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The global trend to “mobilize” banking is in full swing, attracting not only major banks but community banks and credit unions as well. Mobile banking apps have already become a standard of service for most financial institutions, so merely introducing an app is not enough now. Thinking of how to gain a competitive advantage with a banking app is a necessary component in developing a successful mobile banking strategy. Gathering and analyzing notable mobile banking trends can help banks to better understand the market, reveal emerging trends and stay one step ahead of other competitors.
Insights Into Mobile Banking Today
Mobile banking is becoming ever more popular among users. The data included in the latest Consumers and Mobile Financial Services report shows how quickly people are adopting mobile banking apps. For the past five years, the number of mobile phone owners with a bank account using a mobile banking app has doubled, reaching 43% in 2015. The majority of all these users are millennials. While high-earning, affluent customers are typically banks’ heavy lifters, in that they purchase the highest amount of financial products and services, millennials will soon also become the leading force on the market. Thus, mobile banking apps should primarily target these demographics.
The same report states that the most common activities that users do in their mobile banking app are checking an account balance and recent transactions, transferring money between bank accounts, and receiving notifications from a bank. It means that customers have already successfully adopted essential mobile banking functions and can perform most basic activities without visiting a bank office.
Some banking giants have already noticed that branch-based banking is no longer driving the growth. For example, in 2016, Bank of America cut hundreds of branches in an effort to focus more on mobile, online and ATM services. In fact, the overall number of visits to brick-and-mortar branches can be decreased by 33% if customers are prompted to utilize mobile banking and use it to deposit checks. That is why banks can reconsider the necessity and cost-effectiveness of branches with a low number of visitors. Instead, they can use the resulting budget surplus to make a splash with their mobile apps.
As stated in the Mobile Deposit Benchmark report, mobile check deposit is currently one of the most attractive mobile banking features for customers. The quality of user experience for this feature depends on many parameters, including how successfully customers can find one in their banking apps, how fast they can get help and how easy they can use the auto-capture feature. At the same time, a superior UX would seem rather questionable if banks have lower deposit limits for mobile banking than for ATMs or if they ask customers to hold physical checks for longer portions of time (e.g., 30 days) after making a deposit.
Why Banks Are Going Mobile
Mobile banking improves overall customer satisfaction and loyalty. According to the 2016 U.S. Retail Banking Satisfaction study, there is an immediate upsurge in overall satisfaction when customers use mobile banking. Customers with high mobile banking satisfaction are much more likely to recommend their bank to others as well as reuse a bank for another product than customers who do not use a banking app.
Mobile banking also optimizes cross-selling. As stated in Fiserv’s 2016 study on mobile banking adoption, mobile banking affects average and total product holdings. In particular, in just three months, these indicators increased 12% and 11%, respectively. Mobile banking customers have 2.3 product holdings compared to only 1.3 products for branch-only customers.
Finally, mobile banking increases a bank’s revenue. In the same Fiserv study, it compared revenue generated among mobile banking and branch-only users. Data from eight credit unions and nine banks of varying asset sizes show that mobile banking customers bring 72% more revenue than branch-only customers. For mobile users at credit unions, revenue was 36% higher than for branch-only users.
When mobile banking first appeared on the market, it helped banks to attract new tech-savvy customers. However, within a short 10-year span, the technology is now nothing new. In order to further increase the number of mobile banking users and move toward the mobile-first approach, banks should strive to meet the needs of customers with excellent customer service through a mobile app. This means banks should make mobile banking interactions faster, more convenient and easier to use as well as develop value-added features that allow customers to access essential and more complex services from their phones.
For truly satisfactory transactional experience, banks should strive to provide slick and fast access to the most frequently used functions such as paying bills or checking account balances. A banking app should also ensure easy money movement between accounts that allow customers to effectively manage their finances on the go. Creating a mobile app with an online loan application function will also increase the speed and ease of banking interactions. And by incorporating the ability to live chat, banks can make customer communications more informal and in some cases less time-consuming than a phone call or a visit to a branch office. Altogether, these mobile banking features would help shape a positive customer experience.
Thanks to mobile banking, financial institutions can not only improve customer satisfaction and loyalty but also increase their revenue, reduce average transaction costs and optimize cross-selling processes. As banking apps become more prevalent on the market, only those banks with attention to their digital initiatives will be able to reap all mobile banking benefits.
Lucubrate Magazine, Issue 50, December 21st, 2018
The photo on top: bloomicon
The article is from Forbes, May 16, 2017. The Lucubrate editors have added on pictures.
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