The state of mobile banking revealed

Digital transformation Banking
Mobile banking apps and customer engagement
Digital banking industry research published in 2018 by a number of leading research and advisory firms highlights a trend that has led the industry to reflect on a core aspect of current priorities as well as future strategy: the customer. A renewed focus on the customer became a central theme running through consumer surveys, research reports, advisors’ recommendations, conference panels, and social-media discussions among industry veterans. Tracking the discussion through these different channels provides insight into what it is that customers want, what that means for the industry, and how mobile banking fits into the picture.

Taking a customer-centric approach to digital banking

In its 2018 global banking outlook, Ernst and Young (EY) reports that digital transformation was a business priority for 85% of banks across the globe. Investing in technology is, of course, central to reaching digital maturity, and EY’s study found that for 67% of banks, investing in technology is driven by a focus on acquiring, engaging and retaining customers. It might seem like a simple approach, but Capgemini’s 2018 world retail banking report summarizes one of the key challenges that banks face in making a strategic priority like this a reality: “as the world’s consumers embrace digital adoption, so too, do retail banking customers expect seamless service across multiple channels and all lifecycle stages”.

A recent example illustrating the industry’s focus on adopting a customer-centric approach was Sonia Wedrychowicz, head of technology transformation for consumer and community banking technology at JP Morgan Chase, emphasizing the difference between user experience and customer experience. “Customer experience is all about holistic view of our customers’ experience with us”, she explained in a post on LinkedIn. “It’s about how people interact with us through different channels, how we design and simplify their journeys and deliver them consistently with quality.” Customer experience, for JP Morgan Chase, includes user experience, which for the bank is about “designing a specific interaction with a customer, at a given place and time”. User experience thus becomes a “building block of an overall customer experience”.

Mobile banking apps and customer engagement

Mobile banking, and mobile banking apps in particular, has become a central field on which the customer-first approach to banking has been playing out. Many recent surveys have polled customers on their preferences and satisfaction when it comes to mobile banking, and the results show that much work is still to be done. Research into customers’ satisfaction with their banks conducted by JD Power in 2018 indicated that banking customers that only use digital channels are the least satisfied with their banks, compared to customers that also – or even exclusively – visit branches. Capgemini’s World Retail Banking Report 2018 confirms this: customers are generally better satisfied with online banking and branches than with mobile banking apps.

Cataloguing what customers want, Javelin’s mobile banking scorecard identifies and weights those categories of mobile banking that customers indicate are most important to their satisfaction with the channel. According to the report, these categories are, in order of their importance to customers, money movement (23%), ease of use (22%), security empowerment (21%), financial fitness (17%), customer service (11%), and account opening (6%).          

Source: Javelin Strategy and Research: Mobile banking scorecard 2018

A deeper look into what Javelin’s categories entails indicates that customers want added functionalities delivering one-stop convenience, a user experience focused on streamlined, easy-to-use navigation, and greater control when it comes to security. This is in line with recent findings from a consumer survey Entersekt conducted through The Harris Poll, where we found that 68% of American consumers would prefer to use one single app for all their banking and payments needs. In fact, our research shows that, if they could have such an app, 67% of consumers would be less likely to use cash or payment cards.

In terms of improved functionality and greater control, Entersekt’s survey gives added context to mobile banking customers’ preferences. 71% of consumers polled indicated that they would use their banking app more often if it offered more innovative services, and 90% of consumers would want the option of approving all or some transactions completed on their mobile before the transaction is processed. These figures bring to mind the argument that when customers are given more control, they feel more secure, and are more likely to engage more with a channel or service. What is also clear, however, is that mobile banking customers demand not only greater control, or more security, or supreme convenience – they are looking for a combination of these categories, presented to them in a way that is as innovative as it is relevant.

From experience to empathy

It has become clear throughout the last year or two that a true customer-first approach to banking aimed at deepening engagement encompasses more than user experience and even customer experience. Research firm Gartner uses the term “empathic banking” to refer to an approach based on increasing customer engagement by being present in “important moments in customers’ lives” and encouraging or triggering actions to support customers in these moments. As Gartner explains, “empathy drives the bank to recognize its customers’ challenges or situations and help to do something about them”. In this sense, it’s not just about designing customer’s interactions with the bank; instead, the bank invites an interaction based on what it already knows about the customer’s financial life. Banking and fintech expert Jim Marous refers to this as the “personalization promise”, arguing that consumers have come to “expect their financial institution partners to be able to provide real-time recommendations” that are personalized and relevant, based on contextual insight.

What has also become apparent in recent research, is that banks can no longer afford to focus only on a mobile strategy. Over the last few years, mobile banking has been a key focus area for many banks embracing a mobile-first strategy. But, as Gartner argues, these banks now “find themselves in a situation where they need to round out their technology investments in other digital channels” to meet consumers’ demands. Add to that the fact that mobile banking adoption has plateaued over the last few years, and it becomes clear that customers are looking for more than just an app. In fact, analysis from Javelin Research and Strategy predicts that mobile banking adoption will remain far short of online banking for the foreseeable future. The firm advises digital banking strategists to “shift their focus from basic adoption to deepening engagement”.

An omnichannel experience that goes beyond a mobile-first approach

When it comes to engaging customers, it has become clear that banks need to provide an omnichannel experience that is customer-first above anything else. As Forrester emphasizes in the firm’s 2018 banking customer experience index, digital-only might not be the best strategy. “Conventional wisdom states that customers prefer digital experience”, the report states. “As a result, companies race to create entirely digital experiences to entice customers away from contact centers and branches. That’s a mistake. Our data shows that the real situation is more complex.”

The real situation, as Capgemini argues, is a landscape characterized by “disruption from unexpected competitors, […] explosive growth of new technologies, and relentless consumer demands”. The only way banks can remain competitive is through reinvention, adopting an approach that goes beyond mobile-first or digital-only to engage customers through whichever channel they prefer.

Entersekt partners with prominent banks and enterprises around the world. Our innovative range of authentication solutions helps them reach and acquire customers, launch new services, and multiply revenue streams while meeting compliance obligations with confidence. Contact us today to find out how we can fast-track your digital enablement journey.