Apps on the rise: the future of mobile banking in Australia
Think about the last time you interacted with your bank. Was it a monthly statement you received in the mail? Perhaps it was a call you made to query a transfer? Well for a growing number of Australians, that last interaction was logging in to their mobile banking app.
According to Roy Morgan research released in January, mobile banking is not only the most rapidly growing way to bank, it also has the highest levels of customer satisfaction (89.3%) compared to internet banking (87.7%), phone banking (77.2%) or banking at a branch (85.2%).
So if mobile banking is set to be the future of how we bank and manage our finances then what can we expect banking apps to look like and provide?
For a take on the current state of mobile banking in Australia, as well as some future insights, we sat down with mobile banking experts Fusion - the designers behind six 2019 Mozo Experts Choice Excellent Banking App Award winners.
What do you think separates a great banking app from a run-of-the-mill option at the moment, in terms of features, functionality, usability and design?
A great banking app meets all of someone's needs from the initial download with a quick and easy on-boarding experience through to revealing features and functionality as the customers needs evolve. The customer shouldn’t have to deal with other platforms or channels to prove who they are to get up and running with a new account and it should only take a few minutes and be able to be completed 100% within the app.
Once setup, the customer should be able to take advantage of device specific features such as biometric authentication (Face ID, touch ID etc) and payment methods (Google, Apple, Samsung Pay etc) to ensure repeat access and payments are secure, easy and efficient as possible. In Fusion’s view, providing the ‘Pays’ from Apple, Google and Samsung is a mandatory hygiene factor for banks and credit unions to satisfy to truly meet their customers expectations.
A prime example is how all the Big Four banks, except ANZ, tried to resist adding Apple Pay to their offers. Driven by persistent customer pressure via App Store and social media commentary, CommBank recently fell on their sword and is now providing Apple Pay to their customers. We imagine the remaining two will do the same.
Aussies are pretty innovative when it comes to our finances - we’re one of the biggest adopters of fintech platforms in the world. How do you think Australian banking apps compare with counterparts from overseas?
On a good day we'd say Australia banking apps are right up there with the best. Of course there are some stinkers in the app stores too, but the benchmark here is not set by just a few brands. Look at the brands who Mozo gave awards to - there's a mix of credit unions, mutual banks, online-only and the majors - that means there's a healthy competition across the industry, which is good for consumers as they benefit from a great mobile banking experience.
In terms of the highest degree of innovation in banking apps, we would have to give the crown to China. The sheer adoption numbers by the population of China of the Alipay and WeChat Apps is staggering. They are more than simply banking apps, they have created entire financial suite-of-micro apps delivered within one app, where people can manage all aspects of their financial lives. Micro-lending, frictionless payments at Point Of Sale, Automated Saving, Investment advice, Credit Scoring, Insurance are all the norm within these apps.
Can you give us any indication of the adoption rates among your users? How many Aussies would you say are using mobile banking apps these days?
We can't reveal specifics for confidentiality reasons, but we can say one thing is for certain - mobile banking use is dominant and is continually rising and desktop based internet banking use is now falling. The adoption of mobile banking (and that includes tablets too) will outstrip internet banking use in the next few years, because the number one device in an Australian household is a smartphone. More people are using mobile banking than those that aren't, so we've passed the tipping point of adoption.
Perhaps more importantly is how many people are returning to their banking apps time and time again. In 2018, our customers used our banking apps every 3.4 days, or twice a week. This is a big increase from 2017’s numbers, where customers used our apps every 4.4 days or 1.5 times a week. These numbers are averages. We see far higher usage patterns from customers who have activated features like Quick Balance and make payments with their smartphone using Apple, Android or Samsung Pay.
Banking apps are now the most frequent touchpoint for a bank brand, so they need to provide a good experience - we're seeing at least 20% of the customer base interacting with their bank every day! Imagine that ten years ago, going into the branch or calling the bank up daily, it's unthinkable. A great app has become a vital part in a customer deciding whether to switch banks or not - we often see reviews in the app store that are like: 'Oh I would come and bank with you because you've got great rates but your app is rubbish so I won't'.
Are there any mobile banking app features or functions that you expect to become the norm in future? And are there any you’d be really excited to see more financial institutions start adopting?
Great banking apps will be defined by moving to delivery of a digital experience which is designed for the person, not the people. One size fits all won’t cut it any more as the expectation from customers is a personalised approach tailored to their specific circumstances. Services like Amazon, Facebook, Netflix and Spotify have set the bar high. This is where delivery of individualised spending notifications, budget suggestions and saving nudges all driven by machine learning will separate the great from the good of banking apps.
One app feature that is on the rarer side which we predict will become the norm, is richer information around individual transactions. How much time and money is wasted each day with customers and banks trying to track down what that nonsensical merchant name listed on transaction listings means? Improving transactions listing to be a human-friendly descriptions that included the known brand of the organisation, where they are located and what category of transaction is what people are interested in.
Another area that we see becoming the normal expectation from customers of their banking app is easy to use and predictive focused budgeting and savings tools within the same App experience. Historically this area has been the domain of Personal Financial Management (PFM) apps, but people want the convenience of everything being in one place, being in realtime and not having to dip in and out of a variety of apps. Banks that decide to ignore this expectation will simply lose the primary customer experience to those that do.
One feature, that while unique at the moment, we expect will become the norm is the concept of ‘virtual cards’. This provides people with the ability within their app to create and kill off credit or debit cards for specific online shopping sessions, or simply be able to quickly shut down a card because they lost it and have a new one provisioned within seconds, without any wait for plastic.
Great banking apps are probably going to be more along the lines of fitness apps, which are focused on creating habits which are beneficial for your health. In the case of banking its your financial health, which often leads to your mental health as well. There's a lot of evidence emerging that our level of happiness and our level of certainty with our financial status are heavily intertwined. With that there's also an imperative to be more inclusive across the app's user base - we're working with experts to ensure that the apps we make are accessible by people with different capabilities, such as needing to use a screen reader.
We also predict that via Open Banking, we should be moving to a world where a great banking app covers more than just money, and will bring in a potpourri of adjacent services like insurances, superannuation, investments into a powerful one stop financial control centre.