The ubiquitous banking game
As banks offer an increasing number services and features via mobile, customers are becoming able to do more things, through more channels, from more places and at more times than ever. As such, we’re seeing customer expectations rapidly proliferate, and with that, the ubiquity of service provision becomes an increasingly competitive advantage, both for challenger and traditional banks.
The Ubiquity Race
There have, of course, been many back end innovations over the years that have driven forward the ubiquity agenda, (take the UK Faster Payments network for example). However, to most customers, the perceived value of services is informed by what by what customers can do on their smartphone.
Whilst innovations in core banking and payment processing systems are vital in order to compete on a product level, mobile is now by far the most powerful tool by which to compete on a customer perception level. It’s the face of banking innovation.
Australia’s Westpac is swiftly (no pun intended) positioning itself as one of the most innovative banks in the world by offering features like their augmented reality PFM tool (1). By hovering your phone camera over your credit card you can see charts showing the areas you’re spending most and least money. Although it is questionable how much time this saves a user compared to selecting this feature by tapping on a menu button, it definitely gets cool points (sorry; “generates perceived value”).
Another reason to visit the branch bit the dust when USAA (also the first to use voice and facial recognition last year) started offering photo-based cheque deposits via mobile in 2009. Another 15–30 minutes or so of customer time saved. Another bank service made ubiquitous. Chase and a number of other banks in America followed this. Yet six years down the line many banks, especially in the UK, still require you to put your coat on, find a branch, walk to it, wait in a queue, and have a five-minute exchange with a teller simply to put money in your own account.
What other high-friction journeys still exist? Account opening? Not for long. Atom Bank, one of the new challenger banks pioneering the way in ubiquity (awarded their banking license in June last year), will offer slicker than ever ID scanning and app-based account opening. Their entire business model is built on a branchless philosophy or, or in other words, a philosophy of modern day user experience.
What about removing the friction of having to leave your Facebook app to book the gig tickets you’re discussing with your friend over messenger? In a study by KPMG (2) last year, only 5 out of the 18 global banks reviewed offered social media banking. Most now offer Twitter and Facebook based customer service but those offering payments via social media are talking to the coveted millennial market in a language they simply understand (Barclays were the ones to pioneer this in the British banking arena last year).
Those offering payments via social media are talking to the coveted millennial market in a language they understand. When you have some banks offering payments via Facebook whilst others request you enter a branch with a paper utility bill, that has been sent to you via snail mail, to change your address on file (this happened to me recently), the state of current banking service disparity seems astonishing.
Ubiquity isn’t just delivered via mobile devices either. Poland’s Idea Bank is now delivering it via car. Business customers no longer need to walk to the bank to deposit cash at the end of the trading day. They simply summon the electric car via their app and put their dinero into an ATM deposit in the side of the vehicle. Watch the video here (also hosted in Chris Skinner’s Innovative Retail Banks of 2015 blog — a really good read).
Standard Banking Services Alone Won’t Cut it
Mobile banking is no longer just about banking either. The smart banks are offering features way beyond traditional/core services, for example, Mondo, the bank CEO Tom Blomfield says is targeting “the demographic that values being able to do everything over a mobile phone in five seconds”. Mondo’s features include being able to turn your card “off” via your mobile if you lose it (or indeed if you want to force yourself into a dry evening out at the pub), and digital storage of retail loyalty schemes so you don’t have to carry a wad of stamps and points cards around.
This is truly just the start of it. New banks, and indeed new non-bank financial services providers, are building their technology infrastructure around the wave of open API’s now available, allowing them to capitalize on modern day info feeds to the meet modern day needs of customers. Due to the absence of legacy infrastructure, they’re currently doing this faster and better than the traditional banks. Germany’s Fidor Bank is a great example of a company that has built its entire value proposition around the concept of open platforms and infrastructure creating an open API with a focus on peer-to-peer connections. Again, it’s allowing customers to do more things, through more channels, from more places at more times.
Creating Frictionless User Journeys
Simply put, apps improve users’ experience of the bank. There are five main ways they can do this. By providing…
- Features that make existing banking services easier
- Features designed purely for the mobile channel
- Features designed for mobile then rolled put across other channels
- Branded utility offerings such as mortgage calculators
- Customised real time and relevant advice and services through data use
But every bank has an app right? Correct. But only those who invest in the last four points above in addition to the first point are truly in the ubiquity game. And only when those the apps are inherently driven by improved functionality, user experience and security are they in with a chance of winning it.