Banks told to develop clear mobile banking strategies
Banks are warned against a loss of customers and business opportunties if they do not have clear mobile banking strategies, as the number of users using the service is expected to double in four years.
A research by KPMG using primary survey data supplied by UBS Evidence Lab showed that the number of mobile banking users globally is forecast to double to 1.8 billion, over 25 per cent of the world’s population, in the next four years.
The Global Mobile Banking Report, finds that while mobile is already the largest banking channel by volume of transactions, its adoption by new customers is now entering an exceptionally rapid phase. Adoption rates are highest in developing countries – reaching 60-70 per cent in China and India – rather than developed nations, such as the US, Canada and the UK.
It also suggests that mobile banking and payment systems are increasingly being integrated with other technologies, driving an era of ‘Open Banking’.
The report warns that banks who do not have clear mobile banking strategies will lose customers and cross-sell opportunities in the short-term, as well as risk jeopardising competitive advantage.
David Hodgkinson, KPMG’s UK digital and mobile banking lead and the report’s author, said: “Banks must adapt or die. Mobile banking is clearly supplanting all other channels as the main portal between the bank and the consumer. Many banks have already risen to the challenge and invested in new infrastructure and pioneering initiatives, but others must follow suit and commit to building both immediate propositions and ongoing capability to keep up with the pace of change."
In the short-term, the availability of mobile banking services is a key indicator when consumers choose to switch banks, and the report highlights a clear link between a strong mobile proposition, customer satisfaction and advocacy. However, mobile bank users, who are typically in the mid to late thirties, are the most likely to switch banks, suggesting that even an effective mobile banking offering is not enough by itself to retain these higher value customers.
In the long-term, the report suggests that as mobile banking technology is driving an area of ‘Open Banking’, where consumers can bank within context, across a variety of channels, operating systems and devices, including phones, tablets and wearables. For example, as a consumer holds-up their phone to a television in a store, an augmented reality app can recognise it and provide information including reviews and credit options.
Forty per cent of consumers, cited concerns about entering card details in mobile devices, and the possibility of losing a handset ranks highly among the list of worries.
Banks find themselves having to both protect the customer, while at the same time providing seamless and speedy access to their services to ensure greater consumer satisfaction. Biometric apps and fingerprint scanning are earmarked as ways to bolster the security of mobile banking, whilst ensuring ease of access - only a handful of the main banks assessed in the research currently offer this service.
“This new, exciting phase of mobile banking innovation, spearheaded by new market entrants as well as pioneering banks, will be a rollercoaster. Banks must overcome substantial infrastructural challenges, and reconcile consumers’ appetite for ease of use with greater security. Boldness will be required to overcome these challenges, and the only sure-fire winner will be the consumer," Hodgkinson added.
