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The way bank customers access and manage their finances is evolving at a rapid pace. While the physical branch was once at the centre of a retail institution’s offering, this model has witnessed enormous change in recent years, according to a new report from the British Bankers Association (BBA) and EY. The second Way We Bank study has found that mobile and internet banking is now being used for transactions worth £6.4 billion a week – up from £5.8 billion last year.
Headlines have in the last few days inevitably focused on the shift that changes in banking behaviour are having – and will in the future have – on physical high street branches. But this misses the point of how new technology is giving individuals more control over how they manage their finances, encouraging more responsible spending. For time-poor consumers, internet and mobile banking greatly enhances the relationship that consumers have with their banks. From settling utility bills to paying back friends, it provides the ability for people to conduct essential transactions, wherever they are in the world.
Across the UK, early adopters of the online platforms and the latest mobile technology are already seeing the benefit. This is especially true of those who live in rural areas that, over the last decade, have seen a steady decline in the number of bank branches available to them, although more needs to be done to improve the reach of broadband and mobile networks in these areas. At a national level, the statistics for new services are phenomenal; mobile and tablet banking apps have been downloaded more than 14.7 million times in 2014 and internet banking services typically receives more than 7 million log-ins every day.
Of course, the industry can’t afford to rest on its laurels. Consumers and business customers expect internet and mobile banking services to become faster, more convenient and more intuitive. If, collectively we were to stand still and stop developing new offerings then they would feel let down and therefore there has been considerable focus on developing industry-wide mobile services, such as Paym and Zapp, that everyone can access.
Change hasn’t happened overnight. The major milestone in the evolution of payments in the UK was the launch of real-time payments in 2008 in the form of the Faster Payments Service. This allows businesses and consumers to transfer funds electronically between accounts held at participating financial institutions in seconds – instead of the two to three business days it used to take. Take-up has grown every year since the scheme went live and in 2014 the three billionth real-time payment was processed. From the start of 2012 every bank account was reachable through faster payments and provides the foundation for new mobile services.
The fact that mobile and internet banking is now being used for transactions worth £1 billion is a big achievement and one that has the power to bring enormous benefit to the UK economy. Furthermore, it cements Britain’s position as a global leader for financial services technology. But despite all the change, physical bank branches aren’t completely dead. The BBA report points out that more than 2,000 bank branches have been refurbished in the past two years. This is case of looking to the future whilst supporting our banking heritage.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
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Carlo R.W. De Meijer Owner and Economist at MIFSA
11 September
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