The State of Mobile Banking and Digital UX

Remember when checking your balance online was new and novel? The advent of the internet and online banking permanently changed the way consumers conduct their banking activities and interact with their financial institutions. This evolution was further impelled by the seemingly immediate and widespread adoption of mobile devices. According to Malauzai’s Monkey Insights research data going back to 2010, there were approximately 100 mobile banking apps available that year. And out of those 100 apps, the majority weren’t true native mobile apps, but instead web apps that essentially allowed the customer to access the bank’s internet banking on a mobile device. The few true mobile banking apps available in 2009 were limited to features like balance inquiries and ATM/branch locations.

Today, however, 87 percent of financial institutions within the asset range of $50 million to $15 billion have launched a mobile banking application. The apps have progressed not only in popularity, but also in ability. The substantial growth in the number of mobile banking apps reflects consumers’ growing reliance on mobile devices. It also demonstrates how important the digital channel has become for customer engagement and building loyalty.

In this era of mobile growth and explosive digital adoption, simply having an app available is not a differentiator. In fact, most consumers simply expect all financial institutions to have an app available. The emphasis now is on the overall design of the app, the user experience, and the number and types of features available.

Mobile design today has become synonymous with simplicity and ease-of-use. This sensibility has filtered into everything from mobile devices to the desktop, where, ironically, even internet banking is starting to resemble mobile banking. At the industry’s most technologically advanced banks, more people use mobile banking than internet banking, with a majority of transactions performed on the mobile platform. This trend is only going to continue. According to a recent study by Juniper Research, by 2021, 3 billion people worldwide are expected to bank via digital platforms.

Mobile design has become commoditized in the past 24 months.
At the front of the pack, competitors have caught up with each other.  They have broken away from their internet-centric approach and are delivering on the promise of mobile. These banks are providing a mobile and desktop experience that is consistent and led by mobile sensibilities. Feature sets are rich, and the overall mobile and digital experience has attained new heights of usability and ease.

In the past two years, a new mobile banking design standard has emerged, raising the bar for the industry. The majority of the market is participating in—or is in the process of transforming to—the next level of mobile design excellence. Evidence of this commodification is twofold.

1). Financial institutions are excelling. Organizations such as Capital One and Discover Card are matching the designs of the best apps out there, on par with Facebook or Amazon. Banks are engaging via the mobile platform, delivering a user experience that is enhanced and easy. More and more banks are performing at a higher design level, as it is no longer a differentiator but a requirement.

2). Software vendors are delivering. Digital banking platform providers have also evolved, and are now enabling financial institutions to deliver solid mobile banking designs. Up until this point, platform providers had limited design capabilities, and all of their clients tended to look alike. Now, most of them provide flexibility, generally matching the look and feel of a solid native mobile banking application. The “internet on the phone” days are long gone.

Mobile design sensibility has evolved, pushing simplicity—and security—even further.
Ten years ago, the first mobile banking app had less than six or seven total features. Modern mobile banking apps now match or even surpass internet banking functions. As the apps become more feature-rich, good mobile design is focused on keeping it all easy to use—adding features and removing clutter without confusing the end-user. The most advanced internet sites are now using the same techniques pioneered by mobile devices: promoting highly-used features and offering easy side-bar menus and sliding- and touch screens.

The goal is to make the most-used features easy to access, while creating navigation standards that promote engagement and usage. New innovative techniques are helping to solve these challenges by:

• Making certain features “in-line” accessible from any screen
• Using tiles to represent features
• Updating menu functionality to allow for grouping with improved graphics

Undoubtedly, ease of use must be balanced with safety. Seventy percent of the complaints that a financial institution receives are related to digital banking policies and procedures. End users do not like being interrupted when they are trying to check a balance or make a payment. Interruptions equal complaints. The tension between good usability, engagement and keeping the channel secure and safe to use is a tightrope walk, but a necessary one. This balance is constantly being readdressed as new features are added to the digital arena.

New technologies working behind the scenes can help. Behavioral analysis tools embedded with AI, for example, can work behind the scenes and analyze what a person is doing in real time. That way, the customer is only interrupted with security procedures when it appears they are doing something different—for example, performing a task with higher risk and/or making a large payment.

Personalization increases digital engagement.
According to Forbes, people tend to use an app more if it allows them to customize the way they use it. Notably, this is not just changing colors or background photos. Rather, it is about the features and functionality the end user will get out of the app and the experience. What screen should appear first when an end-user logs in?  What order are accounts in?  Can languages be changed and nick-names given to accounts?  All of these are simple forms of personalization within the digital channel and have become commonplace.

Key innovations are on the horizon.
The innovations driving the next generation of mobile banking engagement are starting to emerge. Here are some of the new features being introduced in an effort to better help both consumers and businesses:

1). Financial wellness. Helping people save money and plan for the future are not new to the banking industry. Personal financial management—or PFM—has been focused on solving this problem for years. The difference today is that PFM can be incorporated into the overall digital experience. Previous iterations of PFM were included as an “extra” feature, or a separate experience accessed from within digital banking—a less-than-ideal arrangement from the user perspective. People want to better manage their finances, but given previous integration models, it was too hard to do.

Now, banks will have access to digital platforms that pre-integrate traditional PFM features. This is made possible by open banking. End-users will be able to seamlessly use PFM because it will be integrated directly, helping them to easily save and plan.

2). Artificial intelligence and chatbots. The ability to use natural language to ask for a balance or prepare an ACH payment for a business is also on the horizon. Both voice and text will be powered by artificial intelligence. Banks have already started to launch basic chatbots, and it is becoming a feature that helps a financial institution to differentiate because, to date, not many have been able to deploy it successfully.

Designers are starting to focus on “voice-design” using pace, texture and volume as factors to consider in this new paradigm. Once natural language becomes a ubiquitous technology, the traditional screens we are familiar with today will evolve—and the way a designer thinks about engagement will transform almost completely.

The technology is still emerging, and kinks are being worked out. It has a few years to go before it reaches stability and mass adoption.

3). More features through fintech partnerships. Up to 20 percent of current internet banking users have attached a third-party financial technology to their internet banking. These third parties are used to gain access to some feature or function the end-user cannot find within internet banking itself. This add-on approach is not an easy one. Typically, the third party uses old, outdated technology to access the bank data and information, creating a clunky experience for end-users.

Consumers and businesses are demanding access to more. The reality is, however, that it’s difficult for most financial institutions to provide all the latest technology at a rate fast enough for their customers. Open banking standards will ultimately bring more solutions with easier access and usability. Innovation will quicken and end-users will get the solutions they seek, fast.

4). Digital payments get faster. Venmo has made a name for itself by helping people pay each other easily. Banks have countered with the Zelle network, which is integrated within mobile banking. Even legacy BillPay has increased access to paying bills in real time. ACH and NACHA have followed suit and transformed to same-day payments and will eventually be able to facilitate real-time payments.

New networks are springing up all the time—all geared towards making payments settle in real-time. Real-time payments are without a doubt here to stay. Increasingly, the digital channel will leverage this capability to improve the consumer’s overall experience.  While there are risks associated with transferring money in real-time, the benefits far outweigh the challenges.

This article was originally published in ABA Bank Marketing.