How effective UX design process can produce high performance apps
The phrase “banker’s hours” has traditionally been used with disdain. For a long time, access to financial services was limited. This forced customers to visit a physical branch or a broker’s office, wasting energy and time. Fortunately, things are changing courtesy of the digital revolution within the financial industry ushering in mobile banking apps.
“Fintech” and “mobile banking” have become the topics du jour for anyone in the financial services industry. Consumers are no longer interested in being limited to prescribed hours to do their banking. A study by the Federal Reserve Board of Governors found that 43% of mobile phone users with a bank account reported that they used mobile banking. What’s more, a Google study found that 40% of consumers would choose to switch banks rather than put up with a less-than-optimal mobile experience from their current bank.
Mobile banking apps are the future of the industry. Designing mobile apps that allow people to connect with their finances with ease and confidence are the new standard. Businesses who capitalize on this trend will have no shortage of consumers.
Mobile Banking Apps Provide Seamless Interactions And Frictionless Transactions
The smartphone has created a fundamental shift in the way people handle their finances. Personal finances can be managed at any time and from anywhere through mobile banking apps. While consumers are still adapting, forward-thinking businesses will position their mobile app as top contenders for the coming tidal wave.
That wave has already arrived. Mobile banking apps are rapidly moving from being seen by consumers as a perk to an absolute necessity. According to a Bank of America study from 2016, 62% of people’s primary method of interaction with their bank is digital, up from 47% just two years earlier.
This presents an enormous opportunity for business leaders who can really connect the path between consumers and their banks. The right mobile banking apps won’t just be nice to have but will be a must-have. In order to keep customers, banks will need to provide services that are efficient, user-friendly, and transparent. Mobile banking apps provide these features and much more.
Payment apps are also at a critical junction. According to the Federal Reserve study, there was over a 20% increase in the use of mobile payment apps among smartphone users just from 2011 to 2014, and another study from First Annapolis found that 64% of respondents had used a mobile payment app in the last year. In fact, 39% already had a digital wallet on their phone. These numbers skew way higher for younger respondents.
The same First Annapolis study found that only 5% of respondents were using their mobile banking apps once a week or more. While there’s plenty of consumer awareness in the market, consumer adoption is still pretty wide open. With merchants and consumers not fully committed to one solution, businesses have an opportunity to establish an impenetrable presence at the point of sale.
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Mobile Banking Apps Will Help Target Your Audience And Improve Services
So, mobile banking is rapidly becoming a necessity, but it’s also a massive opportunity to better connect with customers. According to a study from Fiserv that included 240,000 credit union members, mobile banking customers used 77% more product offerings than branch-only customers, and the average number of unique products holdings increased by 12% after customers started using mobile services.
More importantly, POS transactions for mobile payments were much higher among smartphone users. Mobile users only made up 14% of the customers but 39% of total POS transactions, and mobile users added a 19% increase in POS transactions and a 46% increase in POS credit and debit card transactions. So, not only are mobile banking apps becoming necessary for customer retention, but they are also more valuable for continual customer acquisition. These customers use banking services more, make more purchases, are receptive to new features, and cost less to acquire.
But mobile users pose even more opportunity. The ability to capture data from mobile users can give crucial insights into their spending behavior. This dramatically improves the ability to deploy targeted marketing campaigns that directly respond to consumer needs. Marketers can limit their outreach to those people who actually want what they’re selling and maximize return on investment.
This type of data is invaluable and has helped drive the development of wildly successful personal finance apps like Mint. Their services are excellent and give users the ability to manage their personal finances and track their spending habits. Additionally, Mint can offer services for free because consumer data allows Mint to offer in-app services customized for individual users.
Building Mobile Banking Apps Can Reduce Cost And Improve Margins
Of course, the news keeps getting better for financial institutions successfully converting branch customers into mobile banking customers Not only are customers more loyal, more active, and provide more data, but they also increase overall margins dramatically. A Javelin Strategy & Research study found that the average cost for a mobile banking transaction was just $0.10 for banks compared to $4.25 for an in-person transaction at a physical branch.
