Three Top Trends in Mobile Banking: What You Need to Know

mobile-banking-6-21-17.pngIt comes as no surprise that today’s banks need mobile solutions to stand a chance of satisfying their customers. You’ve probably heard of the Big 5 of mobile banking, the essential features that are now an absolute must-have for the modern customer, including: the ability to transfer funds between accounts, pay bills, make deposits, locate ATMs and branches and conduct peer-to-peer payments.

These essentials are an excellent starting point for banks developing mobile solutions. However, the truth of the matter is that the basics are no longer enough. Any bank that has entered the 21st century provides their customers these capabilities. In order to differentiate their products, drive profits and keep their customers satisfied, modern banks must find ways to use mobile to offer customers more value and convenience and be more relevant to their daily lives.

Many of the largest banks have already realized this and have been working diligently to develop creative new solutions. Perhaps that’s a large part of why these banks have managed to pull ahead of community banks in customer satisfaction rates, a surprising development considering that community banks are commonly thought to have the personal touch.

However, who’s really owning the mobile banking space are companies that aren’t banks at all. Apps like Venmo have taken the mobile banking world by storm and are edging banks out of their rightful place as financial service providers. To stay on top of the latest mobile banking trends, banks should keep an eye on three larger mobile trends and follow suit with their own offerings.

So, what’s the latest?

No. 1: Intuitive Interfacing
The banks who have been most successful with their mobile banking have found ways to make the experience as intuitive for their customers as possible. One of the ways they’ve done this is through eliminating complicated menus and interfacing mobile capabilities into the features that customers are already familiar with.

For example, customers can now use their smartphones’ voice control to request and make payments from PayPal’s Venmo, one of the most popular peer-to-peer payments apps. Users don’t have to navigate the app—or even directly use it—to transfer money between friends. Instead, they can simply instruct their phone and their payments are taken care of.

To ensure their mobile offerings are attractive, banks should first and foremost make sure they’re easy-to-use and provide customers with a seamless experience they don’t have to think about twice.

No. 2: Artificial Intelligence
Voice-activated devices like Amazon’s Alexa have recently introduced artificial intelligence into the mainstream. Banks on the cutting edge have already recognized this technology’s potential to provide an enhanced customer experience that offers more value and have begun capitalizing on it.

Perhaps the best example of this is Erica, Bank of America’s soon-to-be-released chatbot, which can now go beyond the Big 5 basics to impart personalized advice on customers’ finances.

Companies outside of financial services are finding creative ways to utilize artificial intelligence as well. One interesting example is the app Digit, which helps the user build savings by connecting to his or her checking account and automatically making transfers to an FDIC-insured savings account based on income and spending activity. Users no longer need to think about practicing better financial habits; instead; they have an algorithm to do it for them.

No. 3: The Subscription-Based Model
Subscription-based services like Spotify, Netflix and Amazon Prime are influencing purchase trends and consumers’ expectations of the companies they work with, including their banks. These fee-based services offer value at an affordable price and can easily be controlled and customized based on the user’s need.

Also interesting to note is that a recent survey indicated access to discounts as a primary impetus for customers to not switch from their current bank. Money-saving deals can promote better fiscal health and allow customers to save more than they’re able to make in today’s interest rate environment. Plus, the bank is at the point of sale whenever consumers make a purchase.

The payment models utilized by services such as Amazon can clue banks in to how they should structure their own mobile offerings. And in fact, the top six banks have all been developing their own rewards-based shopping programs, which may be part of the reason why they’ve managed to pull ahead in customer satisfaction.

These are just a few of many mobile trends that are currently all the rage in banking. But it’s important to remember that mobile is ever-evolving, and today’s trends won’t be tomorrow’s. Banks must be ever-vigilant about observing what’s happening in the mobile space and think about ways they can keep innovating their own offerings to stand apart from the crowd and make sure their products and services please their customers.

Facebook is Hungry for Mobile Payments

Facebook isn’t just satisfied with having more users than any other social media in the world. They’re craving their piece of the future of mobile payments. With the recent announcement to offer peer-to-peer payments through its Messenger app, Facebook is seeking to establish a deeper connection to users’ finances and to take a bite out of traditional financial transactions.

Facebook Payments is completely free and will first be available via Messenger to users in the U.S. only. The feature can be used on the desktop or within the Facebook Messenger app, which launched last year as a companion to the Facebook app. Once a Visa or MasterCard debit card is linked to the Facebook account, users can open a chat with a friend, tap the dollar sign icon, type in the dollar amount and press send. That money is deposited to the friend’s bank account within a few days.

It’s a similar process to the already extremely popular peer-to-peer payments app Venmo, owned by PayPal, which was one of the first apps to take a social network approach to mobile finance. With Venmo though, you see payment interactions between all of your friends in the app. It doesn’t show dollar amounts, but the captions, comments and likes between users tell a story of what those people are up to and spending money on, and with whom, which is a lot like what you discover scrolling through a Facebook News Feed.4-17-15-SC_venmo.png

The move to make Messenger a separate app from Facebook, disassociating it with the News Feed and adding more privacy, was strategic though. Rather than mixing your payments with everything else you find on Facebook — pictures and posts from friends, games, location check-ins, advertisements — it may make handing over your payment information more appetizing if it’s in a separate app within a private message.

Steve Davis, product manager of Facebook Payments, said in a TechCrunch interview that “conversations about money are already happening on Messenger,” such as people chatting about splitting the check for dinner, travel plans or purchasing concert tickets. “What we want to do is make it easy to finish the conversation in the same place you started. You don’t have to switch to another app,” says Davis.

Introducing peer-to-peer payments into its Messenger app was rumored for months before being officially announced in early March, one of the earliest signs being the hiring of the past PayPal president David Marcus to lead Messenger. That Facebook Payments announcement was soon followed by the Facebook F8 developer conference, where Business on Messenger was also unveiled, a feature that will soon allow customers to chat with merchants directly through Messenger about orders and shipping updates. Plus, Facebook announced software tools that make it easy for third party developers to integrate with Messenger—a move that eventually may lead to accepting payments from users via the Messenger app.

While Facebook may not be charging fees for payments in the beginning, there is potential to generate additional advertising revenue in the future, which already brought in over $3.5 billion during the fourth quarter of 2014. When Facebook gains access to users’ payment details and is able to track what people are buying, it’s likely they can also deliver even more highly targeted advertising.

Facebook Advertising started out small and inexpensive but has spent years nipping away at traditional advertising, until it’s now one of the most sought after methods of targeted advertising, and it is only gaining more traction. So while Facebook may be taking small bites of payments now, it has the potential to be one of the biggest financial disruptors yet, simply because of its reach to 1.19 billion mobile monthly active users, about half of those in the U.S., and already 500 million people using Messenger.

Who knows how Facebook’s introduction to finances will settle with people, but if peer-to-peer payments is only its first course, Facebook has a lot more to devour along its way to disrupting traditional financial relationships.