Channel of choice: how banking apps are changing the way we manage money

Hugh Kingdon, Head of Business Dev, Visa, Europe

June 26,2019 16:25 PM GMT

Consumers expect more from financial service brands than ever before. Mobile has been a key driver, with a new report from Optima in partnership with Visa revealing that 41% of UK adults now utilise mobile for banking services.1 Thanks to the rise in mobile banking, customers are expecting more in the way of speed, convenience, tailored advice and personalised information than they ever have before. 

While this change presents pressure for brands to deliver, it also presents exciting opportunities to interact and build loyalty with customers in new ways. Both FinTechs and traditional players have different approaches here. As mobile interactions accelerate, FinTechs are rapidly innovating the services they provide, whether it’s in-app chat functions, real-time alerts or spending controls that make it easier for consumers to understand their spending habits and engage with organisations at a time of their convenience. On the other hand, traditional brands are building on their established relationships with their customers to enhance the consumer experience – particularly around open banking capabilities.

Without doubt, the increase in competition is raising the bar, in turn benefiting the consumer and redefining how we manage our money. The research report from Optima shows that the average number of current account features supported by traditional and non-traditional providers is growing year on year as they push each other forward. While there still remains a gap between the two – in particular around money management features – traditional players are working hard to bring new capabilities to their banking apps.

Every second counts…

In order to meet the new competitive challenges, FinTechs and traditional financial services companies alike need to ensure short development cycles of apps, the ability to deploy new functionality quickly, and keep up with the ever-increasing pace of change within the industry. According to the research, FinTechs are constantly amending their services to ensure quick user access, delivering faster log-in times in the first six months of 2018, with median log-in times being reduced from 8.1 to 7.5 seconds.2 Long-established companies need to focus on improved speed as a priority to ensure they aren’t losing out.

The personal touch

Consumers now expect a personalised service from their banks and want to interact with them at a time of their convenience. However, the research shows that in-app chat services are only fully supported by 32% of apps across both FinTechs and traditional players.3 All companies need to ensure that they are not only focusing on viewing balance and transactions when it comes to mobile banking services, but also that they are offering a diverse range of features with a focus on creating a personalised experience for consumers.

Hygiene factors

The inclusion of money management features such as real-time balances and budgeting tools have transitioned from being ‘nice to have’ to necessities that enable consumers to take advantage of a larger financial ecosystem and should be a priority for both FinTechs and long-established brands. FinTechs have excelled in this area, ensuring that their app features and functionality are focussed around money management and control. Traditional players need not be held back by legacy systems when it comes to offering these features – several have created standalone money management apps in order to improve the services they offer to consumers through mobile.

Adapting to changing demands

Whilst the rise of FinTechs has created a real shift in the way that people do banking, many consumers still place their trust in established banking brands. However, with consumers looking for greater daily choice, it is becoming more common for them to utilise the innovative features of a FinTech player alongside their traditional bank.

There is an opportunity for traditional players to build on this longstanding trust to provide exceptional streamlined services aligned with ever evolving consumer demand – with several strategies now being deployed, such as gradually adapting legacy systems, deploying new challenger brands themselves or collaborating with FinTechs on specialised areas such as money management. When it comes to mobile banking, digitally transformative features such as real-time balance and transaction information, integration with mobile pay functions as well as personalised money management advice, centered around consumer spending data, will be key to retaining customer loyalty.

In contrast, while FinTechs understand the drivers behind innovation and are quick to adapt to customer needs, the challenge will be to continue to do this at scale as they grow. This is why they will need to work with trusted industry partners such as Visa to support their rapid growth, allowing for continued innovation without compromising on customer service, network or security quality.

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[1] Mobile Banking App Review 2018: Reloaded, Optima Consultancy in partnership with Visa, p.6

[2] Mobile Banking App Review 2018: Reloaded, Optima Consultancy in partnership with Visa, p.22

[3] Mobile Banking App Review 2018: Reloaded, Optima Consultancy in partnership with Visa, p.14