How to make your mobile banking a competitive weapon

As stated in the latest Malauzai research, the mobile banking market became saturated. Striving to keep up with the competition, the absolute majority of banks invested in mobile banking development in the last decade. Currently, only the smallest financial institutions under $100 million in assets may still not have a mobile app.

At first sight, it seems that banks have significantly pulled ahead with mobile banking services. However, if we take a closer look at all these apps, it becomes evident there’s still a long way to go before they meet digital demands of customers. And here’s why.

Build vs. Buy challenge

Finding the balance between a bank's immediate needs and its long-term growth has always been paramount and challenging – especially if the bank is small. Therefore, it is not surprising that when mobile banking just appeared on the market, banks adopted different strategies. Some banks considered mobile banking development as a long-term IT initiative and invested heavily in custom banking software to ensure the app’s scalability in the future. Some banks chose to take a “wait and see” approach. However, soon they found themselves in the middle of an intense competition without any app at all and had no other choice than introducing a mobile app to keep up with the market requirements.

Another group of banks, especially those with constrained budgets, started with off-the-shelf mobile banking software because it was fast and cheap. However, while out-of-the-box functionality can serve a bank’s short-term goals, it has limited capabilities and is not enough for a company’s success in the long run. With this in mind, ScienceSoft’s IT consulting team came up with a number of ways how a bank can reshape its mobile banking software and make it a competitive weapon.

4 directions to reshape mobile banking

1. Personalization − implies that banks should tailor the mobile app to customers’ needs as much as possible. 

How to achieve it:

• Show personalized product recommendations. Combining data from banking CRM with predictive analytics, banks can offer personalized marketing right in their mobile banking apps. This brings benefits both for banks, which will do more cross-selling, and for customers, who will receive only relevant product offers. To ensure higher conversion rates from these offers, banks can add to their mobile apps the online application functionality with prefilled customer data. Banks can also send push notifications with merchant-funded promotions based on customers’ current locations and preferences.

• Introduce money management tools. This functionality allows customers to see their transactions visualized and get insights about the state of their budgets. To provide a more comprehensive spending overview, banks can also add a receipt tab allowing customers to photograph and categorize receipts in their mobile banking app. Thus, instead of categorizing a purchase at Walmart as “general merchandise,” the mobile app can add granularity by applying more informative categories. Such an engaging functionality can potentially affect customers’ loyalty not only to the mobile app but also to the bank itself.

• Show a forecast of customers’ spending. As stated in a new Bankrate report, nearly six in 10 Americans don't have enough savings to cover a $500 or $1,000 unplanned expense. Taking into account that Americans so chronically undersave for emergencies, banks can help customers to have a better control of their spending via a mobile app. For example, banks can display upcoming payments and transfers as well as give customers an idea of their safe-to-spend balance. The mobile app can also notify customers in advance of a low account balance or an approaching credit limit.

2. Simplicity – implies that banks should eliminate friction and unnecessary steps for customers in achieving their financial goals.

How to achieve it:

• Explain how to use mobile banking. As banks constantly update their mobile apps with new functionality, they should communicate these improvements to customers with tutorials when customers log into a new version of the app.

• Introduce advanced search. If customers can’t easily find how to complete their financial tasks online, they abandon their mobile apps and rush to more expensive touchpoints, such as contact centers or physical branches. To ease customers’ navigation through the mobile app, banks can add voice navigation or natural language search capability.

• Design an understandable menu. As mobile real estate is precious, some mobile banking designers minimize the app’s menu into a ‘hamburger icon’ – a small pack of horizontal lines in the left upper corner. Though frequent Facebook or Instagram users are already familiar with it, some customers may find it hard to navigate with hidden menus. That is why, banks can use ‘Windows-like tiles’ on the main screen or add the word ‘menu’ below the hamburger icon until customers get used to it.

• Use convenient login options.  Banks should strive to make the login process as simple as possible, without compromising security. For this purpose, banks can use biometric authentication, which guarantees easy access to mobile banking while ensuring the app’s adequate protection.

• Activate pre-login features. Banks can add more convenience and flexibility to customers by letting them complete some tasks without logging into the app. The pre-login mobile banking functionality may include an emergency call option, mobile chat, notification about lost or stolen cards, etc.

• Ensure smart money transfers. To provide an ultimate customer experience with mobile banking, banks should synchronize all customer contacts into a single database and combine all identical contacts. As a result, customers will be able to use any attribute to find a recipient in the contact list (e.g., name, e-mail, phone number, etc.), which significantly simplifies p2p transfers or split payments.

3. High availability – means that customers should be able to solve urgent financial affairs with a mobile app as quickly as possible.

How to achieve it:

• Add self-service features. Mobile banking should let customers complete some banking operations without the need to visit a branch or call a bank representative. For example, using a mobile app, customers can temporarily lock their cards, set or change their PIN, notify the bank of an overseas trip, disable ATM withdrawals during the nighttime as well as payments abroad.

• Offer product comparisons. Mobile banking can also include a comparison tool that allows customers to choose the most suitable financial products and services. For example, customers may appreciate a comparison of various scenarios to buy a property or choose a wealth management strategy.

• Introduce in-app appointment scheduling. With this mobile banking feature, banks can save time for busy customers, which in turn may increase their loyalty.   

• Support a live chat. In case of fraud or other urgent issues, customers want to reach human help as soon as possible. Banks that pay special attention to the quality of customer service can introduce a 24/7 online help option by adding a ‘contact us’ button allowing to chat via WhatsApp or other messengers. A conversation with a bot assistant - like the one shown in this mobile banking demo - is a great alternative for less urgent issues.

4. Differentiation – implies that a mobile banking app should have a number of features that will make it favorably different from competitors. 

How to achieve it:

• Offer cardless ATM withdrawals. This feature can be realized with QR technology, i.e. a customer can either use a code generated by the mobile app or scan a code on the ATM with a smartphone.

• Allow cardless purchases. Banks can also enrich their mobile banking apps with digital wallet capabilities thereby changing the way people shop and make payments. In this way, mobile banking can become a single place responsible for both online and POS payments as well as offers, coupons and loyalty rewards.

• Automate transfers to savings accounts. Behavioral economists’ study about ‘pre-commitment’ shows that customers can save more if they set up automatic transfers to their savings accounts. Thus, instead of placing the savings burden on customers’ shoulders, a bank can support customers in meeting their savings goals with a mobile app. Indeed, if the money never hits your checking account, you’re less likely to waste it.

Do your clients enjoy all these mobile banking possibilities?  

Using these four directions, a bank can turn its simple mobile banking app into a lure that attracts customers’ attention. However, if a bank neglects the app’s functionality and interface, customers can become indifferent and reject mobile banking services at all. Since mobile banking has lately become an essential component that shapes the brand of a bank, disregarding app enhancements is unacceptable for banks.