Best Mobile Strategy

November 29th, 2017

Summary Analysis

A.pngdoption of mobile banking isn’t yet universal. Even at the largest banks, only 52 percent of customers use their bank’s mobile app, according to a 2016 study by global technology firm Mitek Systems and the consulting firm Futurion. Still, for many Americans, mobile is a deciding factor in choosing where to bank. Forty-six percent of consumers say that an institution’s mobile banking service is important in choosing their primary financial relationship, according to research conducted by the firm Raddon, a Fiserv subsidiary.

To determine which bank of the 10 largest in the U.S. has the best mobile strategy, Bank Director evaluated app downloads in aggregate and based on size, meaning the four largest banks were compared to one another, and the smaller six compared against their peers. Mobile features within each bank’s retail app and how customers rate their experience, based on app store reviews, were included in the algorithm. Bank Director also surveyed industry experts. The best banks invest in and improve the mobile experience and have an app that their customers want to use.

JPMorgan Chase & Co. has been highly successful in driving its customers to mobile, scoring highly for its digital footprint and high customer satisfaction scores. To JPMorgan Chief Ex-ecutive Jamie Dimon, mobile adoption is a competitive strength. “We have 23 million customers who bank on their phones now. It will be a challenge for anyone to be better, faster, cheaper than us,” he said in an interview with Bloomberg Markets in 2016. That number topped 28 million active mobile users of the second quarter 2017, according to the company—an increase of more than 20 percent in a little more than a year. Based on the breadth of features available through its app, Chase doesn’t exhibit the highest level of innovation, but customers are happy, reporting an average rating of 4.55 out of 5 stars from iTunes and Google Play customers earlier in 2017.

Jamie-Dimon.png“They have really worked to get their customers to embrace and adopt mobile,” says Jim Burson, senior director at the consulting firm Cornerstone Advisors. Chase barely edged out Bank of America Corp. and Capital One Financial Corp. for best mobile strategy. Bank of America and Capital One tied at second in the category ranking and, like Chase, score well for customer satisfaction, but Chase surpasses the two in mobile adoption. However, compared to the regional banks in the ranking, Capital One far exceeds its peers, with more than 19 million downloads—similarly sized PNC Financial Services Group, which ranks sixth, touts 4 million downloads. Bank of America and Capital One excel compared to Chase in terms of the features embedded in their apps.

Wells Fargo & Co., at fourth, also offers a more innovative mobile app than Chase in terms of number of features, but performs slightly below its peers in terms of customer downloads and satisfaction. The largest banks, for the most part, exhibit the most mobile strength in the ranking. Citigroup, at seventh, is the exception, and is the poorest performer of the four largest retail banks. Its level of adoption compared to peers is the lowest in the ranking, and it places solidly in the middle in terms of mobile features and customer satisfaction. Citi has a smaller retail banking presence but a big credit card business, not unlike high-ranking Capital One. Citi also has a large international market, but Bank Director’s study evaluated adoption, via downloads, of each bank’s primary retail banking app in the U.S.

Coming in at fifth, U.S. Bancorp performs well compared to its peers when it comes to mobile downloads. Until recently, the bank was one of the few in the country—and the only bank in this ranking—that charged for mobile deposits. Despite this, it exhibits above-average adoption of mobile, based on downloads. However, U.S. Bancorp rates lower for mobile innovation and exhibits the second-lowest customer satisfaction score in the ranking.

Of the remaining large regional institutions, PNC ranks sixth, BB&T Corp. comes in at eighth, TD Bank (U.S.) ninth and SunTrust Banks at tenth. PNC performs the best of the four in terms of mobile downloads, and both SunTrust and PNC are favorably rated by their customers. BB&T overhauled its app in late 2015 and added a number of features, but as of the end of 2016 exhibited a low level of adoption. Customer satisfaction scores were low as well.

The number of Americans using mobile banking could reach 60 percent by 2019, according to Raddon, so getting mobile strategy right is only going to become more important for banks hoping to please customers.

