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The curious case of Online Banking

Online Banking

Are mobile apps making online banking obsolete? Statistics paint a different narrative.

Today, we live in an extremely connected-world; one in which smartphones are near-ubiquitous, and access-to-internet is considered an essential-service. Almost all digitally-active individuals of the banking-population seem to own and use a smartphone.

So, in this Mobile-First era, should banks persist with ‘Online Banking’ service? Who really uses it? Why not migrate every account and functionality to the mobile app? What justifies the continued investment in sustaining the Internet/Online Banking platform?

My curiosity drove me to objectively evaluate the trends, statistics and forces influencing the adoption across the Mobile and Online channels. As I delved deeper, a different narrative shaped up.

Over the years, Bank of America (BofA) has championed serval innovative digital-initiatives. In June 2018, BofA launched their chatbot – Erica, and made it available to all their mobile users. In about a years’ time, Erica has become one of the most popular and rapidly adopted chatbot in the Financial Institution (FI) ecosystem. Now theoretically, given the best in class mobile app and chatbot that BofA offers, all of their digi-savvy customers must have migrated entirely to mobile-apps, right? 

However, statistics indicate otherwise. As of June 2019, BofA has about 27 million active mobile users and about 10 million ‘online banking’ customers who do not use the mobile-app. Among BofA customers, adoption of mobile-apps has not meant the abandonment of Online-Banking.

Kindly note that these 10 million are internet-aware and tech-savvy customers and in all probability have and use a smartphone. BofA understands and acknowledges what is happening here. A third of it’s digital-customers have a clear channel preference – Online Banking. It needs to be respected. So, in the near future, BofA plans to extend their award-winning bot, Erica to its ‘Online Banking’ customers as well.

Among the end-customers, the adoption of Mobile-Apps has not come at the cost of abandoning the Online-Banking channel. The lesson for FIs then, is to not ignore the online-banking platform in pursuit of mobile-first design/approach.

The relevance and continued-usage on Online-Banking platforms can be explained by the 3 Perspectives (3P) that favor them.

The three perspectives (3P) are,

1. Varied personas and preferences

Not all customers are alike. For the FIs, it’d be wise to segment the customers within each category (Retail, Corporate, SME) into several personas. These personas, must take into account the demographics, and behavioral traits among other things. A good example/template of Persona classification is shared within the ‘Accenture 2019 Global Financial Services Consumer Study’. In this study, the FI customers are categorized into four personas – Pioneers, Pragmatists, Skeptics and Traditionalists.

The study details, along with statistics, how each persona vary in their preference and adoption of various services and channels.

2. Everybody needs an alternate channel – even your Mobile-First customer

More often that we realize, that our phones are not handy or have simply run out of juice. The online/internet banking platform is still the second-best option.

Also, a transaction (ecommerce or peer-transfer, for example) that starts off in a laptop/tablet tends to favor ‘Online Banking’ as the channel of payment. This helps complete the purchase/payment in the same device, instead of switching devices.

3. Real-estate on the phone

Personally, I hold accounts across 3-4 different banks.  It is neither optimal nor logical to install 4 different banking apps on my phone all the time. Because, there is only so much real-estate on my phone screen. Also, I believe that any app that I wouldn’t use at least a few times every, month is not worth installing. So, when I need to transact with my non-primary account, I rely on internet banking. Don’t we all?

These considerations are valid realities, and strong use-cases is support of Online Banking platforms.In short, the Online Banking platforms still has several compelling use-cases and is expected to remain relevant for a long time. They still have a vital role in meeting the customer requirements and also furthering the banks’ vision. 

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Comments: (7)

Melvin Haskins
Melvin Haskins - Haston International Limited - 17 October, 2019, 08:301 like 1 like

First, my laptop has far better security than my phone and for banking this is extemely important. Second, most apps farm information from your phone and I seriously object to this. Third, I do not use my bank account often enough to warrent needing it on my phone.

Jayanth Jagadeesh
Jayanth Jagadeesh - EdgeVerve - Bangalore, India 17 October, 2019, 09:03Be the first to give this comment the thumbs up 0 likes

Hi Melvin,

I agree with you on all the points. 

