01 October 2014

Banking Transformation

Tushar Chitra - Oracle Financial Services Software

14 | posts 54,519 | views 0 | comments

Future Finance

Finextra and Oracle have gathered together some of the industry's top thought leaders to discuss, debate and analyse the key trends and issues within transaction banking, regulations and retail banking. This group will focus on upcoming regulations, new service offerings and industry debate shaping the new financial services landscape with regular blog posts, video interviews, webcasts debates and surveys.

Is Today's Approach to Banking App Development Quick Enough?

22 July 2014  |  2913 views  |  0

2 hours and 19 minutes. That's how much time the average person spends on mobile apps every day. With a mere 22 minutes spent on the mobile web, consumers are growing more and more used to having an app for everything. And, in this regard, banking services are no different.

Banking app usage is through the roof!

Over the years, growth in the use of mobile banking apps has far exceeded the industry’s expectations. In February 2014, the enormous number of concurrent users checking balances and making transactions caused a number of mobile banking apps in the UK to experience service outages.

In October 2013, Bank of America announced that more customers logged into its mobile app than its online equivalent. There have been similar reports from banks in Sweden and New Zealand as well.

Yet, despite this, the progress of development of banking applications has been sedate .

How much time do banks spend in development?

A mere 5% of banks take less than three months to develop and launch a banking app. The overwhelming majority of 45% stands at 6 to 12 month development cycles, while a further 22% take more than a year.

The lack of in-house resources seems to be the primary contributing factor, with 78% attributing the drawn-out development time to inadequate resources. The problem, however, isn't necessarily one of resources, but perhaps one of perception.

Banks are exceedingly cautious

And naturally so! As a result, however, the apps that banks put out offer typically the same functionality as the online platform, acting more as an extension of the web interface rather than a new way of interacting with the bank. This, in part, can be attributed to a desire to stay away from innovation and keep security and reliability as the key goals for any deployment.

In an assessment of essential qualities in a mobile app, 38% of banks listed customer satisfaction as their top priority, followed closely by 31% for security. Interestingly, time to market was the least important of all the criteria, with a mere 6% highlighting this factor as being critically important to them.

While the approach that banks are taking is sound, the problem here lies in the fact that the market for mobile banking apps is tremendous.

In the last year, mobile banking transactions doubled in the UK alone! While the demand exists, largely because of strong, traditionally slow-moving roots, banks haven't really been able to take advantage.

Change across a half-decade

Only in the last five years have mobile apps really taken off in the way that they were originally intended. As a result, banks have been facing challenges with keeping pace.

This is fairly evident in the way budgets are allocated, for example—more than half of all major banks say that they allocate just 5% or more of their IT budget to app development. Development teams remain captive within the IT organization of the bank itself, are usually centralized, and aren't split up across platforms for more focused development.

Even the perception of the importance of mobile apps seems split across the board—nearly half the stakeholders consider apps a critical part of their digital strategy, while the other half views it as just a niche within IT.

Banks need to ramp up their app development

Captive IT teams, slow pace of change, strong roots in what is now an established online presence rather than a mobile one, and some general confusion around how to leverage the mobile platform have held back banking apps for a while now.

Making matters worse is that the rate of change in the mobile industry is far more dramatic than even the online and IT industries. Compounding this is the broad number of devices and associated device and software specifications and standards.

If banks are to find a way to meet consumer demands and yet maintain their development principles of security and consumer satisfaction, the system of app development itself needs to evolve.

In all, with the current app development scenario and the needs of a rapidly evolving marketplace, banks are finding it difficult to keep pace with evolving consumer expectations. However, with careful reevaluation of just how a bank can give consumers what they want—without making them wait too long—we should start witnessing change.

The next few years will be telling, because banks will need to either keep up, or pull out of the mobile race entirely. And with the latter obviously not an option, we'll be seeing change soon enough.

TagsMobile & onlineInnovation

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from Tushar

Is Today's Approach to Banking App Development Quick Enough?

22 July 2014  |  2913 views  |  0  |  Recommends 1 TagsMobile & onlineInnovationGroupFuture Finance

Mobilizing Your Loyalty Programs

24 June 2014  |  2638 views  |  1  |  Recommends 1 TagsMobile & onlinePaymentsGroupFuture Finance

Why and How Should Banks Target Mass Affluent Customers

01 May 2014  |  3475 views  |  1  |  Recommends 1 GroupFuture Finance

The Mobile Payment Wars: Will HCE be a game-changer for NFC

19 March 2014  |  3815 views  |  4  |  Recommends 2 TagsPaymentsGroupFuture Finance

Mobile Payment Wars: The Importance of BLE And NFC

04 March 2014  |  1666 views  |  0  |  Recommends 1 GroupFuture Finance
name

Tushar Chitra

job title

Sr. Director Product Marketing

company name

Oracle Financial Services Software

member since

2013

location

Bangalore

Summary profile See full profile »
I am Sr. Director of Product Marketing for FLEXCUBE at Oracle Financial Services. With over 14 ye...

Tushar's expertise

What Tushar reads
Tushar writes about

Who is commenting on Tushar's posts

Ketharaman Swaminathan
Daniel Eckstein
Andrew Smith
Martin cox
Paul Love