The world is changing. And banking is no exception.
New innovations, technologies, regulations, and developments are continuously unfolding, and this impacts our lives, influences our decision-making and ultimately builds trends.
As for mobile banking trends - they also continue to shift and mature.
So, what exactly is mobile banking?
As Wikipedia explains:
“Mobile banking is the act of making financial transactions on a mobile device (cell phone, tablet, etc.). This activity can be as simple as a bank sending usage information or fraud activity to a client’s cell phone or as complex as a client paying bills or sending money abroad.”
The advancement of new digital tools, such as your mobile phone or tablet, give banking consumers the convenience of banking where and when they want. Because of that, mobile banking will eventually overtake all other banking channels put together.
These mobile banking users are expected to reach and surpass 2 billion by the year 2020, according to a recent report from Juniper Research.
That’s roughly one out of four people worldwide.
Here are more impressive stats:
A study by Citi this year showed that in the U.S., one-third of people (31 percent) use mobile banking more than any other app on their smartphone. Only logging onto social media (55 percent) and checking the weather (33 percent) are more common mobile activities.”
Because if it rains, why walk to your nearest bank branch when you can access your account info from home and from the palm of your hand?
The growing adoption of mobile banking has been driven by many factors, but fundamentally it has to do with convenience and solving pain points.
Let’s look at the top 10 trends in mobile banking that will continue to influence where this is all heading.
1. Open Sesame - integrating external APIs
A recent mobile banking trend that has gain a lot of attention in is the Open Banking (a.k.a. PSD2) directive.
The new initiative opens up and levels the playing field - allowing for the proliferation of new products and services to benefit the end user. When it comes to mobile banking, that means you can use a third-party app, like MoneyStrands, to see account information from all your banking providers in one place.
Banks, by opening their APIs to third-party developers and companies, will prepare themselves for what is yet to come. As one banking report points out:
Despite their initial reluctance towards open APIs, banks are starting to understand their potential, with almost 70% implementing API gateways to accelerate digital banking innovation. 41% see an API gateway an enabler of the developer ecosystem, while almost 38% as a chance to open up to third parties.
2. Out with the old, in with the new - replacing outdated infrastructure
Believe it or not, some bank’s systems are so old that there aren't many people around that understands their coding language. As a consequence, old and outdated legacy systems will be forced to integrate new technologies.
In addition, and to avoid the risking of being left behind, many banks will need to offer an easy-to-use mobile banking app that can provide a better level of transactions and services to its users.
The popularity of mobile first solutions for any industry, let alone banking, means companies can’t afford to stand on the sidelines of innovation and progress.
3. Whenever, Wherever, Whatever - The Omnichannel Banking Strategy
Omnichannel banking is about offering the same banking services to clients across all the available channels the banks has to offer, whether that be online or offline, or even both at the same time.
Therefore, receiving a frictionless omnichannel experience is something clients constantly expect from any service provider or company.
One good example of a company offering a great omnichannel experience is Starbucks. Yup, the coffee brand. Their mobile app now allows you to order on the way, pay with your phone, check your Starbucks Card balance, add money, view past purchases and transfer balances between cards as well as find stores.
As these omnichannel strategies continue to develop, mobile and digital banking platforms will keep evolving and offer exceptional services and customer-focused interactions across all touchpoint.
This is where we really see mobile banking innovation leading the charge.
4. Bringing a smile - meeting customer expectations
No one can deny the huge convenience and time-saving advantages of banking through your mobile phone. Among other things, it allows users to transfer money, buy cryptocurrencies, pay bills, check their deposits, on-the-go, 24-7-365.
A study by ING points out that one in five (21%) have transferred money via organisations other than their main bank in the last 12 months; 15% have done so to make peer-to-peer payments; 13% used digital banking services; and 9% borrowed money.
Thus, the proliferation and increasing popularity of "alternative" mobile platforms for banking will continue to adversely affect the main bank's branch visits, ATM use, credit card use; as customers move to use these platforms because they more user-friendly, are loaded with features, and outperform the main bank's digital products. Did I mention some even have lower transaction fees and commissions?
As such, these trends in mobile banking are putting a lot of pressure on large banks and financial institutions to provide the necessary technology to meet or exceed their customer's expectations if they want to decrease their churn rates.
5. Big wins for small biz - operational cost-efficiency
In the same fashion that users will continue to demand and expect the ability to easily pay with mobile, so too will small businesses need to prepare and benefit from that trend.
In general, mobile banking is a cost-effective way for small businesses to manage their daily transactions and finances, as well as control their spend and budget more intelligently.
