Sunil Mishra, Senior Principal Consultant, Infosys Finacle
In 2015, Exicon, a mobile solutions provider and app developer, estimated that between them, the world’s 15 largest banks had spent close to US$80 billion on developing 606 mobile apps7. Citing app proliferation among banks, a well-known research firm says some have built more than 20 apps to fulfil a range of customer needs8. Yet, mobile banking apps lag many others in innovation and quality of experience: an analysis of 140 apps from 35 top retail banks found that they were strong in basic functionality, but distinctly lacking in innovative features, such as personal financial management tools, chat and messaging9.
Customers, meanwhile, are quite frustrated at having to switch between multiple apps.
When surveyed recently, 75 percent of 700 millennials said they were dissatisfied with their mobile banking experience10.
The fractured experience provided by banking apps is at complete variance from one of banks’ top priorities, which is to create a customer-centric organization. It is also a matter of huge concern because in a few years from now, 89 percent of marketers are expected to compete, not on product or price, but on the strength of their customer experience.
Banks are clearly in a difficult position. The retinue of apps costs a lot to maintain, but currently yields little or no return. Worse, because the apps are usually not integrated, they cannot match what customers enjoy with other providers – a unified, consistent, seamless and convenient user experience. A great example here is Uber, which has taken the API route to integration with a number of travel and hospitality apps, from Google Maps to Trip Advisor to United Airlines, to provide a complete travel experience to users.
Banks should accept that the future model of success is one of distribution, decentralization, and disintermediation, and adapt their app strategies accordingly.
Business considerations apart, there is a regulatory push towards a more open form of banking from initiatives such as PSD2 in Europe and UPI in India. Banks that fail to heed these signs could end up as utilities, and cede their customer relationships to their more progressive rivals, including challenger banks and Fintech companies.
Hence there is a need for a fundamental change in the approach to mobile banking apps. In future, app design should adapt to customer expectations and behavior, rather than the other way around. Banks must also focus on enhancing their apps so that they not only provide banking functionality but also improve their customers’ lives in several ways. They can do this by visualizing the customer journey and designing apps that cater to various needs and add value at every stage; instead of offering a fragmented experience through various apps across different functions. The apps must also remember their interaction with customers, and use that learning to make relevant, contextual propositions.
If the ultimate goal is to eliminate friction in the banking experience, then banks need to ensure the following:
Apps are consolidated differentiated and highly personalized
A provider of mobile and Internet banking in the United States says that banking policies, procedures and (inadequate) communication are responsible for 70 percent of negative customer feedback on mobile banking apps.
Until now, banks have followed a bank-centric app strategy, designing and organizing apps by function or line of business and so on. This has imposed a very inconvenient experience on customers, who are forced to contend with a plethora of apps for their various banking needs. A cumbersome authentication process, and multiple passwords, adds to the frustration.
A frictionless experience requires banks to do the exact opposite of what they are doing today, starting with consolidating and integrating apps from a customer point of view.
And rather than offering the same apps at everyone, banks must target different apps to suit the needs of individual segments, for example salaried professionals and small business owners. This may well increase the total number of apps for the banks, but it would do the opposite for customers.
As banks are looking at increasing mobile capabilities to provide frictionless experiences, a new crop of users have become more commonplace. People who were not well-versed with smartphones earlier, are now increasingly choosing smart virtual assistants (SVAs) as a means to interact with their mobile phones. Banks are already looking at this channel as a means to offer products/services for these customers, and this channel holds a lot of promise for the future. For example, OCBC Bank has integrated Siri to offer banking transaction services through smartphones.
Apps provide functionality beyond transactions
Banks need to look beyond core functionality, such as account views and payment methods, at innovative add-ons that are a natural appendage to banking services. These add-ons could be financial in nature, for example wallets, or non-financial, such as educational content. The idea should be to fit the bank seamlessly into the various activities that a customer goes through in a day – shopping, product research, event planning etc. – at every life stage. Currently, very few banks do this.
A benchmarking survey of mobile banking functionality among 46 leading banks found that only six had installed an app-wide search engine to make it easy for customers to find what they needed11.
Apps integrate with third-party providers in the ecosystem
In many parts of the world, regulators are encouraging open banking with directives such as PSD2 and UPI, which will open up banks’ data resources to the ecosystem. This will create an opportunity for banks to partner with service providers, and in the process, access more customer data that they can use to personalize offerings and differentiate experience at the level of the individual customer.
Apps are compatible with a variety of mobile touchpoints
Today’s customers move between a number of mobile devices and operating systems and expect their apps to follow. Hence banks should make sure their mobile banking apps work on different touchpoints, including wearable devices and tablets, and their respective operating systems. Here, they can draw inspiration from China’s WeChat, which even caters to those who do not own smartphones.
The goal should also be to make it easier for customers to access even offline touchpoints, such as nearby branches and ATMs via geolocation apps. Here it is worth citing the example of an app from a leading U.S. bank, which has an inbuilt option to call the bank’s representatives.
To conclude, banks must consolidate and integrate their mobile banking apps from a customer perspective, offer innovative additional functionality, integrate apps with other providers, and make them work on as many touchpoints as possible. But even as they make these changes, banks should not lose focus on earning a return on their app investments. Since apps are costly to maintain, banks must clinically eliminate those which do not perform, and balance investments between a limited set of successful apps and a strong mobile web, which would be cheaper to run. It is a good idea to invest small to begin with, and deploy further funds after figuring out what works and what doesn’t.