1. Better security 

2. Overlooked by App-Farms 

3. No need to download an App

 

Thanks for sharing your opinions. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 17 October, 2019, 13:351 like 1 like

I didn't like the UX of my mobile banking apps when I first tried them 3-4 years ago and deleted them within a few days of installing them. Because of that, and pretty much all of reasons mentioned in #3, I don't have a single mobile banking app on my phone now, although I've been using online banking for +15 years.

That said, four years after I installed and wrote about it in HDFC Bank's PayZapp Ends My Bill Payment Woes, PayZapp, the mobile payment app from my bank, continues to be my go-to digital payment method.

Jayanth Jagadeesh
Jayanth Jagadeesh - EdgeVerve - Bangalore, India 18 October, 2019, 03:37Be the first to give this comment the thumbs up 0 likes

That's an interestring story. Thenaks for sharing Ketharaman Swaminathan. 

Just curious, how does PayZapp stand against more formidable competitors like iMobile, GooglePay, AmazonPay or PayTM ? 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 October, 2019, 11:371 like 1 like

@JayanthJagadeesh:

Just struck me, a mobile app is something we own ("I have a mobile app") whereas a website is something we use. It's human psychology to own only what we like but, when it comes to mere use, we can tolerate things that we don't necessarily like. Not surprisingly, the CX bar for mobile app is far higher than that for website.

Sorry I don't know what is iMobile.

I think it's terribly dumb to let a Merchant dip into my money without my permission and, on top of that, gain the ability to post negative updates on my CIBIL credit score in return for the peanut credit they give (if at all). As a best practice, I keep my merchant and funding source separate. So I totally avoid merchant payment services such as Amazon Pay, Ola Wallet, etc.

I believe bank account linked payment methods like UPI, Google Pay, PhonePe, Zelle, etc., are unsafe, especially those that support PULL method of payment like all UPI apps. But I gave Google Pay a try just for the heck of it. I didn't like its CX, I deleted it. I described five friction hotspots in GPay on Quora but my answer has gotten merged into oblivion. If I find it, I'll post a link here. 

I quite like PayTM the product but my trust in PayTM the company has eroded over time

I like PayZapp because, unlike PayTM, it supports 1-Tap frictionless payment even without having to load any money in its wallet. In other words, if I have zero balance in my PayZapp wallet - as I do - I can still fund a payment directly from my credit card on file without going thru' 2FA / VbV / OTP friction. This is not possible with PayTM.

(In the non-UPI mode) PayZapp's instore merchant acceptance network badly lags that of PayTM. Ergo I still use PayTM when I can't use PayZapp.

Jayanth Jagadeesh
Jayanth Jagadeesh - EdgeVerve - Bangalore, India 19 October, 2019, 05:34Be the first to give this comment the thumbs up 0 likes

@Ketharaman Swaminathan 

I liked your opinion on the psychological bias of 'I have' over 'I use'. It's an interesting perspective - I must delve on it further. 

On the UPI enabled payemnt modes (GPay, Amazon Pay etc), I don't think they can dip into your funds without permission. The PULL feature merely (for now) virtualizes the payment details (sender, amount, bank account, IFSC) and sets up alerts. Eventually, as a user you must approve the payment with two-factor-authentication (App login and PIN). 

Interesting to know about PayZapp's tap-and-go feature. I assume, the limit for contactless payments is Rs. 2,000, right? 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 October, 2019, 13:32Be the first to give this comment the thumbs up 0 likes

@JayanthJagadeesh:

Not true in my context, which is Single Immediate Payment via PULL mode (although you're probably talking of a different context of setting up a recurring payment mandate). While entry of UPI PIN is required to authorize the SIP, ICYMI, several frauds have been committed via social engineering in UPI, Zelle, FPS and other A2A payment methods worldwide.

Sorry you've misunderstood my PayZapp 1-Tap feature. It's not Tap-and-Go, does not use plastic card, is not subject to INR 2K limit. You scan the mVisa QRC at the Merchant Establishment, enter any amount you want to pay, and PayZapp completes the payment in a single tap by drawing funds from the credit card on file without 2FA / VbV / OTP friction.

Jayanth Jagadeesh

Jayanth Jagadeesh

Product Marketing

EdgeVerve

Member since

02 Aug 2019

Location

Bangalore, India

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