By Evan Sparks
For a growing share of bank customers—especially millennials and their successors, Generation Z, mobile banking is where they will engage with their customers most frequently. According to Federal Reserve figures, 43 percent of bank customers use mobile banking, including 67 percent of millennials. According to a TD Bank survey, mobile is the fastest-growing channel for bank customers.
Today, bank mobile apps offer a great deal of customer convenience, from balance checks to funds transfers to mobile deposit capture. These are all features that used to require a phone call, a visit to the bank or an envelope and a stamp—and now, customers can do them quickly from wherever they are. But with banks facing increasing competition from nonbank fintech companies and fragmentation of their customers’ finances, they are seeking new ways to drive customer engagement.
Engaged customers are more profitable customers; according to Gallup research, a high level of customer engagement means on average more than one additional financial product per customer. With mobile banking, the bank now goes with its customer wherever she is—which means that one of the most effective ways to drive engagement is to get customers spending more time and finding more usefulness for their banks’ apps. Here are four solutions bankers are turning to in order to enhance their mobile app and deepen in-app engagement.
1. P2P payments
For several years, the market leaders in person-to-person payments—Venmo and its parent company, Paypal—have been on the periphery of the banking system. But with the ongoing launch of Zelle, banks are making a strong bid to bring P2P firmly back into the banking world.
Earlier this summer, Zelle started being made available directly to customers through their banking apps. Customers at Zelle partner banks can use their bank app to send money directly from their funds to a customer at any other Zelle bank and see the transaction recorded immediately.
At press time, 34 banks and credit unions had signed on and nine had rolled out the new platform. Banks of diverse sizes, from the largest nationwide banks to midsize banks and local community institutions, are included. Frank Sorrentino, chairman and CEO of ConnectOne Bank, a New Jersey community institution that offers Zelle, says participating banks are “forward-thinking and want to be on this common platform.” With Zelle banks accounting for the vast majority of U.S. deposits, the system approaches near ubiquity—customers at non-Zelle banks can even receive payments by downloading the Zelle app due to be released this fall.
The idea behind Zelle is to offer customers the convenience of quick payments combined with the security of their own bank’s app and the knowledge that funds are transferred in real time. “When it comes to money, consumers trust their banks,” says Peter Tapling, the chief revenue officer at Early Warning, the company that developed Zelle. “Banks can provide better service to their customer if they have direct visibility into all that’s going on.”
Zelle has partnered with the three largest core processors—Fiserv, FIS and Jack Henry—making it easier for smaller community banks to offer Zelle to their customers if they wish, says Tapling. No matter the size of the bank, Zelle network rules and technology ensure the in-app experience is the same for every user. Businesses can also use Zelle for business-to-consumer payments, providing an option for commercial bank customers to get payments settled more quickly, such as an insurance company paying a claim.
2. Receipt management
For many corporate employees, expense reports remain an old-school relic in the digital age with the need to keep track of numerous paper receipts, then categorize them and add up the totals. And for people who budget in their personal life and use receipts to track their spending, or for self-employed entrepreneurs who need to record their expenses for tax purposes, managing receipts is an extra headache.
But just as mobile deposit capture made it effortless to handle paper checks, new receipt management solutions are bringing the convenience of the smartphone to the chore of expense tracking. For example, a company called Shoeboxed offers technology that adds a receipt tab to the app, allowing customers to photograph and categorize receipts, making expensing vastly simpler.
But receipt management also offers benefits for retail consumers too. “The step further that we can go is we can also pull off SKU-level item data from those receipts,” says Michael Hourigan, director of marketing at Shoeboxed, referring to the specific product codes for items purchased. For example, it can integrate with personal financial management tools to offer a monthly budget snapshot with much greater granularity. Instead of categorizing a purchase at Walmart as “general merchandise,” the app can break it down into groceries, health and lawn care.
Receipt management also allows banks apps to track warranty registration deadlines, product recall alerts and tip fraud, Hourigan says. Customers that receive email receipts can also have these synced into the app. “Receipt capture makes your mobile app much more sticky,” says Hourigan. “It makes users routinely come back to it.”
3. Wealth management insights
Many bank customers today have many different retirement or asset management accounts—say, a 401(k) with T. Rowe Price, a Roth IRA with Fidelity and a brokerage account with Charles Schwab. Some customers, particularly those who have worked at numerous jobs, may even have dozens of these accounts. It’s hard to get a unified view of the performance of diverse investment accounts, though, and to understand whether they’re performing as they should.
New wealth management solutions can change that. Visualize Wealth, for example, offers an in-bank-app solution that integrates views of all investment and financial accounts, lets customers allocate which investments are directed toward particular financial goals, and provides a “nutrition label” that analyzes fees, rates of return and risk levels to provide a transparent view of investment performance.
Benjamin Gross, Visualize Wealth’s founder and CEO, contrasts the in-app solution to fintech companies that provide investment analysis but are also seeking to capture investment accounts. “Our goal is to arm institutions with a value proposition that consumers can’t get anywhere else,” he says. “We’re not trying to manage your money or harvest those assets. All we’re trying to do is provide you a transparent view of your portfolio. That’s a huge value add that no one is offering in the market now.”
A second value proposition for banks with these kinds of solution allows “curated opportunities” for referrals to wealth management. For example, a customer with an underperforming portfolio might receive a pop-up offer for a referral to a bank’s wealth management team. Gross adds that the data gathered in the app “helps optimize cross-selling opportunities”—leveraging the data further.
4. Automated savings transfers
Behavioral economics research on the concept of “pre-commitment” shows that individuals save more when they’re automatically opted in to savings programs. For example, when a 401(k) contribution goes from not-enrolled-with-an-opt-in-choice to enrolled-with-an-opt-out-option, workers save more for retirement. If the money never hits your checking account, you’re less likely to notice it’s not there. The same principle applies to savings accounts.
Younger customers want to save more but they often find they don’t—the money just gets spent. Only one-third of millennials say they think they’re saving enough, according to survey data. But new automated savings tools can make that happen.
“There are plenty of personal finance tools, but every one of them place the burden directly on the shoulders of the users,” says Christian Ruppe, co-founder and CEO of startup Monotto. “If we could create a platform that set out the process of how to do it and completely automated it to where the individuals didn’t even have to make [savings] decisions, then more people would stick with it.” Monotto will soon launch its white-label savings transfer solution with Bear State Bank in Little Rock, Ark.
Integrated into the bank’s app, Monotto’s product allows customers to set savings goals, and then the app uses an algorithm to set automated transfers to savings based on what the customer can handle. Banks can use the data generated by Monotto to set up individualized marketing campaigns for customers based on their goals and their progress.