Those savings present a huge opportunity for financial institutions willing to make the upfront investment. The most valuable customers are the ones most interested in mobile services, and shift them to those services means saving huge sums of money on transaction costs. Pushing funds to better serve active customers provide immense value. It is even possible to start seeing customers more willing to pay for premium services as a result.
Mobile Banking Apps Present New Opportunities in the Lending Space
Of course, the benefits of a decreased cost per transaction aren’t limited to saving banks money for day-to-day transactions. The changes to the lending industry also have a chance to break ground on new territory.
Obtaining a loan to buy a car or open a small business has long been a difficult process. However, that has changed with mobile banking apps. Originally, banks needed to pay loan officers to research which loans would present the largest return on investment. Now, mobile banking apps enable financial businesses to collect consumer information to better validate these investments. This new approach has opened up a whole new swath of potential customers. With overhead drastically reduced, lenders can afford to take on more borrowers and to strategically loosen their standards.
Small-business lending apps like Kabbage can approve a $100,000 line of credit after a process that can take as little as just seven minutes. Even the big players are getting into the action. Major banks like Barclays are using mobile banking apps designed to facilitate small business loans in England.
There’s also the growth of peer-to-peer lending, which is leveraging technology to connect borrowers with potential lenders, cutting the banks out of the loop entirely. Companies like Prosper, Upstart, and Funding Circle are putting consumers in touch with other consumers while carefully tracking default rates to give borrower and lender a clear sense of what appropriate interest rates are.
The loan process can be complex, but mobile banking apps can streamline the process and help users make better financial decisions. Prioritizing the user will unlock new revenue streams for the lending industry.
Build Mobile Banking Apps To Serve Underbanked Populations
It might be hard to believe, but much of the American population is underbanked. These underserved communities even lack access to a simple checking account. This gap in our financial infrastructure creates a host of extra expenses for people who are already struggling to get by.
However, mobile can lower many of the old barriers to provide banking services to new consumers. The Federal Reserve study found that smartphone ownership was just as high among the underbanked as the fully banked. Consumers were more likely to use a smartphone to access finances than to visit a local branch. Financial institutions need to mend the relationship between themselves and communities that they have long ignored or failed. Financial institutions who can assist these communities will uncover untapped revenue streams.
Perhaps even more exciting is the way that investment portfolio management is changing. Plenty of mobile banking apps now offer people the chance to invest whatever small sums of money they may have left over after paying bills. Apps like Acorn, Stash, or Clink all allow users to begin stashing away small sums to begin taking advantage of the benefits of compounding interest. On top of that, automated investing apps have further helped make the process of selecting investments much easier and more transparent, helping attract a new generation of investors and savers in the markets.
Fintech Could Be The Key To Next Generation Of Financial Companies
One of the most exciting things mobile is bringing to the financial services industry is innovation. Despite current developments, there’s every indication that we are only scratching the surface of what’s possible. More and more fintech companies are building a wide variety of new services and processes for mobile consumers. Many of them are capitalizing on opportunities with enormous value. Just look at the many fintech trends happening over the last few years.
The explosion of mobile banking has created thousands of jobs and stands to continue to grow. The financial services industry is catching up to the digital revolution and the apps that are likely to become household names in the near future will continue to appear over the next few years.
Mobile is the Future for Financial Services
Mobile has been changing nearly every aspect of people’s lives. It should come as no surprise that our financial lives are a part of that as well. Folding current fintech trends into the broader cultural shift surrounding smartphones would likely be a mistake. While largely unchanged in the 20th century, the financial industry is undergoing a change that will permanently redefine it.
As a result, we could be entering a golden age for the financial services industry. A golden age introducing a host of new services, new products, and new consumers.
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