According to the Mobile Banking App Review 2018 , it is widely accepted that mobile banking apps are rapidly becoming the channel of banking customer relationships, certainly in the near-term before we are all embedded with AI chips.
The demise of the UK’s branch network is frequently reported. By 2022 the average customer is expected to visit a branch only four times per year, turning instead to online, and particularly mobile, banking.
With this trend, banks are finally starting to recognise the importance of delivering enhanced functionality above that of basic balance and transaction history, enabling customers to fully service their accounts via their smartphones.
To stay relevant to customers, providers need to deliver useful and usable mobile banking services that not only exceed customers’ current expectations but also anticipate their future needs and improve their financial well-being.
Mobile banking apps have moved beyond being a digital statement
Providers are making it easier for customers to squeeze routine banking activities into busy lives, which has led to a corresponding steep decline in branch visits. Banks have had to adjust to this new reality or risk being sidelined by new mobile-only challenger banks and FinTechs. Providers must invest in both iOS and Android operating systems to succeed in a competitive market. Those that do not are at a disadvantage.
Furthermore, from 15th August 2018, service levels will be published as a result of new requirements introduced by the Financial Conduct Authority (FCA). Banks must publish specific information about personal current accounts. This includes how quickly new customers can access internet banking, as well as the services a customer can access via the mobile banking channel. This level of transparency will allow customers to compare the differences in service levels offered by UK banking providers.
The app is poised to be the ultimate battleground for customer acquisition
New entrants are raising the bar
In a faster moving market, existing players need to match scale with speed, which is making it harder to stay competitive. New players tend to have shorter release times. They update more frequently and respond to customer feedback by adding features customers love, such as real-time balances and transaction notifications.
These features are starting to become something customers expect from their bank. At the same time they show incumbents’ limitations and highlight the infrastructure and legacy constraints of larger players. Some incumbents are launching entirely new apps on new platforms in an attempt to overcome legacy constraints. This poses its own challenge: getting customers to migrate. And where users are forced to do so, they are not always happy about it.
Digital growth isn’t slowing down
Many providers are continuing to move through app download bandings demonstrating that mobile banking is yet to reach full penetration. Our study highlights this evolution – but of course, installs do not necessarily translate to active users and so we also cover customer engagement within apps. Many providers are continuing to move through app download bandings demonstrating that mobile banking is yet to reach full penetration. Our study highlights this evolution – but of course, installs do
Account opening is a
This reflects the true disparity between incumbent current account providers and new players. Incumbents rely on desktop and browser-based application processes, compared to challenger banks whose process is entirely within the mobile app. The biggest pain point however, is the time it takes for a customer to have a fully functioning account.
A card, PIN and access to internet and mobile banking, ranged from 5 minutes to 14 days. Current account switching has so far been slow, with CASS reporting only 1 million current account switches a year and only 4.7 million switches since the service launched in 2013, therefore this disparity has not yet been fully exposed. As customers become more aware of the benefits of moving providers and the ease of account opening, switching is likely to draw customers to those offering a better digital experience.
Innovative app features are quickly becoming hygiene factors
Last year challenger banks such as Monzo and Starling Bank were praised for their innovative “freeze and unfreeze” card feature which gives users the ability to control their card directly from within the app.
Today 43% of current account apps offer this feature. The challengers are leading the way and those that do not follow start to look old and dated.
We expect to see a rise in focus on money management driven in part by changes brought about by open banking.
Customers increasingly expect help and tools to assist with personal financial management. Naturally banks are well placed to support this. However, it is likely to further expose legacy constraints and therefore to extend these tools to their customers incumbents will increasingly partner with third parties.
Business apps are … not the business
We see many providers neglecting their business apps and, in some cases, choosing to combine business accounts into the same app as consumer current accounts. Whilst this may be logical in principle, banks may be failing to appreciate that business banking is an entirely different activity. Businesses want to have multiple user log-ins and current account apps often do not support this functionality. Challenger banks are actively targeting the SME market and incumbent banks risk losing another lucrative customer segment. By not investing and allowing their business apps to age, incumbents have potentially opened themselves up to competitors with more attractive digital propositions.
Credit where credit is due
Credit card mobile apps are performing well in our study. This may reflect the fact that a customer’s needs for managing a credit card are fewer than that of a current account, but credit card providers are successful at serving these needs, or at the very least customers are satisfied with their app.
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