Mobile apps are disrupting the financial services industry with emerging offerings like Venmo, Credit Karma and RobinHood topping the app charts. Beyond making a splash in the US, these fintech apps are going global, signaled by RobinHood and Baidu’s integration to make free trading of US stocks available in China and Apple Pay’s latest expansion into Canada. In today’s mobile-first world, it’s crucial for any company to adapt to the growing app-first mindset on an international scale. This presents a significant opportunity for worldwide success, if the right strategies are in play.
Many aspects of finance, from peer-to-peer payments and asset management to stock market trading and credit scores, are adopting an app-centric strategy and calling all established financial services to follow suit. For retail banks, the importance of joining the app economy extends beyond mobile payments and ties directly to customer acquisition and retention, particularly for younger demographics. In fact, a 2015 SNL Financial survey showed that over 25 percent of customers who changed banks that year did so for a better mobile banking experience. A Bain study from November 2015, also revealed that the mobile app is the most delightful channel of interaction for retail bank customers in the US, UK, Australia, China, South Korea and Japan over any other channel. And now, with Millennials the largest generation in the workforce, financial institutions must evolve to meet their on-demand lifestyles or risk losing out to more relevant startups in the space.
Beyond recent newcomers, some more established players have also entered the fray like Chase Mobile, Bank of America and App Annie customer, Capital One.
Source: App Annie, Store Stats
In the face of increasing competition, both retail banks and emerging fintech startups need to look beyond standard features and into the realm of innovation, customer relationships and data-backed decisions. A few success strategies include:
- Innovative app features beyond traditional banking tasks or their core offering. Innovative features utilized to enhance customer experience include free and secure document storage, secure one-touch ID logins, in-app live chat with agents or financial advisors, ability to withdraw money from an ATM without your debit card and more. It’s critical for fintech companies to think beyond the norm and dive into innovation if they want to remain competitive in the app economy.
- A focus on customer relationships. Innovation that builds on the banks’ existing relationships and trust with customers is key to providing the experiences that customers demand. A recent App Annie report that analyzed mobile banking apps in Europe, revealed that the most successful retail banking apps in France prioritize easy access to information and enhance customer relationships through direct communication and live messaging or video chat. With a focus on fostering customer relationships spanning both in-branch to in-app experiences, these banks are able to maintain and build their user base — ultimately strengthening their resilience to the evolving landscape.
- Data-based updates: Establishing the optimal customer experience can only be achieved through data-backed decisions. This is true for any business, but especially those in the app market, as ease-of-use and end-user experience are critical factors to drive usage and retention. Retail banking apps should use their extensive data on customers to provide budgeting assistance and update the in-app experience based on specific insights around user activity (eg: pro-actively suggesting a loan when it’s needed rather than passively offering it and charging for overdraft).
As the drive for innovation in mobile banking continues, we believe wearables will represent the next frontier for retail banking apps. These devices are perfectly positioned for market adoption and are primed to capitalize on the heightened demand for mobile payments in younger generations. We’ve already seen some wearable adoption in the banking sector including Wells Fargo at Hand for the Apple Watch, Capital One Mobile and CommonWealth Bank for both Android wearables and Apple Watch. We expect other major banks and emerging fintech players to follow suit and expand wearable technology to dive into more innovative features that we’re seeing in the mobile market already.
While there have been innovative and exciting financial services apps from startups and some traditional financial services providers and retail banks, if other established players don’t make app strategies a priority, they can expect to see death by 1,000 cuts given how strong their customers feel about this delightful experience.
Source: Bain/Research Now, NPS surveys, 2015
Watch the Future of Fintech panel discussion about Alternative Data in Financial Services featuring Schmitt, Bina Kalola (Bank of America), Jeff Glueck (Foursquare) Matthew Granade (Point72 Asset Management), and Robin Wigglesworth (Financial Times):