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Impact of Mobile Banking Applications on Financial Industry


Over the last couple of years, mobile banking applications have become a standard of service for almost all financial institutions. Hence, merely introducing a mobile banking app is not enough. Financial institutions now need to have a successful mobile banking strategy to gain competitive advantage.

Insights into Mobile Banking in 2018

Mobile banking is very popular among the millennials. According to Juniper research, digital banking users will reach 2 billion in 2018, representing nearly 40% of global adult population. Mobile banking users will grow 14% year-on-year, compared to 6% for online banking.

Digital-only customers now account for nearly 30% of retail bank clientele in the United States. However, according to the 2018 US retail banking satisfaction study, customers who only use online or mobile channels are the least satisfied. The most satisfied ones are those who can access the branch as well as digital channels. The reason behind low satisfaction level among the digital-only customers is because of the below three factors that do not meet the expectation.
• Communication and advice
• Products and fees
• New account opening

The banking industry still has put a lot of effort to bridge this digital divide. Here are some of the trends that financial institutions have already started focusing on in 2018.

Top Digital Banking Trends

1. Chatbots – Banks have started using chatbots. Chatbots help banks to communicate with their customers on a large scale in a user friendly way. Bank of America launched its chatbot “Erica” in 2017. Erica is integrated with BoA’s mobile banking app. It uses artificial intelligence (AI) and predictive analytics to help customers make smarter financial decisions. It also, enables customers to make payments, check balances, save money and pay down debt. Similarly other banks have also, started using their own version of chatbots.

2. Open API Economy – Nowadays, a simple mobile application for basic banking functions is not enough. Banks have started providing value added services in the app independently or by collaborating with fintech providers. This has been made possible by using accelerated programming interfaces popularly known as APIs. APIs allow fast and secure data sharing between systems. Therefore, adding new features to existing apps or building exciting new apps has become very easy via the open API economy. Offering value added services in the mobile app provides more features and flexibility to the customer, which in turn drives more transactions through the mobile channel. The Opne Bank Project offers an API and app store for banks. Here, banks can quickly deliver a range of digital offering by using 3rd party applications and services.

3. Blockchain – Blockchain technologies have the potential to overcome many of the hurdles that mobile banking still faces. Most governments are encouraging more and more cashless transactions and usage of electronic wallets. Blockchain ensures that these transactions are secure. It helps prevent fraud, double-spending and price gouging while also, making mobile payments faster.

4. Banking as a Service – BaaS extends banking services outside the branch and the traditional working hours. Banks are becoming more flexible by incorporating technology into all of its operations by sharing their expertise. With BaaS, banks can take the best of the already existing services and leverage those to form their own offerings, made possible through APIs. This openness and sharing of technology has allowed the industry to scale massively and also, get faster access to the newest features.

The relationship between the bank and its customer is shifting. It is now driven by decreased reliance on a physical branch and greater adoption of mobile technology. 36% of the world population uses smartphones with more than 4 billion people around the world using the internet. As we see more and more people get access, innovations in technology will also intensify. The banking industry is likely to get transformed completely in the coming years.

Shuvro Shankha Sarkar
Senior Consultant Marketing

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