The keys to delivering excellent mobile financial services

A must-have for banks

The world is getting more and more connected with a global smartphone installed base of 2.8B units in 2016 (Morgan Stanley research). In this context, providing mobile banking services is a must-have for financial institutions. They all have their own applications available on the most popular mobile platforms. Interestingly, per the website MagnifyMoney credit unions and small US banks do a better job than the large US banks in regards to mobile services:

Source: http://www.magnifymoney.com/blog/banking-apps/best-and-worst-bank-apps-2016


Profusion of Fintech startups

Large banks not only compete with Credit Unions and small Institutions but also with many Fintech startups that specifically target mobile users. Over ~470 mobile Fintech have been founded in the last 5 years per Tracxn. These Fintech operate in 7 main areas:

1. Payments

  • Point of Sale for mobile devices or tablets (e.g. Square, iZettle)
  • Mobile wallets facilitating payments in specific industries (e.g. TabbedOut, MyCheck) or across industries (e.g. Dwolla, LevelUp, Monitise)
  • Money transfer and Remittance services (e.g. Venmo, MoneyGram, TransferWise, WorldRemit)
  • Check remote deposit (e.g. Mitek, IngoMoney)
  • Bill payment and Business expense (e.g. Expensify, Abacus)

2. Account information / PFM

  • Enhanced banking services through partnership with banks (e.g. Simple, Moven)
  • Tracking and management of personal finances (e.g. Tink, Billguard)

3. Savings

  • Periodic micro savings (e.g. Acorns, Digit, Qapital)

4. Investing

  • Monitoring & portfolio management (e.g. Robinhood, Wealthfront)

5. Lending

  • Apply for a loan and check the status of a loan (e.g. Lenny, Cunexus)
  • Micro-lending (e.g. Affirm, Seeds)

6. Mobile-first banks

  • Innovative firms offering a full range of banking services with a banking license (e.g. Number26, Starling Bank)

7. Insurance

  • Receive insurance quotes and purchase insurance services (e.g. Trov, Zhongan)
  • Micro-insurance (e.g. Bima, MicroEnsure)

How to design mobiles services

The first step is to develop a deep understanding of how customers consume mobile banking services. Here are the results of a survey by Google:

Source: https://www.slideshare.net/NickMeijvander/google-how-people-use-their-phones-for-finance-activities

The keys to provide exceptional customer experience in mobile financial services are:

  • Simplicity of use
  • Personalization
  • Convenience (versus calling or going to branch)
  • Availability (always on)
  • Security

Being the best on all these dimensions at the same time is challenging. Providing the best customer experience requires to be aware of the trade-offs and to make conscious design choices.

For instance, frequency of use is a key parameter that is often overlooked in the design choices. There should be a clear distinction between services that you use every day compared to the services you only need on an exceptional basis.

Think about it: how often do you use your insurance app? Ideally you would never use it. But you want to be able to use it when you need to file a claim or get assistance. Similarly, how often do you get a new mortgage? On the other hand, anyone wants to use convenient means of payment every day. If you are a trader and an investor, you check your portfolio and look for market insights every day, if you don’t trade being able to check your retirement plan once a year or so is good enough.

Another issue is the ability to aggregate different services on one single platform. Having to check on 10+ different apps on your phone kills the convenience of each of them. A good example is WeChat in China: it has become a single platform where users can access and pay for many different services (finance, ecommerce, etc.):


Next steps

In the next steps of mobile banking, firms are currently exploring new technologies to improve their mobile offerings and the experience of their customers:

  • Biometric authentication (e.g. MasterCard “selfie” payment)
  • Voice technology (e.g. Enacomm, Eva)
  • “Intelligent” Virtual Assistants / Chatbots (e.g. Bank of America Erica)

To differentiate, firms must go beyond the basics of mobile account and transaction management and go one step further into providing simplicity and convenience for their customers.


This post was first published on IBM’s mobile business insights blog.

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