• Thu. Dec 1st, 2022

Switch to Mobile Banking 3.0

ByCindy J. Daddario

Jul 28, 2022

Mobile was already a hot spot for banking in the years leading up to the global pandemic, but when established ways were instantly upended in the spring of 2020, the heat turned scorching.

Being stuck indoors has pushed even those dependent on traditional bank branches to become digitally savvy: Over 65% of consumers are using mobile apps more frequently, and the majority expect to continue to do so , according to S&P Global Market Intelligence’s annual U.S. Mobile Banking Survey.

“The convenience that mobile banking offers its customers is too powerful to ignore,” says Evan Albert, co-founder of SeamlessChex, which provides solutions for merchants to send, accept and verify payments online. line.

Meanwhile, bank branches continue to disappear. S&P reported that banks closed more branches in 2020 than in any other period in the past 10 years. This pace has accelerated in 2021 and closures are also expected to be widespread this year.

BAI’s Banking Outlook research shows that mobile banking is expected to grow to around 22% of channel usage in three years, while online usage will be stable and usage of branches, in-car services and contact centers will shrink.

But simple applications are no longer enough. Hot topics include cardless ATM withdrawals, QR codes and voice-initiated payments, says Tom Thunstrom, financial analyst at the University of Delaware’s Small Business Development Center. Other trends include personalized messages, facial recognition, virtual branches, cryptocurrency services, and integrated banking services, such as “buy now, pay later” options that are becoming more prevalent on websites. sale to detail.

Tech titan Apple has announced Tap to Pay on the iPhone, a move that should allow millions of merchants to seamlessly accept Apple Pay, contactless credit and debit cards and other digital wallets via a simple telephone contact with no hardware or terminal required.

“Adding this functionality to mobile banking apps would allow banks to better serve small businesses,” says Richard Crone, CEO of Crone Consulting LLC, an independent consulting firm specializing in helping businesses integrate free software capabilities. -mobile service to payment optimization strategies. “It’s important because more than half of a community bank’s profits come from serving small businesses.”

Agile startups are also lurking around every turn, ready to disrupt an industry that some say was too slow to realize the need for change in the branch banking model.

“Fintechs are definitely going through the golden age,” says Ivan Kot, director of Itransition, a Colorado-based software development company. “When digitization accelerated due to the pandemic, they had more options and experience to innovate. They have built partnerships with traditional banks and young financial startups, making the best of both worlds.

Since larger banking institutions have more resources, they can switch to mobile banking quickly and easily. According to Albert, this leads to a loss of business for some small banks and an increase in business for larger ones.

According to Thunstrom, regional banks have been more likely to partner with fintechs for innovation, while smaller banks often work with vendors. “These companies are relatively modern and aggressive – for the right price – in helping community banks meet their mobile banking needs,” he says.

Community banks, meanwhile, continue to work to find their niche. “The challenge with community banking is maintaining relevance in a market where you’re competing against national brands that may innovate faster and a younger population that may not be as loyal to the small town community banking model as you are. ‘She’s looking for a brand or a bank. That’s innovative,” Thunstrom said. “You may see some community banks focus more on small businesses or targeted segments of the market to stay viable.”

As consulting firm West Monroe put it in a recent report, “The events of the past two years have forever changed the way banks will do business. In what was already an industry facing challenges with customers and customers wanting a simpler, more technological way of doing business, life under pandemic conditions has only amplified those desires.

One thing is now certain, the report continues: “Banks of all sizes must become digital businesses, not only in terms of interactions with their customers, but also by digitizing and modernizing all facets of their operations, products and experiences. “.

Dawn Wotapka is a BAI Contributing Writer.

Gain insight into where mobile banking is heading with BAI’s executive report, “Mobile Banking is on the Move”.