Introducing this month’s Editor’s Question is Chris McGee, Managing Director of the Financial Services Consulting Practice at AArete.
Consumer adoption of mobile banking continues to accelerate, with US customers now using mobile apps more often than any other banking method.
According to a 2023 survey from the American Bankers Association, 48% of bank customers use apps on phones or other mobile devices as their top choice for managing their bank accounts, while 23% use online banking via laptop or PC. The next most popular banking methods include visiting a branch (9%) or ATM (8%) and phone banking (5%).
In addition to the obvious convenience of mobile banking, customers are attracted to the ever-increasing features and benefits on offer. At the same time, customer expectations around mobile banking are increasing. Commonly cited frustrations include the need to download too many updates, being interrupted by irrelevant pop-ups, and elements of an app’s functionality being broken or just clunky.
However, customers aren’t necessarily leaving their banks because of dissatisfaction with mobile apps. A 2021 Bankrate survey, for example, found that the quality of mobile or online tools accounted for only 6% of customer loyalty. Mobile banking is a big deal for customers, but it’s not yet a deal breaker, so it can be difficult for banks to discern a direct ROI for improvements to mobile applications.
Nevertheless, smart banks are investing in next-generation mobile banking, leveraging emerging technologies such as advanced analytics, data visualisation, digital payments, security detection and AI.
Advanced analytics can be used to personalise mobile banking products and services to better meet the customer’s needs – no more of those irrelevant pop-ups! – while identifying opportunities to cross-sell and upsell to the customer. Applying advanced analytics techniques to available data can also offer customers smarter versions of in-app financial tools (such as loan calculators) and deeper insights into personal purchasing trends. Those insights are not only useful for the customer; they can enable the bank to suggest on-target purchasing solutions, both from the bank itself and third-party partners (utility providers, grocery stores, airlines etc.).
Developments in data visualisation are helping to improve the layout, functionality and navigation of mobile apps, making the apps easier, faster and more intuitive for the user.
As customers leverage mobile more and more, the trend to complement banking with digital payment options becomes greater and greater. Digital wallets and tap-to-pay options are only the beginning of what will become a new spectrum of options for customers to leverage when making purchases for goods and services.
Banks are using AI to evolve mobile banking in several areas, including security detection. AI can detect fraud and other potential risks faster than ever before, while helping banks to comply with a growing number of regulations. AI will increasingly play a key role in protecting customers’ assets and personal data and, crucially, in earning customers’ trust.
The need for cybersecurity will remain a major trend in mobile – and general – banking. Cyberattacks disproportionately impact the financial services industry, which is second only to the healthcare industry in terms of cost per breach, according to IBM’s Cost of a Data Breach Report 2023.
Meital Raviv, Chief Financial Services Strategy Partner at Amdocs Financial Services
It comes as no surprise, but Artificial Intelligence (AI) has had a massive impact on banking and financial services. However, we still have great lengths to go in terms of how much this technology can truly impact the industry from a mobile banking standpoint. While GenAI has already been deployed to revolutionise a number of banking capabilities, one aspect in particular that we can expect banks to lean further into is in building a superior mobile experience through personalisation – especially for multigenerational households, Gen Z and other upcoming generations.
Today’s customer expects an individualised banking experience tailored to their unique needs, and GenAI has the potential to serve as the vehicle for personalised recommendations, real-time financial guidance and banking tools that enable more comprehensive financial management capabilities for a variety of customer demographics, such as families and younger generations as they enter the world of banking – all from their smartphones.
GenAI offers the opportunity to drive customer satisfaction and retention across generations, household types, and different customer needs. For example, a small business owner has very different banking priorities than a student, but both want tailored experiences they can access easily from any device – and this is an area that not all banks are succeeding. Banks can use GenAI to break down data silos and create greater insights into each customer, giving them better resources and insights into their financial wellbeing in a more streamlined fashion. GenAI can enable better product development, leveraging more sources of data to build great banking products, such as competitive data, market data, consumer attitudes, etc. Banks that can leverage GenAI to take this to the next level are not only better at differentiating themselves in the market, but also at serving as a partner to their clients. Whether it be using GenAI for chatbots, financial consultation or gamification for early banking education for children, there are multiple levels of innovation for banks to unlock across this emerging technology – and it’s something customers want. A recent Amdocs survey found that 66% of respondents reported interest in building better money habits with tools that gamify personal finances through GenAI.
Beyond adopting AI for more personalisation, this technology can support banks’ security efforts. Mobile banking means more online financial activity, and therefore more online risks. AI and Machine Learning can help banks more quickly identify fraud activity, reduce risks and strengthen the security of online banking.
Stacy Njimu, Portfolio Manager at amana capital
Mobile banking has emerged as a key driver of innovation in the financial industry. As mobile devices continue to become more advanced and ubiquitous, financial institutions have an opportunity to leverage emerging technologies and trends to enhance user experience and security, while also providing customers with greater control over their finances.
One trend that is shaping the future of mobile banking is biometric authentication. With the use of unique physical or behavioural characteristics, such as fingerprints or facial recognition, biometric authentication provides an incredibly secure way to verify a user’s identity. This not only helps prevent fraud and identity theft but also enhances the overall user experience by allowing users to access their accounts quickly and easily.
Another trend is the use of Artificial Intelligence (AI) and Machine Learning. By analysing customer data, these technologies can provide personalised financial advice and recommendations. AI-powered chatbots can assist customers 24/7 while also helping users manage their finances more effectively. Machine Learning algorithms can also be used to detect patterns in customer behaviour and identify potential security threats.
Money and wealth management tools are also increasingly in demand by mobile banking users. Financial institutions can leverage this trend by providing users with access to a range of financial management tools, such as budgeting apps, investment management tools and retirement planning calculators. These tools can help users understand their finances better, make informed decisions, and achieve their financial goals.
In conclusion, the future of mobile banking looks bright, and financial institutions that embrace emerging technologies and trends can enhance user experience and security while staying ahead of the curve. By adopting biometric authentication, AI, Machine Learning and money management tools, financial institutions can ensure that mobile banking remains a critical component of the financial industry for years to come. Don’t miss out on this opportunity to provide your customers with the best possible experience and greater control over their finances.