Banks are being told they must “adapt or die” as mobile banking soars. According to the Global Mobile Banking Report by KPMG, the number of mobile banking users globally is forecast to double to 1.8 billion, reaching more than 25% of the world’s population, within four years.
The adoption of mobile banking – already the largest banking channel by volume of transactions – is now entering an “exceptionally rapid phase” said the study, which is based on primary survey data supplied by UBS Evidence Lab.
In addition, the fact that mobile banking and payment systems are being integrated increasingly with other technologies, is ushering in an era of ‘Open Banking’ – where consumers can bank across a variety of channels, operating systems and devices, including phones, tablets and wearables.
In light of the trend towards mobile technologies, banks without clear mobile banking strategies will lose customers and cross-sell opportunities in the short-term, as well as risk jeopardising competitive advantage, warns KPMG.
The availability of mobile banking services is a key cause in consumers switching banks, the study indicates. It also established a “clear link” between a strong mobile proposition, customer satisfaction and advocacy.
However it notes that with mobile bank users, typically in their mid to late thirties, being the most likely to switch banks, even an effective mobile banking offering is not enough by itself to retain these higher value customers.
The report identified three key areas of focus to help banks to take advantage of the surge in mobile banking and prepare for the Open Banking era:
Expand mobile banking services – to include virtual customer support, social media banking, ‘life tools’ such as cloud storage and, in future, wearables and augmented reality. Banks must tread carefully though, warns KPMG: unwanted sales messages can ‘invade’ so-called ‘device intimacy’, leading in the worst case, to customers switching providers.
Greater collaboration between the banks and developers – including Application Program Interfaces (APIs), allowing third-party developers to develop such technology. Large banks should also continue acquiring technology start-ups and investing in incubators.
Report author and UK digital and mobile banking lead at KPMG, David Hodgkinson, commented: “Banks must adapt or die. Mobile banking is clearly supplanting all other channels as the main portal between the bank and the consumer. Many banks have already risen to the challenge and invested in new infrastructure and pioneering initiatives, but others must follow suit and commit to building both immediate propositions and on-going capability to keep up with the pace of change.”
‘Banks in various developing countries were left standing when consumers and SMEs adopted mobile payments technology with gusto and those banks are now playing catch up in order to regain market share. In markets where there is greater regulation of the payment sector (such as the UK), new entrants have faced greater barriers to launch, but they are adept at identifying and designing products that people wish to use. As more new entrants become authorised, there is less scope for the established banks to be complacent in their digital offerings.’
Clare Burman, Associate Director