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Extinction, or revolution: has the time come for banks to move away from dedicated apps?

Mobile banking applications have become a common resource for customers over the past decade, from checking balances to transferring money between accounts and setting up new payments. The boom in digital-first challenger banks such as Monzo has seen high-street banks roll out new app features to compete and keep pace with customer trends. 

With features such as face-authorisation for payments or allowing people to completely switch off spending, banks like Lloyds and RBS are ploughing money into banking applications – but is their investment misplaced? The main functions consumers need from banking apps are now also available on communications channels such as Facebook or WhatsApp that customers already use and are comfortable with. Trends show social media is likely to become more of a one-stop-shop in the future – just look at Instagram’s new shopping capability. Banks have to be able to pivot and adapt their offering to changing customer sentiment. Ultimately the customer experience needs to be as pleasant and secure as possible, which means taking place where consumers are most comfortable.

As banks continue to close physical branches, there’s no guarantee they won’t start doing the same to their apps in the future, if customer usage goes down. Banks need to recognise that modes of communication may continue to change, but customers will always crave convenience, consistency and relevant information. They must be willing to re-assess their approach, no matter what new form communication will take in the future.

 

The easier the better 

Recent developments in the finance industry are helping facilitate this simpler approach for consumers. For example, PayPal and Facebook have enabled payments in Messenger, whilst Open Banking allows bank customers to see all their current accounts, savings and credit cards in one place. However, these developments are not largely coming from the traditional high-street banks, which is concerning. Especially as Gartner has predicted that by 2030, 80 percent of banks will be made irrelevant by competition. If high-street banks don’t improve their ease of use and change the status-quo, they risk handing their customer relationships over to digital-native challengers.

For instance, the majority of consumers want a quick, easy way to speak with their bank. Yet most banking apps still don’t have a chat functionality or other automated features – account updates such as changes of address or new standing orders often still need to be done in person. A perfect example of poor customer communication in banking is TSB’s online banking meltdown last year. The consequence of not sharing details with customers was uninformed, frustrated consumers ready to leave TSB for pastures new – which thousands ultimately did. 

The driving force behind the success of digital competitors like Starling Bank and Monzo is that they have ease-of-use and 24/7 customer service at their core. Traditional banks need to change how they provide customers help in the age of the always-on consumer. Technologies such as face recognition are all well and good, but it is far more important to be available to customers. 

 

Be at the right place, all the time 

Customers will always have questions about unexplained transactions or un-completed payments – money is a sensitive issue, requiring care and attention from those handling it. But how can this availability be achieved, if branches continue to close down and chat functionality isn’t widely offered on high street banking apps? Banks need to look at other ways they can reach customers, offering added functionality on the devices they use, ultimately making it easier for them to get the answers they need. 

A key piece of the puzzle that banks are currently overlooking is proactive communication. Sending push notifications when customers are close to their overdraft limit, or providing regular balance updates, makes users feel informed and builds trust that the bank is on their side. These can run through an app, but should work in such a way that customers eventually won’t even have to open the app, as their needs are understood and pre-emptively dealt with.

 

A new day is dawning 

Mobile banking applications have been a great resource for banks, and have enabled many to differentiate themselves from the competition. However, as customer behaviour evolves, the way banks engage with customers must change too. Instead of focusing solely on mobile application functionality, banks should be looking at how customers now want their account information sent to them, finding ways to add value through proactive communication.

It’s just as important to re-evaluate the language used by banks to communicate with customers as part of this process. The traditional banking experience of customers donning their suits to attend in-branch meetings with their bank manager no longer exists. Digital challengers have managed this pivot well. For example, Revolut now share informal, emoji-laden push notifications welcoming customers back home after time abroad. This personal touch improves the customer relationship and shows understanding of how they like to be communicated with, mirroring the conversational style they’re used to when engaging with customer services on platforms like Twitter.

‘The easier, the better’ now seems to be a customer experience mantra across most industries. It’s no longer good enough to just be a safe pair of hands with money, banks must now work to make things as convenient as possible for account holders at the same time. Ultimately, perfecting the customer experience should be the top priority for banks, regardless of the method being used to delivering it.

 

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Comments: (2)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 August, 2019, 11:552 likes 2 likes

Good post. CX is key but banks don't seem to accept it. A recent experience: My credit card issuer - a Top 5 UK bank - recently launched chat. I wanted to inquire when I'd get the PIN for my new credit card. The CSR told me not to enter the credit card # in the chatbox. I asked why. He said, I should share sensitive info only on a secure channel like PhoneBanking. I posted on Twitter saying this bank seems to be emasculating chat channel to protect jobs of call center employees. It replied back saying phonebanking is secure. I said any channel can be made secure. If it implies that chat is not secure, then I can't believe its claim that its phone channel is secure.

Long story short, its chat was useless, I had to keep calling phonebanking to get my PIN. All this while, my new credit card was as good as not-activated beause I wasn't able to use it without PIN, it was more than a month since I got the new credit card, the bank lost interchange revenues, nobody but me seemed to care. Around the same time, I read about Apple Card and how it can be activated in 3 minutes!

Sigh, I wonder when will banks learn to remove friction and enhance CX!!

Maximiliaan Van De Poll
Maximiliaan Van De Poll - Cybernetica - Tallinn 29 August, 2019, 12:50Be the first to give this comment the thumbs up 0 likes

Really great post, Andrew. Very insightful and genuinely interesting.

It's funny you say that it's "no longer good enough to just be a safe pair of hands with money", as many of the incumbent banks are failing at even being that, while the newer kids on the block start day one with strong authentication solutions.

Estonia is a good market to look at where the big banks act like the new kids, offering integrated services and slick apps that notify you when money comes in or goes out, with top security that only takes 4 seconds for log in and transaction verification.

Yet to have chat options in-app though. It'd be a good addition.

Thanks again for the post.

Andrew Stevens

Andrew Stevens

Global banking and financial services specialist

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