The Customers of Mobile Banking
At a recent event, a banking expert from a European country stated that "There is not a specific channel profitability in mobile banking".
At a recent event, a high-level banking expert from a European country stated that “There is not a specific channel profitability [… in mobile banking]”.
It is necessary to take into account that mobile banking services is a very recent phenomenon. It was only 2008 when Apple allowed banks to distribute their Apps with the App store open to a third party. Now with Apple Pay available in the iPhone6, Apple again is opening new grounds in terms of financial services.
Certainly, there is a high level of customer satisfaction with respect to mobile banking. We are witnessing a high growth rates in the number of people that bank from a mobile smartphone or tablet. The growth in mobile banking is also at the expense of online banking but also internet banking is growing. In certain countries, for instance in the Usa, the access to bank accounts in mobility is outweighing the ones from the online channel.
In the United States in late 2013 out of 70 million customers accessing their bank via digital channels, about half (35 million) makes it through mobile access. Of these, already nine million customers use only the channel mobile.
Apart from the growing adoption of mobile banking, competition is growing from players from different economy sectors. For instance, technology players, such as Apple, Google, PayPal, and others, are already entering the financial services market with mobile products. The customers of mobile banking can be of different types:
New customers “Mobile First” customers start directly by doing banking using the mobile Apps. Later, they use also the online banking from their desktops. These are mostly young people or very young, with a higher education and a strong familiarity in the use of digital tools;
Other customers were using the online banking, but migrate or integrate with mobile banking. A recent survey showed that in the customers relying on mobile banking, there is a higher proportion of customers between 45 and 54 years old. A recent survey in the Italian market, for instance, showed that this segment went from 18% to 28% of the total sample surveyed. It has doubled in the population of customers over 55 year-old, indicating that the use of new technology is no longer the preserve of the younger generation;
In reality the results today at the international level show the opportunities offered by the mobile to serve new customer segments, not fully serviced and reached by traditional banking offers. They are the under-banked or un-banked users of smartphones. The forecasts for these market segments are very optimistic, with a higher growth in the use of financial services by mobile than it has been reached with the online channel.
The mobile world is characterized by the importance of simplicity of use, customer experience, even the “fun” when a customer uses the service. Particularly important is the
guarantee of security. Easy, secure and fun are terms that occur frequently in the marketing messages from the operators. In the few years in which mobile banking has developed, it has led to a flowering of innovation in terms of “presentation” of services on mobile devices. The most interesting ones are the financial statements that appear at the very first login together with the immediate link to the latest transactions. Also interestng, are the tools that facilitate cash and economics budget management. All these functionalities are offered with a graphical user interface that is highly appealing and updated in real time.
As for services, especially banks aim to ensure the usability of the basic functionality, much less to offer services a bit ‘more elaborate, such as those which help trading online.
The new Mobile Banking Apps – thanks also to many innovative start-ups in the field with Mobile First approach – have demonstrated the ability to make significant improvements and innovations to the traditional user experience in banking services. For example:
The simplification of the interface and especially the login, that the example of what has been done by some innovators, as GoBank, Simple, Mint and Capital One (with SureSwipe);
The analysis in real time and easy to read on the balance and the last transactions (Moven);
The opportunity to take a picture of a document, a check or a receipt and then enable a paperless management of the associated transaction (This dematerialization process would be managed entirely by the end user);
Sharing an account between different people, such as children and parents (with the app Tandem Yodlee) that promises maximum transparency and tracing all transactions in a collaborative environment;
The ability to quickly transfer money to another phone simply by using the address book of contacts (so-called Person-to-Person (P2P) payments) like the Pingit service from Barclays and the electronic wallet (like the one launched in Italy by the partnership of Visa with CartaSi);
The possibility to do trading anytime and anywhere.
The display of the location of the nearest ATM or branch of the Bank, thanks to the GPS;
Over 54% of the services offered by banks through mobile media functionality are not closely related to banking: from utility services to those in entertainment, gaming, e-commerce, news and so on. The customers using the mobile banking apps in his everyday life tend to become more loyal.
The advance of the mobile channel is irreversible as early as 2013, 32% of customers, according to an ABI Lab survey in Italy, claimed to prefer their smartphone to their PC to see their balance. The banks need to redefine their multi-channel strategy. It is not easy, but it must be done. And where brings the future? The branches will be forced to redefine their offer and move towards specialist advice, scaling functions as traditional services, bank statement or payment, which will tend to be progressively delegated to remote channels, for which there is still ample room for development. Just as it is expected to increase in all the activities, a multi-channel strategy revolves around the provision of an excellent customer service, the coordination between offline and online channels and analysis of the data collected (thorough the so-called Big Data Analytics).
“Mobile banking could grow by 80%” has been predicted. In a survey in Italy, 70% of the banks surveyed reported increasing investments in this segment in the coming year, while 30% expect even stronger appropriations. The smartphone revolution, then, is only the beginning.