Mobile Banking: How Apps Are Changing the Game
Younger generations are using apps for everything, and banks need to catch up if they want to stay relevant for their clients.
The primary motivation of any person to use an app is convenience. The same operations might be performed on a laptop or at the office, but if an app offers you the possibility to solve your problems on the go, without wasting time on going to the bank, this can be a sound value proposition.
Banks are capitalising on this assumption and moving as many operations as possible to the self-service area to save resources and cut costs. When convenience is not enough, banks add other benefits to the mix, to persuade even those reluctant to adopt technologies that digital banking is a better option.
Some of its perks include enhanced safety, the possibility to manage your spending, and the option to have a personalised financial advisor in your pocket. The most advanced apps strive to become personal financial assistants.
Here are a few of the top features of mobile banking apps that have the power to transform the relationship between clients and banks in the next five years.
Enhanced banking security
When money is involved, security is one of the main concerns. In fact, the banking sector was a late adopter of mobile technologies due to strict standards.
The current state of development of mobile devices and software allows banks to offer apps without risking their users’ cybersecurity. Most smartphones support biometric recognition ( through face/fingerprint scanning) that can be integrated with banking apps. This means that clients can sign a check with their fingerprints or a selfie.
Another safety layer can be geolocation. As all smartphones are capable of accurately detecting location and most people typically use their apps within a particular area of residence, it makes sense to alert the user when their banking app initialises operations outside that area. When the user is traveling, they can communicate with the app and set new secure areas. Such a feature can be coupled with purchasing a travel insurance, thus bringing the bank an additional profit.
Financial planning and budgeting
Studies show that most millennials and Gen Z representatives don’t keep a traditional budget and can run into serious debt issues. The good news for them is that there is always an app to help keep it under control. Banking apps can automatically track the user’s spending habits. Such apps can also send reminders so that the user doesn’t miss any deadlines, therefore avoiding penalties.
The best apps of this type can act as financial counselors. The software records every payment and assigns a category (food, transportation, leisure). At the end of the month, it generates a report with actionable advice to cut unwanted spending. Depending on the settings, the app can automatically transfer a sum of money to the user’s savings account.
Easy payments and more high-retention features
Cashless, contactless and wireless payments are on the rise. The volume of non-cash payments is growing steadily at 12% globally, with the lowest pace of 7% in APAC, Europe and North America, and the highest ones surpassing 35% in Asian countries.
Inspired by various apps that have already integrated mobile payments, banking apps need to offer a competitive product. Users want to be able to receive money, pay for their utilities and mortgage, make deposits, exchange foreign currency, and get access to their multiple accounts, all in the same app.
The best banking apps will be able to compete with popular peer-to-peer payment apps like Revolut, regardless of the bank the other party uses.
Another option for banks to retain users is to introduce personalised loyalty programs into their apps. This is what VPBank did when developing their mobile banking application.
The rise of voice-based control of gadgets also finds its way into app development. We are already used to ask Siri and Alexa for everything, so why not ask the banking app to make transactions for us?
This is better than asking Siri because having a native bank app doing this removes some of the security concerns.
Following the same line of self-service and opting for having less workforce at physical branches, some banking apps include helpful chatbots. These take over some of the duties of the call center and provide clients with helpful information about interest rates, exchange rates, submitting a mortgage application, opening a deposit account, and much more.
The first generation of chatbots had canned answers for frequently asked questions, but the development of AI can transform this communication radically. Natural language processing means that the app can understand problems and provide customised answers.
Using the bank app chatbot function, clients can receive financial advice, make payments, or ask more details about the bank’s services, sometimes even outside office hours. This flexibility presents a competitive advantage to early adopters and will only become the norm in the years to come.
Open bank APIs
Creating native apps is just the first step for banks. The future solutions can include banks’ open APIs for developers to integrate the banking services with other apps. For example, the rising popularity of ticketing apps or fitness apps means that users can use direct payment from their bank account to purchase products and services.
In the future, we can expect that utility providers, insurance providers, and even governmental agencies will integrate these tools to facilitate payments.
Next steps in mobile banking apps
As the generations change and millennials start to dominate the market, banks will be forced to become more digital. Users demand 24/7 accessibility to their money and satellite services. Apps are a simple way to keep them engaged, presenting a tremendous opportunity for banks to create more personalised services.
Using these channels doesn’t mean that branches will disappear or that call centers will become obsolete; it is just about giving clients a choice to use the most convenient tool for them.