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1 Very Smart Move That Could Pad These Banks' Bottom Line

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In the parade of banks discovering that nurturing online and mobile banking products is good for business, another institution has just fallen into line. First Niagara Financial (NASDAQ: FNFG  ) just announced its own mobile banking initiative, joining the ranks of banks such as Bank of America (NYSE: BAC  ) , JPMorgan Chase (NYSE: JPM  ) , and Wells Fargo (NYSE: WFC  ) .

A way to capture new customers
More banks are realizing that customers want mobile services, and that offering a wide variety is not only cost effective, but can actually bring in new relationships. A report by the Federal Reserve  noted that fully 22% of consumers are either unbanked (that they use no traditional banking products) or underbanked (that they may have a checking or savings account, but also use alternative financial services). These consumers use mobile phones, however, and a majority of those users have smartphones. Developing smartphone banking apps, such as the one being offered by First Niagara, is an excellent way to bring these consumers on board – and, just maybe, convert them to the ranks of the "banked."

Bank of America , JPMorgan, and Wells all have smartphone and tablet apps, though Wells so far only supports Apple's (NASDAQ: AAPL  ) iPad. Mobile check deposit is available from all three, and First Niagara plans to offer the service later this year. Bill paying is a feature all offer, which just happens to be what 47% of respondents  to the Fed's survey said is their primary mobile-payment activity.

Big banks have been pushing mobile services over the past year, and B of A's Brian Moynihan noted at the Goldman Sachs conference last fall that customer usage of mobile had increased 30% year over year, while branch visits had declined. This has really turned out to be win-win for B of A, since mobile is a less expensive way to serve customers, and branch closing is part of the bank's plan to reduce costs.

JPMorgan has seen a similar increase in mobile customers  -- a 34% increase from the fourth quarter of 2011 to Q4 of 2012. Comparably, Wells Fargo has noted a 33% rise  year over year, and is expanding its Mobile Deposit program.

Fool's take
Though First Niagara is later to the mobile game than other banks, it is offering the very things that customers want, and it will doubtless experience the same growth in mobile that its bigger brethren have. Mobile will help banks cultivate new products, as well as bring in customers that may have slipped through the cracks of traditional banking -- plus, it costs banks less to support. As a customer-pleasing cost cutter, it's a no-brainer.

B of A has always been a go-getter when it comes to mobile, but there's lots more than that going on with the big guy lately. To learn more about the most talked about bank out there, check out our in-depth company report on Bank of America. The report details Bank of America's prospects, including three reasons to buy and three reasons to sell. Just click here to get access.

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