Quantifying Mobile Banking Performance

By Steve Cotton

A comprehensive benchmarking study recently released by FI Navigator and Celent leverages new data on 6,490 U.S. financial institutions that offer a retail mobile banking application.

The mobile banking channel is rapidly altering the delivery model for banking services. And executing mobile banking successfully requires a real-time understanding of the entire landscape. As of March 31, 2016, 81.9% of financial institutions with more than $100 million in assets were offering a mobile banking app. However, the feature sets within those mobile offerings are wildly divergent, as the very definition of mobile banking continues to expand.

Financial institutions need information to keep up with mobile’s lightning-fast pace. Otherwise their strategy formulation and performance assessments are compromised. Data is the basis of competitive advantage in this increasingly digital financial vertical.

Additions to mobile features are changing the definition of mobile banking.

 Mobile banking features can be grouped into six categories:

  • Basic Banking
  • Enhanced Banking
  • Quick Access
  • Payments
  • Support & Information
  • Fraud Management

We’ll take a quick look at just two of these feature sets, Quick Access and Payments.

Cotton Table 1

The Quick Access group shown in Table 1 contains a relatively new batch of features that focus on reducing access friction for mobile customers. This feature set includes quick balance (pre-login), PIN code access, fingerprint authentication, and cardless cash allowing ATM access without card presentment. Of these relatively young features, fingerprint authentication has the highest current representation in financial institution mobile offerings, at 10.6%, while cardless cash is just emerging with only 0.1% of institutions offering this feature.

Cotton Table 2

While the Quick Access set accelerates mobile access, the Payments set in Table 2 offers mobile banking customers an expansive set of mobile payment alternatives that have a demonstrable impact on customer enrollment. The payments group includes interbank ACH/wire transfer, mobile deposit, bill pay, photo bill pay, bill presentment, person-to-person (P2P) payments, credit card management, and prepaid card management. Mobile deposit has evolved from being the hot new feature not too long ago to having 63.0% provision among all financial institutions. The bill pay feature tops the group on provision at 87.7% of all institutions.

Cotton Table 3

Feature leaderboards in Table 3 examine the trends in mobile banking feature provision. The leaderboard ranks features by how many institutions started offering them during the period. The hottest features from the trailing 12 months are presented along with the previous and current percentage of all institutions offering the feature.

Fingerprint authentication emerged with 572 financial institutions adding the feature. The relatively mature mobile deposit feature is still garnering enough additions to claim second place with 507 additions, taking it to 63.1% penetration. The remaining three positions are filled by quick balance, P2P payments, and the quite mature bill pay.

Cotton Table 4

One year ago, we witnessed a very different leaderboard led by mobile deposit with a whopping 701 additions in the year ending March 31, 2015 (Table 4). Another relatively mature feature grabbed the second position as bill pay added 218 institutions during that period. In a virtual dead heat in the final three positions were ATM/bank location, account alerts, and P2P payments.

What drives mobile banking enrollment?

Do specific features influence customer enrollment? Absolutely. This is known as feature lift, which isolates the impact of any specific feature on customer penetration as measured by enrolled customers to deposit accounts. For example, customer penetration across all asset sizes shows that mobile banking apps that do not provide bill pay have an enrollment of 9.7%. For those that offer bill pay, enrollment jumps to more than 24%—providing a feature lift of more than 150%. This feature lift holds even after removing smaller institutions of less than $1 billion in total assets. Feature lift is a tool that provides institutions with an initial means of assessing the potential impact of a new feature.

Arguably, effecting your financial institution’s digital transformation is your most important strategic objective. The referenced customer penetration metrics have clear patterns of increase by asset size, mobile banking debut age, and feature provision. These benchmarks can allow financial institutions the peer comparisons to assess performance and evolve mobile strategy. Even better, vendor analytics allow comparisons of mobile banking vendor performance in these areas.

Cotton Table 5

What did underperforming institutions do over the trailing 12 months? Of financial institutions leveraging a vendor-hosted mobile solution, 4.6% changed vendors and their customer utilization was only two-thirds of those that retained their vendor, as detailed in Table 5.

Unlock the potential of industrywide analytics.

Financial institutions have relied on peer data to augment overall performance for decades. In an area as vital to that overall performance as mobile banking, they need that same peer context to inform their future investment.

Steve Cotton is CEO and founder of FI Navigator, a provider of a web-based bank data and analytics platform for the banking vertical delivering institution-specific insights and industrywide research to fintech providers and financial institutions. FI Navigator and Celent recently published Mobile Banking Quantified: Comprehensive Benchmarks for U.S. Vendors and Institutions leveraging March 31, 2016 data.

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