In this Report
Mobile banking capability up 12% internationally with no signs of slowing.
Using data from 77 billion websites, Similarweb charted 56% of traffic coming from mobile. For the first time in history mobile has overtaken desktop and the financial sector are playing their part. In 2017 Finance is seeing it’s mobile at an all time high of 40% with 43% of personal banking products now able to be opened on a mobile device, up from 31% in 2016. Europe and Australia led the increase, with North American banks showing only a 6% increase in the number of products that could be applied for from a mobile device. Overall mobile readiness continues to be highest in Australia, with the leading banks having mobile capabilities for 75% of their personal banking product account openings. Despite innovation efforts, Finance still has the highest bounce rate for desktop vs mobile with mobile having over double the bounce rate of it’s desktop counterpart. (15.7% DT, 33.7% Mob, Ratio 2.14)
In the coming twelve months we expect to see a continued rise in mobile focus in the industry. While users might still be drawn to the more formal process for larger decisions (account openings, mortgages, etc.) we believe product managers will be using mobile as a key acquisition tool as the CMO’s continue to work more and more closely with CTO’s. There is also likely to be mobile revenue growth through the more lean financial products that require less formality as UX/UI improvements make it easier to make financial purchases; notably, travel insurance products and small lines of credit.
In the coming twelve months we expect to see a continued rise in mobile focus in the industry.
BBVA; eye-watering growth via speedy mobile innovation
Spanish bank BBVA now has over 15 million mobile active users, a growth rate of over 40% within the past year as the bank adds more services to mobile. This MAU growth comes as more and more consumers have begun adopting mobile banking as the norm and BBVA have matched the demand with a strong investment in digital innovation.
Aside from the addition of new customers in this area, BBVA is also reporting an increase in user interaction on mobile especially in its native Spain, with more than twice the interactions it reported in May 2016. (The bank reported 23.8 million interactions in May 2016, compared to 56 million interactions during that time this year). Additionally, 92% of services and banking products will be available via mobile in Spain by the end of 2017, as reported by the bank.
Discover; the first cashback via Apple Pay in the US
Discover has become the first major credit card company to let its customers redeem cashback rewards with Apple Pay. Cardholders can now redeem rewards after a purchase in just “two touches,” Szabolcs Paldy, vice president of e-business for Discover, said in the announcement. The user needs to “tap” for details within a redemption message that will appear in the Apple Wallet, and will redeem “your Cashback Bonus as a statement credit in the amount of the purchase,” according to the company.
Danske Bank; shuts down Norway mobile app, turns to competitor
Danske Bank is shutting down its MobilePay app in Norway and instead use rival DNB Bank’s Vipps service. Vipps started gaining momentum over MobilePay after a February deal between DNB and 100 local banks to acquire a 48% stake in the mobile payments services and then spin it off as an autonomous joint venture. Nordea are likely to follow suit and are currently in talks with Vipps about a distribution deal.
Vipps head Rune Garborg said in a statement: “Everything has pointed to a consolidation of the market for mobile payments. We’re happy to see banks that operate in Norway rally around a joint solution.”
CommBank; smartwatch withdraws
Until now, smartwatch banking apps have largely been able to merely view an account balance and sometimes receive certain notifications. But CommBank’s smartwatch banking app took the technology one step further, letting customers make ‘cardless cash’ ATM withdrawals on both Apple and Android smartwatches. This is the first mobile banking app for a smartwatch in Australia that enables transactions and another sign of Australia’s digital edge in the financial sector.
Bankwest; Easy Alerts
Bankwest won a 2016 Canstar Innovation Award for the Easy Alerts function on their mobile banking app. Customers get a push notification on their phone (rather than an SMS) to let them know when:
- Low balance: The current account balance has fallen below a set amount or is not enough to cover a scheduled payment.
- Success: The current account balance has reached your savings goal.
- Payday: A deposit has been made to the customer’s transaction or savings account.
- Fraud: Transactions or credit card payments have been made overseas.
- Fees: Customers should transfer some more money into their transaction account to avoid the monthly account-keeping fee.
A low balance type of alert can be particularly useful, as the latest Canstar Blue survey found that 32% of Australians have let their account run dry and failed to meet payments for bills at least once.
The rise of omnichannel in banking
Omnichannel account opening refers to the ability to save and resume on a separate device at another time. With only 22% of financial products capable of omnichannel, a capacity far below similar sized industries, we expect to see it become a core focus of product managers over the coming 12 months with double digit increases forecast for 2018. A recent survey by Backbase reported that 100% of the banks in their survey rate the creation of a seamless omni-channel experience from ‘important’ to ‘extremely important’, where 61% consider it ‘extremely important’. That said, only 1 in 5 banks is expanding its omni-channel strategy.
Why is it key?
- Attention spans of Millennials are below eight seconds. Add to that an increase in device and connectivity options and omnichannel capabilities take on a crucial role in on-boarding strategy.
