Mobile banking apps: industry overview + looking forward
This isn’t surprising in many ways. Consumer banking has moved from the teller’s window to the ATM to the personal computer over the years, as busy customers try to avoid long lines and inconvenient branch hours, and more and more people get their paychecks deposited directly into their bank accounts.
Retail chains such as Starbucks, meanwhile, have begun to implement mobile payment methods linked to rewards accounts or advance orders. Credit cards have gotten into the act, too, and individuals have begun using apps such as Cash App and Square to send money to each other.
Bank accounts are a logical next step. Institutions such as Bank of America and Wells Fargo have developed mobile banking apps, and consumers have responded. Statista predicts that roughly 25 million households in the US will turn to banking on mobile devices this year. Citibank saw a 26-point jump in a customer satisfaction survey after expanding digital services, and this is likely to increase as tech-savvy millennials and Gen Zers become the dominant market for banking customers.
Big tech companies are eyeing this area as well. Google is considering partnerships with Stanford Federal Credit Union and Citigroup to provide checking accounts. Apple and Goldman Sachs already have teamed up on the Apple Card, which is mainly used with the Apple Pay app. Uber is creating bank accounts for its customers and employees, while Amazon, Square and PayPal are involved in loans to small businesses.
Even the Federal Deposit Insurance Corp. is embracing the new technology. Recent modernization efforts at the FDIC have included a recognition that many customers use “third-party fintech apps,” as well as a focus on brainstorming ideas for apps the agency itself can use to aid in bank examinations.
Benefits and Security Features
Various services are available through online banking apps these days. Banks offer basic access to checking and savings account balances, automated payments and money transfers, but many also go beyond that with artificial intelligence that provides financial guidance.
Bank of America’s AI assistant, Erica, for instance, advises users about ways to save money and lets them directly dispute charges that might be fraudulent, with no phone calls necessary. Other apps facilitate micro-investments or give low-income or unbanked users ways to handle their finances.
The benefits extend beyond individual customers. Small businesses are finding banking apps useful for tasks such as depositing checks, getting loans for equipment and capital, scheduling appointments and paying bills. In J.D. Power’s 2019 U.S. Small Business Banking Satisfaction Survey, business’ use of mobile apps has increased by 8% year-to-year, and mobile app users report 43 more points of satisfaction than those who remain unplugged.
Another benefit of banking apps and other online banking services has come to light as this article is being written: keeping the public safe. The coronavirus pandemic has motivated more people to use mobile payments, which don’t require two people to touch the same object, and banks are encouraging their customers to go digital as well. Traditional banks are temporarily closing many branches, and governments have advised people to avoid public places and social gatherings, making mobile payments a necessity in many cases.
Security and privacy are concerns, of course, as with all things digital. Some Citi customers faced double charges through the bank’s iPad app a year or two after it was launched. Banks and financial technology companies recently debated the role of screen scraping and other forms of customer data collection, with banks arguing that customers need total control of their financial information and fintech companies saying that data collection gives users more choices.
A study last year found that, while a majority of people used digital wallet apps in 2019, 72% prioritized privacy and security when choosing a bank. A question on many users’ minds: Mobile banking is handy, but is it safe?
Banks and tech companies are stepping up to address these worries. Akoya, a startup from the parent company of Fidelity Investments, puts more control over data access into customers’ hands. Investors include JPMorgan Chase, Wells Fargo and other major financial institutions. Companies such as Shape Security, meanwhile, are creating tools that banks and consumers can use to prevent app-based fraud.
Security and privacy are two qualities in customers’ minds as they consider what makes a good mobile banking app. Convenience is a heavy weight on the other end of the scale, however, as consumers increasingly want ways to manage all their finances at once. AI that offers advice, such as Bank of America’s Erica, is another valuable feature, as is keeping even secure logins simple. Small services, such as finding local ATMs, letting customers set notifications, and scanning QR codes are also important components.
All of these considerations mean that there are several answers when a potential user asks “What is the best banking app?”
The Best Banking Apps in 2020
Mobile App Daily, for example, ranked Bank of America’s app at the top, a judgment backed up by the bank winning last year’s “Best Bank in the World” award from Global Finance. Global Finance highlighted Bank of America’s high-tech approach in giving out its ratings, while Mobile App Daily touched on the security concerns about apps by noting that the Mobile Banking Security Guarantee helped get Bank of America to the top of its list.
A different list came out from NerdWallet this year. Bank of America grabbed “Best Big Bank” in those awards, but the Best Online Banking Service title went to Ally and Varo in a tie. Part of the question seems to be whether users are looking for an app first and a bank later or the other way around.
Criteria for apps vary, and concerns about privacy and security abound -- at times with good reason. Mobile banking apps keep on growing, however -- all of our futures are more mobile, more remote and centered around convenience from any location. There’s no cause to think that banking will be any exception.
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Isabel Kunkle is a technology and telecom editor at SmartBrief. She lives in Boston.