The major advantage is that rather than use the old clunky system sitting on their PCs, SMEs can now handle those same financial transactions and monitor their bank statements faster and directly from their mobile devices.
6. Safe and sound - security concerns will shift preferences
Large-scale data breaches have been a hot topic the last couple of years. However, the popularity of mobile-first solutions is on the rise as security improves and people feel safer using mobile banking features.
Starling Bank states that “mobile and online banking each bring their own risks but the additional hardware security features in mobile devices can make mobile banking more secure than its online counterpart.”
This implies that security measures such as multi-factor authentication on their mobile apps provide extra layers of protection vs. banking online on a website.
Although this topic is still up for discussion, and some mobile banking apps are safer than others, nonetheless, mobile banking is becoming increasingly more secure and quelching the concerns from users about the vulnerability of their financial data.
7. Economize or agonize - increasing profitability for large banks
Ever since the financial collapse of 2007-2008, banks have had to rebound and bounce back from the enormous losses many of them experienced. Mounting pressures from all sides have caused many financial institutions to explore ways to cut costs and become more efficient.
One strategy has been the reduction of commercial banking branches (as I discussed earlier) and the proliferation of mobile banking and digital banking technologies. These cost-saving measures have been happening now for many years and this trend will only continue.
Because of advancements in FinTech, between 2015 and 2025, 33% of all commercial banking branches in the U.S. will be closed - with those numbers being higher in the Euro area (45%) and in the Nordic countries (50%). These forecasted figures come straight from The World Bank and Citi Research.
8. Everyone is not your customer - new developments in marketing
Peter Drucker famously said: “The aim of marketing is to know and understand the customer so well the product or service fits him [or her] and sells itself.“
That’s a bold statement, but with data (and lots of it), anything is possible.
Many forward-thinking banks and financial institutions are beginning to utilize data-driven metrics to respond to your customers’ needs in innovative ways.
With so much customer data in their possession, these institutions are now able to leverage customer data, generate forward-looking insights and offer personalized recommendations.
When it comes to inbound marketing, mobile ads are increasingly becoming an important channel for banks and financial institutions to acquire new customers. Think about it this way: most everyone has a mobile phone and uses it daily. Not everyone walks by a bank branch or watches commercials on tv.
A recent report by the Financial Brand mentions that: leading financial firms are increasingly investing in digital advertising that can support more personalized messaging. This is a trend that will continue to evolve and improve as banks will have to flex their creative muscle to reach, engage and retain their clients.
9. New Kids on the Block - the Proliferation of Neo-Banks
When it comes to new trends in mobile banking, neo-banks, also know as mobile-only banks or challenger banks, are pushing the boundaries of innovation, technology, and coolness.
These companies seek to break away from the norm and revolutionize the way people bank on mobile phones.
Their innovative mobile banking features and services typically outperform many of the incumbents' own digital offerings. In addition, they also offer a seamless and smooth user experience that banks find difficult to match.
Because of this, neo-banks are extremely successful with the tech-savvy millennial demographic that are accustomed to using apps such as Whatsapp or Instagram. These same consumers want to carry out their financial tasks similar to how they would send a text message or swipe through their news feed. Simple and intuitive.
Neo-banks are and will continue to deliver on that. This explains why many of them are growing steadily as more and more users flock to them.
10. All Aboard? - The Blockchain Creep
Blockchain seems to be everywhere these days. It’s certainly no stranger when we look at the finance industry.
The blockchain technology, at its core, is interesting to banks because it can solve a lot of the problems that plague their processes and outdated systems.
However, many financial institutions are on the more cautious side on things and are standing on the sidelines as all this starts to play out.
That being said, blockchain’s ramification will continue to disrupt the finance industry and traditional banking, as it helps build new business models that cut down costs and improve profitability.
As one article mentions, many banks and financial institutions are adopting blockchain technology to improve efficiency, cost-effectiveness, and security throughout the entire spectrum of financial services, yet it’s much too early to say whether blockchain will replace aspects of banking.
Despite hundreds of banks and financial companies already using blockchain, its slow acceptance will continue for years to come. This is because each institution will need to determine the benefits of fully embracing and integrate the blockchain technology into their current infrastructures.
Technology is moving at lightning speed and there are plenty of advantages for customers and businesses of all sizes to embrace mobile banking and stay on top of the latest mobile banking trends. It is already transforming the way people save, invest, and manage their money, and there are no signs of it slowing down. As for banks and financial institutions, continuing to develop their mobile banking technology will be a key priority going forward, as it will help them improve their competitive advantages over other banks and new entrants.