- More traffic is now hitting sites through mobile for the first time however Time on Site is still dominated by desktop; such a discrepancy points us towards a strong case for omnichannel interconnectivity.
- Abandonment rates for new banking product applications are averaging 70%‐90% av. Funnel management will vastly improve with this technology’s ability to maintain a sales channel particularly for those not yet optimised for mobile.
U.S. Bank; Access account via Alexa
U.S. Bank ran an employee pilot over the summer and initiated work on the Alexa skill earlier in 2017, said Gareth Gaston, executive vice president and head of omnichannel banking at U.S. Bank. The key to getting the product ready for market in such a short time was to “prioritize the APIs on our side,” Gaston said. “We can repeat that as we roll out against similar platforms from Google and Apple.” Available features include checking account balances, paying bills, and viewing transaction history across a user’s U.S. Bank accounts. Gaston sees an enhanced feature set in the future, but the bank wants to learn more about how customers are using the service first.
Chebanka ; If Apple did Banking
“The Great Recession was just starting, and he saw the opportunity to innovate our business by improving our liquidity through new sources of capital,” explained Roberto Ferrari, CheBanca’s General Manager. CheBanca is the online banking arm of Mediobanca, the country’s largest investment bank.
“We wanted to open consumer savings accounts, and since we didn’t have a retail banking presence, we believed our best strategy was to use digital channels.” Instead of launching the bank only online, it started with reimagining new branches as stores where bankers could educate customers on using technology, as well as interact with them more informally. It purposefully didn’t recruit bankers for its staff, but instead drew from high street retailers, and people from fashion, electronics, and other industries known for customer service. Think Apple does banking.
“After two years, we were larger than many digital-only banks today,” Ferrari said. Fast forward to 2017 they now have over 800,000 customers and more than €20 billion in collection. Today, 98% of CheBanca’s transactions are digital, and its 50 branches focus on mortgages and other higher-value advisory services. Its NPS score is 42, and it currently contributes 30% of the consolidated group profit.
CheBanca continues to innovate its retail business model, having announced plans to buy Barclay’s Italian retail banking business, which will close to double its customers and assets. It has experimented with mobile payments over the past 18 months, has just launched a robo and educational advisor, and is developing a new generation digital offering. As one of the first banks to embrace an API gateway, it’s working with 18 fintech startups on ways to make its services not only accessible, but open.
“We’re a platform, not just a bank or retail chain,” Ferrari added. “We are moving in the direction of being a marketplace for services, whether provided by us or from our best partners and suppliers.”
The digital abyss in wealth and business banking products.
Only 25% of wealth and business banking products have an online offering with less than one in ten business banking products able to be competed on mobile.
Digital disruption is arguably most alive in the business sector. Accountants are being replaced by Xero. PR agencies are being replaced by startups like Telummedia. While digital is reshaping industries, it is at the same rewriting the mindsets of business owners - ‘I can do most things myself through digital’. The financial and political talons of the banking sector has so far been its firm foundation but as governments demand innovation and blockchain technology advances banks are no-longer going to be able to drag their heels. Government‐led initiatives such as Superannuation in Australia and ISAs in the UK are already driving a significant uplift in the ability for consumers to access wealth management products through the digital channel.
Given such stagnant development in this area it is hard to tell where priorities will lie with digital strategists in the coming year. What is clear however is that there is a large market being technically underserved and history has shown what happens when technical meets demographic behaviour and need. With the ability to switch bank accounts within minutes on the horizon, likely through the emergence of Blockchain, it might come down to a simple mass exodus of business customers to trigger a tipping point that brings some much needed digital innovation into business banking.
mBank of Poland has introduced a quick loan program that is perhaps the fastest and most convenient loan in retail banking worldwide. The program, which is for loans of up to €17,000, takes advantage of an existing platform of pre-approved loans and accesses information about the customer’s salary and employment status. The loan process takes less than five minutes from login to having funds in your account. By using the mobile platform, mBank is able to offer access to loans wherever customers are, whether they are shopping online or walking through the mall.
The new mDeals mobile app also deserves a mention for its ability to present relevant-only offers based on location and then to automatically redeem discounts at the time of payment.
Bajaj Allianz, Mumbai
Bajaj Allianz’ new mobile app uses blockchain technology to proactively disburse travel insurance claims related to flight delays even before the claim is reported. Through a partnership with a third-party travel aggregator they get realtime data on flight timings for every city, every location in the world. With this data, the customer no longer has to file anything - a delay within the criteria in their policy automatically processes and arrives in their account as quickly as twenty minutes.
Cameron Stewart is leading our research into the strategy and lives of the world’s digital leaders. His work has appeared in The Irish Times, The Independent, BBC and TechCrunch. He is heading up our move into APAC. via our office in Sydney.