How They Ranked

      SCORE MOBILE DOWNLOADS, 2014-2016 CUSTOMER RATING (AVERAGE)
  1 JPMorgan Chase & Co. 2.25 29,981,150 4.55
  2 Bank of America Corp. 2.75 26,561,621 4.5
  3 Capital One Financial Corp. 2.75 19,479,507 4.55
  4 Wells Fargo & Co. 4.13 25,293,242 3.6
  5 U.S. Bancorp 4.13 4,910,627 2.95
  6 PNC Financial Services Group 5.13 4,122,381 4.4
  7 Citigroup 6.13 6,856,884 3.75
  8 BB&T 7.88 3,101,199 2.65
  9 TD Banks (U.S.) 8.00 3,886,270 3.3
  10 SunTrust Banks 8.13 2,438,203 4.2

Did You Know?

T.pnghe smartphone was introduced a decade ago, and mobile banking has been around long enough for the largest banks to define the landscape for the rest of the industry. But despite its maturity, the industry’s approach to mobile strategy is now rapidly evolving. Everything from chatbots to voice-activated services have joined advanced person-to-person payments and other features in the last couple of years. JPMorgan Chase & Co. leads the field for mobile banking strategy, based on customer adoption and satisfaction, but Bank of America Corp., Capital One Financial Corp. and Wells Fargo & Co. lead the field among the 10 largest retail banks in offering the features that customers want to use today. Predicting how the mobile channel will evolve and which features will resonate with customers can pose a challenge, but each of these banks is exhibiting success in making good choices in upgrading their apps.

Card management functions, such as the ability to turn a debit card on and off or the ability to activate or replace cards, can be incredibly useful for consumers. "If it’s done properly, you’re turning the card on and off in real time—it’s just useful," says Robb Gaynor, chief product officer at Malauzai Software in Austin, Texas. These features factored into Bank Director’s analysis of the top mobile strategies. Bank of America, Capital One and BB&T were among the banks that feature both the ability to turn a customer’s debit card off and on, and activate or replace a card, within their apps.

Easy navigation is another customer-friendly feature. “Now that mobile has become the hub of many customers’ relationships with their banking providers, it is no longer sufficient to just have a hamburger menu,” featuring all the bank’s mobile options, says Peter Wannemacher, a senior analyst at the research and advisory firm Forrester.

Hamburger menus have been commonly used in mobile apps, typically as a top corner button that lists a user’s options. Innovative banks are experimenting with artificial intelligence to upgrade their mobile experience. USAA, which is not included in Bank Director’s ranking, includes a chatbot in its apps to assist customers, for example. Bank of America is currently fine-tuning its voice-enabled digital assistant, Erica, to handle customer requests, which is expected to be live by the end of 2017. A few banks, including Capital One and U.S. Bancorp, use external platforms like Amazon’s Alexa digital assistant to help customers handle some banking functions.

Jim-Burson.pngEarly feedback by customers on voice interactions has been positive, says Jim Burson of Cornerstone Advisors. "It’s going to be interesting to see how a proprietary concierge like Erica, which is around a mobile-first kind of [approach] that Bank of America is doing, resonates versus [Apple’s] Siri or Alexa, which are platforms."

Also, banks are increasingly working to retain control of the payments function as mobile payments gain importance. According to a J.D. Power study conducted in April and May of 2017, 69 percent of consumers had used a mobile payment service within the past month, with adoption highest among millennials and Gen Z, the now youngest generation of consumers born between 1995 and 2004. More than half say they use PayPal, and 11 percent use Apple Pay. Fewer than 10 percent use Venmo, Android Pay or Samsung Pay.

Zelle is the person-to-person (P2P) digital payments service developed by the technology company Early Warning, which is owned by a consortium of the largest U.S. banks. Zelle was unveiled in June 2017 and was immediately made available to all the customers of the banks in this ranking, with the exception of BB&T Corp., which was expected to include Zelle in its app in the next wave as the ranking went to press. Zelle is a real-time payments app, unlike Venmo, and payments will be immediately transferred to a receiver.

It’s not clear how important real-time payments really are to consumers. Malauzai conducted a study that found that most Venmo users just leave the money received from their friends and family in their Venmo account, but the real attraction may be the fact that it’s digital, quick and simple, and check-free.

With Zelle fast becoming the standard at the largest banks, smaller institutions are expected to eventually incorporate it into their own apps, despite the expense and questions around whether it’s more valuable compared to other P2P services currently offered through mobile providers. "Our banks are lining up to do Zelle," says Gaynor. Zelle announced in September of 2017 that it will unveil a separate app, like Venmo, that you could use whether or not your bank is a member of the network. This could increase adoption of Zelle by consumers as a method of payment.

Bank Director Research Group