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Moving to mobile banking 3.0

From partnering with fintechs to developing their own solutions, banks have a variety of options.


Mobile was already a hot spot for banking in the years leading up to the global pandemic, but when the established ways of doing things were instantly upended in the spring of 2020, hot became sizzling.

Being stuck indoors pushed even those dependent on traditional bank branches to become digitally savvy: More than 65% of consumers are using mobile apps more frequently, and the majority expect to continue doing so, according to S&P Global Market Intelligence’s annual U.S. mobile banking survey.

“The convenience that mobile banking offers its customers is too powerful to ignore,” says Evan Albert, co-founder of SeamlessChex, which offers solutions for merchants to send, accept and verify payments online.

Meanwhile, bank branches continue to disappear. S&P reported that banks closed more branches in 2020 than in any other period in the past 10 years. That pace accelerated in 2021, and closures are expected to be widespread this year as well.

BAI’s Banking Outlook research shows that mobile banking is expected to grow to about 22% of channel usage in three years, while online usage will be flat, and branch, drive-up and contact center use will decline.

But simple apps are no longer enough. Hot topics include cardless ATM withdrawals, QR codes and voice-initiated payments, says Tom Thunstrom, a finance analyst at Small Business Development Center at the University of Delaware. Other trends include tailored messages, facial recognition, virtual branches, cryptocurrency services and embedded banking—such as the “buy, now pay later” options that are increasingly prevalent on retail websites.

Tech titan Apple has announced Tap to Pay on the iPhone, a move expected to empower millions of merchants to seamlessly accept Apple Pay, contactless credit and debit cards, and other digital wallets via a simple phone tap with no hardware or terminal needed.

“Adding the feature to mobile banking apps would allow banks to better serve small businesses,” says Richard Crone, CEO of Crone Consulting LLC, an independent advisory firm specializing in helping businesses integrate mobile self-service capabilities with payment optimization strategies. “This is important because more than half a community bank’s profits come from serving small businesses.”

Nimble startups are also lurking at every turn, ready to disrupt an industry that some argue was too slow to realize the need for change in the bank-branch model.

“Fintechs are definitely going through the golden era,” says Ivan Kot, a director at Itransition, a Colorado-based software development company. “When digitalization accelerated due to the pandemic, they had more options and experience to innovate. They built partnerships with both legacy banks and young financial startups, getting the most out of two worlds.”

Because bigger banking institutions have more resources, they can transition to mobile banking quickly and easily—Albert says this results in lost business for some smaller banks and increased business for larger ones.

According to Thunstrom, regional banks have been more likely to partner with fintechs on innovation, while smaller banks often work with vendors. “These companies are relatively modern and aggressive—for the right price—in helping community banks with their mobile banking needs,” he says.


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Community banks, meanwhile, continue to work to find their niche. “The challenge with community banking is maintaining relevance in a market where you are competing against national brands that can innovate faster and a younger population that may not be as loyal to the small-town, community bank model as they look for a brand or bank that is innovative,” Thunstrom said. “You may see some community banks focus more heavily on small businesses or targeted segments of the marketplace to stay viable.”

As the consulting agency West Monroe put it in a recent report, “The events of the last two years have changed forever the way banks will conduct business. In what was already an industry facing challenges with customers and clients wanting a simpler, more tech-friendly way of doing business, life under pandemic conditions only amplified these desires.”

One thing is now certain, the report continues: “Banks of all sizes must become digital enterprises—not only in terms of their customer interactions but also in digitizing and modernizing all facets of their operations, products and experiences.”

Dawn Wotapka is a BAI contributing writer.

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