Mobile banking is building beyond its pandemic spike

The latest BAI Executive Report examines the mobile experience as it stands now and where it may be heading in the coming years.

The banking industry has big expectations for the mobile channel, and no wonder—according to multiple surveys, more than half of the U.S. population is already doing at least part of their banking on their mobile device, and the graph projecting future adoption moves briskly up and to the right.

Of course, a big part of the trend is a response to COVID-19. In April 2020, Forbes reported that mobile use shot up by more than 35% compared to a year earlier, but that boost was from an already high base—a 2019 study by S&P Global found that half of respondents who accessed their checking account on a daily basis did so via a mobile app.

Recent BAI Banking Outlook research forecasts that mobile banking will grow to roughly 22% of channel usage over the next three years. The increase will be led by the younger generations—millennials and Gen Z—who average upward of 100 banking interactions each month, with mobile being by far the preferred channel.

In this month’s BAI Executive Report, we examine the mobile banking experience as it stands now and where it may be heading in the coming years.

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Our lead article by contributing writer Dawn Wotapka ticks off a long list of mobile solutions available to financial institutions, among them cardless ATM withdrawals, use of QR codes, voice-initiated payments and embedded banking features such as “buy now, pay later.”

On the other side of the transactions, Apple plans introduce capabilities to the iPhone later this year that will allow merchants of all sizes to accept payments via digital wallets without a terminal or special hardware. One industry player suggests that banks may want to add Apple’s feature to their mobile apps as a way to better serve small businesses.

Wotapka also gets into the build-buy-or-partner debate that seems to arise when banking institutions consider implementing new technology, and particularly when that bank or credit union is on the smaller size and the tech is customer-facing. When it comes to mobile, scale is especially impactful, as smaller banks are often vulnerable to the resource advantages held by larger rivals.

But despite the size disadvantage, or perhaps because of it, community banks and credit unions continue to intensify their commitment to mobile. In his article, contributing writer Ed Lawler writes that banks have significantly altered their thinking regarding how best to achieve and maintain customer loyalty as mobile’s share escalates.

For some institutions, an emerging model pairs mobile’s ease of connection with the branch’s depth of knowledge and other resources for more complex interactions. “(Customers) may be starting relationships with us via mobile,” one banker tells Lawler, but they “put a high level of trust in our branches in case questions do arise.”

Banks and credit unions are centering their digital delivery strategies on their mobile apps, but what if the future has other ideas? I recently spoke with Mike Abbott, who heads up the global banking practice at Accenture, about his prediction that we will see “the death of the mobile banking app” in the coming years.

He believes the growing use of digital wallets will crowd out the apps offered by individual banks, and that smaller institutions may benefit from this reordering because scale could be less of a competitive factor.

Also in this month’s BAI Executive Report:

Buy now, pay later is here to stay: Vivek Dwivedi from Infosys says banks that miss the buy now, pay later train risk losing out on a significant future revenue opportunity. A big part of that opportunity appears to be demographic—research done in 2021 shows that close to 40% of millennials and older Gen Zers in the U.S. have used BNPL.

Driving loyalty with a robust mobile banking app: Chris Cox from Apiture suggests four questions that financial institutions need to thoughtfully answer as they work to create a mobile app that customers will flock to. The first of those questions focuses on product flexibility, which makes sense given how quickly the tech ecosystem tends to change.

Personalized, mobile-first banking at scale: Mike Hughes from FintechOS writes that financial institutions need to move faster when bringing new mobile products and services to market lest customers get poached by speedier fintechs. Key to this, in his view, is to better deploy data to develop deeper understanding of customer wants and needs.

Access the key insights contained in “Mobile banking is on the move,” the latest BAI Executive Report.

Terry Badger, CFA, is the managing editor at BAI.