By Andrew Levy
When it comes to change, the banking industry isn’t known for being a trailblazer. In fact, the financial services industry has traditionally been a laggard in embracing the evolution of new technologies. But mobile, it seems, is changing the game for good. For the first time, the industry seems to be sitting up and taking notice, and preparing a proactive attack to preserve their market share, and help them reach customers where they are. And just where are today’s retail banking consumers? On their phones! The Federal Reserve of the United States recently conducted a study on Americans’ mobile financial habits. It found that 52% of smartphone users with a bank account actively use mobile banking. And Forrester predicts that by 2017, 108 million customers in the U.S. alone will be using mobile banking.
If financial institutions aren’t putting a focus on their mobile strategy, they run the risk of alienating mobile-savvy consumers and falling behind their competitors. A mere decade ago, many consumers were hesitant to even try mobile banking. But today, more and more people are hungry for new ways to make their banking easier and more efficient. Sixty-nine percent of mobile users currently do some form of banking on their phones. And consumers are increasingly using mobile for more complex interactions, moving beyond checking their account balance to transferring funds and even applying for loans.
This revolution already has some banking brands creating customer perks to get them ahead of the curve. Take amenities offered, for example. In the past, consumers would consider factors like location, interest rate, and even personal relationships with bank staff before choosing a bank. But today, the decision isn’t so personal. Because checks are now often deposited via smartphone and direct deposit, there is rarely a need to visit a physical brick and mortar bank location. That gives amenities such as bill pay, lack of fees and control over money transfers more weight in the decision making process.
It’s clear that mobile has a major impact on the banking landscape today. But what will the mobile financial services industry look like tomorrow? Here are three predictions on what mobile has in store for the future:
- Gen X bankers will finally follow the Millennials’ lead, and fully embrace mobile banking.
It’s no secret that mobile is paramount to almost every part of the Millennial lifestyle. Their banking habits are no different: Millennials boast a whopping 46.6 percent adoption rate when it comes to mobile banking, with only 7.8 percent of these consumers using a physical financial services institution.But not all segments of the population have been so easily won over by the mobile movement. Although Gen Xers display a willingness to adopt mobile across the board, they lack the enthusiasm of their Millennial counterparts. In addition to having to overcome decades of ingrained status quo banking, they have concerns over security.However, more and more Gen X consumers are becoming comfortable with the idea of more extensive mobile banking. Gen-X consumers use their smartphone for payments more than Gen-Y. And young Gen-X consumers are more likely than Millennials to have used their mobile phones to pay bills, make retail POS payments or send money to friends or family members. - Consumer banking apps will evolve from nicety to necessity.
A recent study from Bank of America’s found that nearly 3 in 5 Millennials use their bank’s mobile banking app – the most active users of any generation.But this app-affinity isn’t only contained to the iGeneration. Among the general public, an overwhelming 85.1 percent have used their bank’s mobile banking app – and 66.5 percent of that group use the mobile app often. In general, consumers consider mobile apps a key enabler of their on-the-go lifestyle. In November 2015, a global study by Apteligent found that 38.7 percent of the general public might change banks if they discovered one with a mobile app or better mobile app, while 8.9 percent emphatically would change banks. Forty percent also reported that customer ratings on apps stores are very important.What’s puzzling? Despite these numbers, not all institutions have made the digital transition to mobile. Just over three-quarters of the banks surveyed by Apteligent had a mobile app – meaning one out of every four are floundering in the past. The good news is, many banks have made new mobile initiatives a priority. Forty-five percent of banks are developing a native app for their mobile consumers, while 38 percent are investing in hybrid apps for their mobile consumers. Forty percent of these banks are using specialized mobile tools to develop their consumer mobile offerings, while 75 percent of the banks are looking outside of their APM tools to develop mobile offerings. - Brick-and-mortar banking will eventually go the way of the dinosaur. Yes, we said it: Someday – perhaps even in our lifetimes – brick-and-mortar banking will be a thing of the past. Already, bank branches are disappearing by the hundreds: 739 closed in the first six months of 2015, and 1,531 shuttered in the 12-month period that ended with the second quarter, according to SNL Financial. JPMorgan Chase shut 138 alone, and Bank of America closed 130 in the 12-month period. As consumer-facing banks cope with higher costs and pressure to condense services, closing branches makes sense as a way to keep customers while lowering overhead.
The good news is, many customers are unlikely to mourn the loss of a physical banking center. Customers are one-third more likely to enjoy a mobile transaction than a bank visit; those who use branches are three times more likely to switch banks than those who are infrequent visitors; a branch visit is 2.3 times more likely to end up with an annoyed customer than using an app.
Want to learn more about the mobilization of the financial services industry? Download Aptiligent’s 2016 snapshot of the industry, Inside the Vault: The Future of Mobile Banking.
Andrew Levy is Co-Founder and Chief Strategy Officer at Apteligent, a leading mobile app intelligence platform. Email: [email protected]
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