Consumer adoption of mobile financial services gives banks an opportunity to gain unprecedented insight into their customers’ buying habits, preferences and financial behaviour. Drawing data from banking, payments and other financial management apps can add serious depth to a banks customer relationships, increasing loyalty, informing the development of products targeting specific customer segments and enabling the bank to cross-sell services more effectively, helping them stay ahead of the competition.
At a glance, the mobile banking revolution looks to be in full flow. According to the British Banking Association (BBA)*, UK customers in 2015 used mobile devices to check their current accounts 895 million times, almost twice the number of traditional branch interactions that took place over the same period. The same report also revealed that:
The UK’s mobile banking apps are being used 7,610 times a minute – or 4 billion times a year – and that payments using these apps are rocketing, having shot up by 54% in just twelve months.
Look at adoption rates across the whole financial services demographic and the UK’s mobile banking apps tell a different story. Other feedback reveals that just 36% of all current account customers use their mobile banking app regularly, meaning that a sizeable majority of the UK’s population is yet to embrace the mobile age. This sets the BBA’s figures in context. Regular mobile banking customers, despite representing little more than a third of the addressable market, engage with finances far more often than those that haven’t yet ‘made the leap’.
This is both a problem and an opportunity. A substantial number of customers have responded to the ‘mobile offer’ and are generating the data banks need to stay ahead of the curve. But 36% is a low percentage for the industry and there is great opportunity for any bank who manages to successfully engage their audience through mobile technology.
What then can banks do to lure more of their customers into their mobile world?
Multi-channel customer education
A mobile banking adoption study from TSYS** looks further into user demography. Going beyond ‘digital natives’ (those born into the digital age), the study reveals that:
The number of customers using mobile banking apps falls steadily with increasing age; usage is particularly low among those aged between 45 and 65.
What's more, the study also reports that mobile banking app usage elicits a ‘Marmite effect’ with two extremes — high usage and no usage at all - suggesting a lack of benefit-awareness among customers that don’t using the channel. This suggests that banks need to do much more to educate customers about the benefits of usage. Once the penny drops, customers quickly become highly engaged and consistent users.
The process of ‘educating the unengaged’ requires a carefully planned campaign utilising a bank’s full range of customer touchpoints to communicate the benefits of mobile banking and encourage take-up. Diversity is a key challenge here. Age, income and digital literacy vary greatly across every bank’s customer base, meaning that different customer segments will respond differently to its communications.
To this end, a combined approach is the most effective, blending traditional paper-based letters and brochures, skilled and proactive telemarketing, digital promotion via the bank’s online platform, opt-in mobile marketing (SMS and social media) together with 1:1 branch-based communications from bank managers and cashiers.
For a bank of any size, this exercise requires a campaign management and coordination platform capable of integrating multiple departments and channels to ensure that the most appropriate media is deployed at the most compelling time for each customer segment.
Fortunately, today’s next generation of specialist financial outsourcers, like Equiniti, are equipped to provide the skilled call centre staff, the campaign management technology platform and the necessary expertise to deliver this capability as a fully managed outsourced service, enabling the bank to get up and running quickly and with minimal internal resource requirements.
The use of predictive analytics in mobile data interrogation, while promising, remains immature in all but the largest of banks. Nonetheless, there is a highly effective role that this field can play in enhancing the campaigns of banks seeking to encourage adoption of their mobile apps and services.
Such a campaign will, of course, produce significant quantities of campaign data, most notably pertaining to what channels have been used to engage each customer segment, the marketing messages used and, most importantly, how customers have responded. Monitoring only the increase in mobile service uptake would be a mistake, however; campaigns such as this require significant investment and efforts to understand what has worked and what will work in the future and will pay dividends.
Predictive analytics - where algorithms are used to identify trends and forecast outcomes based on historical data sets - are of particular value here. A campaign designed to educate customers on the benefits of mobile adoption is an iterative process. Each iteration can be enhanced by fine-tuning the campaign’s parameters according to forecasts made by an analytics platform.
Until banks evolve their use of this technology from today’s proof-of-concept trials and test phases to full commercial rollout, it is unlikely that this benefit will be available internally to deploy. Fortunately, financial outsourcers like Equiniti are already offering these features as optional components in their integrated campaign management services.
Biometrics: security and a great user experience
The delivery of a fast, intuitive and convenient user experience (UX) is widely held to be a key factor in determining if – and how quickly – a mobile app is adopted. Unlike many mobile apps, security in mobile banking is a zero-sum game; no bank will play fast and loose with their customers’ confidential account information.
As a result, establishing bullet proof security and, notably, accurate user authentication during both the enrolment and the use of a mobile banking app can detract from an otherwise smooth and convenient UX. Cumbersome PIN, password or multifactor authentication gateways introduce a level of friction and can turn customers away from the setup and login processes, causing many to abandon the service, potentially for other more convenient mobile banking products.
The integration of biometric security procedures into mobile banking apps are now helping banks to strike the balance between delivering optimal security and also an attractive and convenient UX. Biometric technology specialists, like Equiniti in partnership with Daon, provide end-to-end solutions that help banks to verify and manage the identity of their users. Through a range of modalities such as face, voice and fingerprints, the speed and convenience of the vital user authentication process is vastly improved.
Voice recognition, for example, reduces friction almost entirely, since it analyses hundreds of unique characteristics that are then compared to the user’s voiceprint held on file. By design, voice authentication overcomes the security issues facing knowledge-based authentication today.
Similarly, the inbuilt geo-location features of a smart phone or tablet can also be used to ensure that the user is present in the location they claim to be, adding yet another valuable layer of security.
For customers accessing their accounts, making everyday payments or transferring larger amounts, one or more biometric modules can be used in combination. Should even higher value transaction services, or those carrying a greater risk, also be available via the app, additional layers of authentication can be introduced to further increase security.
Partnership and collaboration: the recipe for success
In the mobile financial services domain, banks are finally emerging from a challenging period of intense disruption caused by new fintech service providers entering the sector. Over the past two years an unprecedented $25bn has been pumped into the global fintech market. According to a recent Accenture report***, Q1 2016 saw a 67% year-on-year increase in global fintech investment; that’s a $5.3bn injection of funds over just three short months.
The same report, however, also speaks of a new age of collaboration. 44% of global fintech investment is now going to firms that partner with established players. This is a far more constructive approach.
Through collaboration, banks get the opportunity to benefit from the agility and innovation that has, to date, been a defining characteristic of the fintech industry. In the context of driving mobile app adoption, this is important.
Strategic partnerships with specialist outsourcers enable banks to ‘plug in’ to a suite of digital services that can be wrapped up and delivered as a single managed services contract, relieving the bank of the burden of building these capabilities in-house.
Campaign management platform selection and integration, telesales personnel recruitment and training, biometric security and other UX enhancement technology integration are all key factors in a bank’s efforts to bring their customers across to their mobile services.
This sector, perhaps more than any other in retail banking, moves at lightning speed. If banks are serious about establishing a solid foothold, they need to move quickly. A trusted partnership with a specialist managed services outsourcer can enable a bank not just to keep pace, but to pull ahead of the competition.