A new consumer-led revolution is underway in the way we access and manage our money, with the trend in customers using their banking apps continuing at pace.
Mobile apps have become an ever more popular way to bank. Over the past 5 years customers’ activity on banking apps rocketed by 354% with apps now an increasingly popular way to access current accounts, rising from 21% in 2012 to 61% by the start of 2017. There were 19.6 million users across the UK in 2016 with 159 logins occurring every second.
“The Way We Bank” report published by BBA in July investigates changing customer habits and major technological advances, concluding that mobile apps are set to become the UK’s number one way to bank. Here are a few of the report’s most significant trends:
1) Mobile payments are more important than ever.
The number of banking app logins was up 34% in 2016 (4.9B) with 159 customer logins each second. The number of banking app transactions was up 57% (932M) with 30 customer transactions every second.
Mobile banking is no longer just about checking account balances: customers are increasingly using banking apps to move their money and pay their bills, family and friends. Even though payments are not revenue-generating transactions, a seamless payment experience and owning the payment relationship will be critical drivers for banks to maintain customer satisfaction and loyalty.
2) People are expecting a broader range of services via mobile apps.
Customers are performing a wider range of tasks on mobile, with access to savings, credit cards and mortgage/investment accounts rising by 30%, 46% and 86% respectively from 2015 to 2016.
The sharp increase in the activity around mortgage and investments indicates customer’s appetite to address not only they everyday banking needs digitally, but they are now looking for solutions to their ‘complex needs’, that historically were addressed in person.
3) Customers are embracing new communication channels.
Customers are taking advantage of 24/7 access to their banks via web and video chat. There were 4.4 million customer-to-bank contacts made using web chat in 2016 – 510 every hour. Video chats are also growing in popularity, up 92% during 2016.
Real-time updates via text alerts are helping customers better manage their finances. Customers were helped by 434 million text alerts to track their spending and be better informed about their bank balances. Some banks are even creating mobile branches to improve physical bank access in rural communities.
4) The evolving role of branches and convergence of digital and physical.
The number of visits to bank branches has fallen, from 476 million in 2011 to 278 million in 2016. I will talk about the declining footfall, the evolving role fo branches and re-imagination of customer experience in my next blog. Stay tuned.
Banking innovation through an outside-in and experience-led approach
The world of banking is evolving at an accelerated pace. Customers define the way they interact with their banks and how they manage their money. They expect convenience, simplicity, speed, security, transparency and value demanding anytime / anywhere banking. It is evident that the customer-led revolution of banking is driven by rising customer expectations, their needs and priorities, enabled by digital technology.
However, is replicating the offline experience online sufficient to win in the highly competitive world of banking? What is the best way to create differentiation, deliver customer satisfaction and achieve long-term profitability? What defines success?
Success will be defined by a bank’s ability to make a positive contribution to customers’ lives by helping them find the best outcomes in their day-to-day lives, not just in the context of a bank’s own products and services.
For example, Monzo has focused on solving problems rather than selling financial products. Its app exemplifies this approach with a number of customer-friendly features: telling you how much you spent on your holiday by analysing the location of your transactions, and helping you set monthly spending limits and alerts by category of expense. The recently-launched Monzo University is designed to help people become more financially savvy.
The emphasis is no longer on separating the customer from their money and taking fees and charges for the privilege of administering it. Now the focus is on helping the customer to make the most of their finances.
Success begins with a shift in mindset
While technology is having a profound effect on how we relate and interact with banks, a better-designed app alone may not be sufficient in the long term, especially in light of the upcoming open banking environment. For example, with Moneyhub customers are able to aggregate their bank accounts in one place and use features such as spend analysis and financial planning.
True differentiation and competitive advantage will be based on the fundamental mindset shift and customer value provided. The outside-in and experience-led approach should start with the customer needs in mind: ‘how can we create value for customers’ and ‘how can we resolve customer pain points’? The successful banks will be:
- Addressing customers’ financial needs rather than focusing on product P&Ls.
- Finding new ways to solve customer problems instead of focusing on selling more products.
- Placing the customer at the centre of the bank’s ecosystem.
- Leveraging data to create value for the customer, not just the bank.
- Breaking silos and organising initiatives around customer journeys.
To be successful, banks will need to reinvent their business models based on guiding principles of customer centricity, transparency, fairness and ease of use. Ultimately, banks should become trusted advisors offering transparency, personalized guidance and ease of execution by leveraging digital technology.