6 Mobile Banking Trends to Revolutionize Your Services

The new cohort of mobile-native FinTechs and digital-only banks have set the bar high for mobile banking. Incumbents are now forced to catch up. What’s problematic though is that some banks choose to replicate, rather than innovate their banking experience within this new medium. So how do you get the mobile banking experience right and what technologies should you rely on to drive revenues and pioneer new offerings?

Below is our take on the key mobile banking trends that incumbent companies should look into.

What is Mobile Banking

In short, mobile banking is the future of how most financial institutions will interact with most of their customers. CACI research indicates that mobile will become the most prominent banking channel between 2020-2024.

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Relying on mobile channels to meet those shifting consumer preferences is just one aspect of the matter. When backed by a strong product strategy, mobile banking applications can also turn into a standalone extension of your brand and deliver unique offerings to the target demographics (think Marcus platform by Goldman Sachs that already attracted $60 billion in customer deposits). Increased customer engagement, better marketing, and new unique value propositions are among the other benefits the mobile channel can generate for banks.

Whether you are launching a new mobile banking application or improving an existing one, below are several key mobile banking trends to keep an eye on.

How Banks Can Improve their Mobile Banking Experience: 6 Trends

ABCD-Powered Know-Your-Customer (KYC) Process

ABCD – the acronym for artificial intelligence, blockchain, cloud, and data – is becoming the new alphabet of the future of finance. Popularized by Chinese financial super apps, this tech combo enables banks to build a faster, smoother and more effective KYC experience for mobile users.

How Alibaba and Tencent Feed Data into AI for Loan Approvals

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Using a mixture of social and transactional data, Alibaba assigns custom risk scores to every mobile banking app user and proposes different interest rates. So far, MYbank has lent over $290 billion to some 16 million small businesses at a default rate of just 1%.

Other mobile-first banks such as Revolut, Monzo and the likes are leveraging AI and cloud to streamline account opening. The process of setting up and getting approved for a current online mobile banking account with them takes from 5 to 15 minutes. Both banks use smartphones native features such as camera, biometrics, and location-based services to conduct Simplified Due Diligence (“SDD”).

Biometrics-Powered Security

Biometrics as a security mechanism remains among the top financial trends year-over-year. There are several good reasons for that:

• Biometrics authentication is more secure. According to IBM, 50% of executives consider passwordless approaches to be significantly more secure than passwords vs just 30% believing the opposite.
• Such a method is also more privacy-centered since all biometrics data remains stored on the user’s device, instead of the data center or cloud server.
• Biometrics is user-friendly, especially for mobile banking solutions. Most smartphones already support a seamless collection of biometrics data – fingerprints, voice recognition, face authentication, etc. – making it an attractive choice from a CX perspective. Already 23% of the US consumers, 26% of the UK consumers and 40% of the German consumers say that they prefer biometrics over other options for online authentication.

Read more about biometric authentication best practices for the financial industry.

Marketplace Banking and Banking as a Service (BaaS)

BCG predicts that to remain competitive most businesses will need to switch to an “ecosystem business model”. Instead of attempting to do-it-all on their own, leaders will digitally join forces with other players and grow through platform offerings.

Think about the automotive sector. Most OEMs are gradually launching servitized offerings ranging from car sharing to connected parking solutions, e-vehicle charging infrastructure, and more. By plugging new players into their ecosystem, they drastically expand the scope of value-added services to consumers and gain additional revenues.

The financial industry is pursuing a similar route. Challenger bank Monzo said that their ultimate product vision is “to build a financial control centre, a single hub that you can use to manage your entire financial life”. Already, their mobile banking features include:

• The ability to switch energy providers and find a better deal
• Select different savings options from partners

BaaS (banking as a service) is among the other dominant trends in mobile banking. BaaS providers enable any company to connect with the bank’s system via APIs so that they can build a banking product on top of the providers’ infrastructure.

As a financial institution, you have two options to capitalize on the BaaS trend:

• “Open” your core banking infrastructure and deliver it as a BaaS offering (Example: BBVA)
• Leverage BaaS to expand your portfolio of marketplace products and client offerings (Example: N26 and Transferwise partnership)

Alternative Credit Score Data for Lending

Telecom data is coming to the fore as a new means for assessing the customer’s creditworthiness and gauging their ability to repay a small loan. Chinese supper apps launched this trend in business mobile banking, while banks and FinTechs in the West focus more on personal loans.

Upstart Network, one of the pioneers in the field, which relies on alternative credit data and custom machine learning algorithms to assign custom scores to customers, has already generated $4 billion in bank-quality consumer loans. Their proprietary credit scoring method approved 27% more consumers and reduced the interest rates by 3.57%. Credit-thin consumers, in particular, received higher approval rates and lower interests.

FICO is running a late-stage pilot for their new UltraFICO scoring program that would allow customers to self-submit alternative data such as payment stubs, rental, and utility payments and provide access to savings/checking accounts.

Circling back to mobile data as a credit score source, it could help banks extend their services to underbanked demographics. This global cohort is mainly served by mobile money providers and FinTech services providers. However, banks can generate an extra $380 billion in revenues by catering to unbanked/underbanked customers and micro-enterprises.

Mobile phone subscriptions and usage can be a good proxy for the customer’s income, financial literacy, consumption patterns, and overall lifestyle. More specifically, you can collect the following data from MNOs:

• Mobile account summary
• Raw Mobile Usage Data
• Monthly & daily account history
• Top-up history
• Call & SMS records
• Mobile wallet transactions

Tala, a lending startup operating in emerging markets, relies on the customer’s texts, calls logs, online merchant transactions and several other behavioral data points to build a custom credit profile for each user and extend respective credit.

Voice Commands and Voice Payments

Voice is rapidly becoming another venue for commerce. Last year, 9.6% of consumers made voice payments. Further, by 2023, voice shopping is expected to hit $40 billion in the US as the adoption of smart speakers surges. While payment services providers (PSPs) rush to create new infrastructure for supporting voice-authenticated payments, banks should focus on improving voice support within their mobile banking apps.

USAA, Wells Fargo, and OCBC Bank have already made voice commands one of the competitive advantages of mobile banking for their customers:

• USAA introduced a conversational coach to improve users’ financial literacy
• Wells Fargo supports in-app voice search
• OCBC in-app assistant provides information about various transactions, spending categories, and bill payments.

Mobile Photo Deposit Functionality

Mobile deposit is another feature that the best mobile banking apps offer. According to Cornerstone Advisors report, check deposits are the third most used feature (54%) in mobile banking, coming before bill payments (55%) and balance checking (69%). This feature is particularly popular with younger consumers (aged 18-24) as they are constantly short on time and patience to visit the branch.

Adding this feature to your mobile banking app can give you a major CX advantage over the competition. Moreover, mobile photo deposits can also reduce the load on your staff and save you some operational expenses.

To Conclude

It’s certain: mobile banking will remain in mass demand for the decade to come. However, to capture tangible benefits from this channel, banks will need to shift their focus from merely adapting their core services to the new screen sizes to creating mobile-first experiences, driven by native smartphone functionality.

Let’s develop a better mobile banking experience together! Learn how Infopulse can help you sustainably transform your core financial systems and supporting infrastructure with new technologies. Get in touch with us!