that are fundamentally different.

IT and Business Priorities are Misaligned

More than 50 percent of respondents believe their mobile strategy is either deficient or not aligned with IT and business priorities. Although financial services organizations are rapidly expanding their mobile investments, there is a substantial disconnect between IT and the line-of-business on mobile priorities.

Strategy gap: 50 percent of respondents say their company does not have a mobile strategy. Of those companies with a mobile strategy, 45 percent say it is not aligned with IT objectives and 36 percent say it is not aligned with business objectives. Tactics are overshadowing the development of long-term strategy.

Urgency gap: The line-of-business believes BlackBerry migration is a much higher priority than does IT. On a 10-point scale, 55 percent of respondents rate the level of urgency from the line-of-business as a 9 or 10, while only 15 percent rate the level of urgency from IT at the same level. Misalignment is leading to frustration and deteriorating confidence.

Accountability gap: 48 percent say the line-of-business is most responsible for their organization’s mobile strategy, while only 16 percent say that responsibility sits with the CIO. 19 percent believe it is a shared responsibility. Decision-making authority is not well-defined, and this confusion is adding to the turmoil around mobile strategy.

When demand grows and ownership is unclear, tactics overwhelm strategy. Mobile has many stakeholders: demand and technology choice are driven by the end user; funding and timing are determined by the business; and implementation and security are the responsibility of IT.

CIO opportunity: In the new model of enterprise IT, mobile strategy and accountability will often be decentralized. Forward-thinking CIOs will establish new governance structures and policies to create much tighter partnership and communication among the end-user community, lines-of-business, and IT. The role of CIO, itself, will shift noticeably from execution to policy and enablement.

Agility is the New Security

“Agility and preparedness for change” is ranked by respondents as the most important factor in a successful mobile strategy.

The study asked what factors would most contribute to an organization’s ability to maintain an effective mobile strategy over time. The responses, in order of importance as judged by the respondents, were:

  1. Agility and preparedness for change
  2. Ample resources
  3. Enabling technologies
  4. Knowledgeable or expert staff
  5. Collaboration among business units
  6. Effective leadership
  7. A strong mobile security posture

This does not mean that security is no longer important. It means that security cannot be the centerpiece of the mobile strategy. Securing data is a baseline competence that will be expected of all IT professionals, but agility will separate the top-performing IT organizations and individuals from the rest.

In fact, lack of agility will compromise security, because the organization will constantly be playing catch-up to the ever-changing world of consumer technology. This will become a vicious cycle that will give the user community an incentive to go around IT, further damaging the security posture of the organization. An unresponsive IT team is an irrelevant IT team in the eyes of the user.

CIO opportunity: In the new model of enterprise IT, speed and collaboration will be the test of CIO leadership. Forward-thinking CIOs will change their hiring requirements, training investments, and organizational structures to become agile and to establish an IT culture that embraces technology change.

Moving Forward

Mobile allows data and computing to be available anywhere an employee needs. It is a catalyst for improving almost every business process in a company because an end user no longer has to wait to make a decision or take an action. However, the underlying technologies for mobile are driven by consumer preference and move at a pace well outside the traditional IT comfort zone.
“The Changing Mobile Landscape in Financial Services” by the Ponemon Institute shows that IT professionals in financial services are very aware of the challenges they must overcome to make mobile successful in their organization. They know what the challenges are and why new skills and approaches are required.

A strategic imperative for financial services CIOs in 2014 is to now determine how to establish a new model of enterprise IT that can make mobile a foundational platform for business transformation.

Download the full report.

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