The death of the mobile banking app

The evolution of the digital wallet could democratize technology and help community and regional banks compete more effectively.

Traditional banking institutions have invested heavily in building out their digital capabilities to serve current and future customers, and at the heart of those efforts are their mobile banking apps. But what if the future of digital banking includes a reduced role for the mobile app?

BAI recently spoke to Michael Abbott, who leads the global banking practice at Accenture, about his prediction of “The death of the mobile banking app” and what might take its place.

The interview has been edited for length and clarity.

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The death of the mobile banking app – that’s a pretty bold call. Are you sure we’re not straying into overstatement?

We’re not going to lose the functionality of the mobile banking app, but it’s going to move. When you look at mobile bank app usage, 90% of it is simply checking your balance. It’s one API. So it’s very simple to paint a future where I could move 90% of the mobile banking app usage to any other place. I could get that information anywhere I wanted and probably have a better user experience at the end of the day.

What makes the mobile app so vulnerable to takedown, who or what is going to do it, and what kind of timeline are we looking at?

We can already see it today. Take the Apple card as an example: The real innovation was not the card itself. The real innovation with the Apple card is that, underlying it, there is no mobile banking app. Everything that you need to do with your Apple card is integrated into the Apple wallet: your balances, your money, your transaction information. And although Google has mothballed Plex for now, it’s the same concept – except broader. All of this is happening because the platforms are opening up all the capabilities to make it happen.

Is this the pathway into banking for deep-pocketed tech firms, which have mastered the use of customer data and creating customer experiences?

We’ve all been hearing for a decade that technology wants to take over banking. I’ve come to a completely different conclusion – none of them want to be in the banking environment because if they were truly bankers, they would have the regulations and all the limitations. What is so valuable about banking to a tech company? It’s about owning the front end of the experience. In the U.S., if you could combine payments and banking together in one place, you could sit in front of $5 trillion of consumer spending every year. And if you’re sitting in front of $5 trillion of U.S. consumer spending, do you need to be the bank? I’d argue no.

So where does that leave banks?

Banking is still going to be there. You’re still going to have deposits, you’re still going to need a place to put your wages. You still need banks to lend to consumers, small businesses, corporate entities and the like. The difference will be that, instead of owning all of the touchpoints around their consumers, as banks traditionally have, they will be extending banking into other applications. I can imagine a day when I can load my debit card into Apple Pay and I can see my balance, my transactions and payment history right there.

How significant would it be for banks to lose the data stream that they get from their mobile app?

In any scenario, banks will still have access to most of the information they have today. They may not have all the geolocation information or other things that bank apps can do, but they may not lose that much information. What they’re really losing is control over the experience. Banks will simply pay others to market to their existing customers. They’ll have to think about new technologies and tools and digital channels to reach those individuals via their mobile wallet, which will be very different to what they can do today with their own app.

A big bank that wanted to be the dominant player within a digital wallet has the resources to try to make that happen. But what about the smaller institutions out there?

In many ways, this could democratize access to mobile banking. If it’s just a few APIs, a smaller bank could say, “Hey, just load your card into your Apple or Google Pay and you’ll have full banking functionality that would be incredibly simple.” It would allow small community banks and regional banks to compete without having to put an enormous amount of capital on the table. We are seeing a democratization of technology that I believe will enable many of the small banks today to compete on a digital stage.

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

Gain insights on where mobile banking is headed from the BAI Executive Report, “Mobile banking is on the move.”