Mobile banking: the next competitive differentiator for financial services

Share

Millennials may be the pathfinders when it comes to mobile banking, but more and more of us are using smartphones as our preferred way of carrying out financial transactions, making it the main touch point for financial institutions.

An astonishing three-quarters of Europeans are now 'mobile money users' according to a recent survey by Visa, using smart devices to pay bills, shop, transfer funds and review spending.

Two-thirds of those polled use a banking app to check their balance or access other services, while 68 percent have used a digital wallet such as PayPal, a card-on-file service or a mobile payment service such as Apple Pay, Android Pay or Samsung Pay. Thanks to the categorization of expenses offered by banking apps, budget management accounts now take up nine percent of usage, according to CMM Benchmark.

Millennials are making demands

Millennials have been important in driving innovation in mobile banking. They want more from an app than traditional banking transactions. According to a recent study by Business Insider Intelligence, they like features such as spending comparisons, the ability to view all their bank accounts from one app and set spending limits. Yet the study found that only a few of the top 15 banks in the U.S. offered digital money management tools, with Wells Fargo leading the way. Its innovations have included a Facebook chatbot and the ability to use a smartphone instead of a card at an ATM. Wells Fargo's 20 million customers who use its app can obtain eight-digit, one-time ATM access codes, which are sent directly to their smartphones.

Millennials are also the most uncompromising users of financial services and will readily swap banks if they are not getting the user experience they expect, according to a report by Javelin Strategy & Research. The findings highlighted the fact that the account opening, or onboarding, process is especially critical as an abandoned transaction at this stage is a negative first experience for a customer. Thirty-eighty percent of millennials said the process took too long, for example.

"To capitalize on the growing demand for mobile banking as millennials grow in spending power, financial institutions must simplify user experience and address ongoing concerns around security and fraud," said Al Pascual, SVP, Research Director and Head of Fraud & Security at Javelin Research.

Innovation in ergonomics, services and security

Around two billion users will be banking digitally this year, according to Juniper Research. Traditional financial institutions will need to provide more than traditional services via mobile devices to engage and foster loyalty among consumers. Challenger banks are already introducing innovative new fintech-powered services that offer customers greater choice and more convenience. Online bank Fortuneo is among those offering Fitbit Pay, which allows users to pay at accepted contactless payment terminals using their Fitbit smartwatches. Mobile bank Monzo offers 'tap to activate,' allowing users to activate their new debit cards by tapping against their NFC-enabled Android phones. Payment app Lydia provides a premium subscription service where users can see an overview of all their bank accounts and create recurring payments and sub-accounts for a monthly fee.

Enterprise interactions

They are also targeting distinct audiences. French digital Ditto bank, for example, has been specifically created for frequent travelers and expatriates. Dubbed 'the bank without borders,' it allows you to open an account in one of thirty currencies with just a few clicks. Its Mastercard Gold automatically detects the currency and debits the appropriate account.

Others are hooking up with partners to provide associated services. Insurtech Anorak has partnered with open banking platform Starling to offer life insurance to its customers. Starling customers will now have direct access to Anorak's insurance advice through their Starling app. Starling has similar partnerships with mortgage broker Habito, pension provider PensionBee and investment robo-adviser Wealthify.

With mobile device hacking one of the fastest growing areas of cybercrime, it is little surprise that everyone is working overtime to better secure customers' data. U.S. Bank, for example, is providing a geolocate service to enhance mobile payment security. Payment authorization requests are based on the smartphone's position relative to the place of purchase. Wells Fargo is hoping it can phase out passwords using various areas of biometrics, including voice, fingerprint and iris scans.

In addition, banks are looking into AI to mitigate mobile threats. Microsoft, for example, has developed a solution using AI that can detect fraudulent mobile banking transactions in just two seconds.

The move to mobile-only banks

With no bricks and mortar branches and a promise of convenience, efficiency and simplicity, mobile-only banks are proving highly popular. In France, Orange launched Orange Bank in 2017, and the app integrates contactless mobile payments and real-time bank balances. Customers can interact with their bank by text and voice 24/7 using Djingo – a virtual assistant that's accessible via the banking app, smart home speaker or an Orange set-top box remote control. Djingo answers customers' questions in natural language and performs actions such as blocking cards that are lost or stolen.

With around 20 percent of customer conversations taking place outside traditional working hours, this approach meets the strong demand for a continuous service. Creating a successful mobile-only banking service still requires an effective approach to omnichannel customer service delivery. Complex or high-priority requests, such as concerns about a potentially fraudulent payment, are transferred to a contact center agent who continues the conversation, accessing the history of the conversation so far and the customer's file.

Service integration plays a key role here. As a service integrator, Orange ensures that each element of its banking service works together seamlessly, including the Voice User Interface (VUI). An effective VUI necessitates proper pacing and relevance in question-answer interactions. It is important to capture metrics about adoption and identify phrases that the VUI can't process to enable the AI system to learn continuously. Consumers like using voice to access products and services, and for this reason, VUIs are experiencing rapid growth. So much so that comScore predicts that by 2020, half of all online searches will be conducted by voice.

Our personal money manager

Smartphones have changed the way we communicate and manage our finances. There is little doubt that mobile banking will be central to the way we manage our money in the future. Get ready to see more mobile finance solutions that take advantage of our connectedness, including personalized chatbots, banking wearables and virtual wallets that will totally replace the ones in our pocket.

Discover our range of technology and communications solutions tailor made for the financial services industry.