With more mobile phones on the planet today than there are people, mobile banking has become a hot topic. Many banks and financial institutions began by seeing it as a possibility to cut costs by enabling customer self-service. For others, it was initially ‘me-too’ functionality, to avoid being overtaken by rivals. However, banks now also see how important mobile banking can be to the overall customer experience, and therefore to customer satisfaction and loyalty.
New players like FinTech companies are also adding to the competition that traditional financial institutions must face. Mobile banking can help them to fight back. In its latest (2017) Global Mobile Banking Benchmark report, Forrester Research stated the need for digital banking strategy executives to ‘deliver useful and usable mobile banking services that not only exceed customers’ current expectations but also anticipate their future needs and improve their financial well-being’. While digital marketing teams will have a crucial role to play in making this happen, the mobile banking technology will also be a key factor.
Banks have an initial choice to make about their mobile banking technology – in-house or outsourced. They can also use vendor platforms and components as building blocks, which they then customize with their own specific features and brand. Larger organizations may do more by themselves. Smaller organizations with fewer resources may look more towards white-label solutions. Some vendors offer one part of the solution (mobile app design or back-end system, for example). Others offer a complete mobile solution, front-end and back-end, for integration with a bank’s other financial systems.
What Do Customers Want from Mobile Banking?
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Any mobile banking solution must start with customers’ needs, wants, and expectations. Mobile banking apps that do not satisfy customers will likely be abandoned and deleted. Back-end systems will sit idle, a loss of time and money for the bank concerned.
Customer needs and wants will vary. Millennials in Asia may want cool functionality and a designer app interface that aligns with their native digital lifestyle. Rural communities in America or Africa may be more interested in quick and efficient account services that save them the time and effort of driving to their nearest bank, perhaps many miles away. For the unbanked, mobile banking may be the only feasible way of offering them the advantages of secure banking services.
For an excellent and enduring customer experience, a mobile banking solution should also be flexible. Customer tastes and requirements can change rapidly, and the solution must be able to adapt. Nonetheless, some features are more frequently offered or requested than others. A 2017 survey by the Federal Reserve Bank of Boston of 505 banks in the US and the mobile banking functionality currently offered showed the following percentages of banks providing each type of functionality:
- Check balances (DDA, Savings) 92%
- View statements and/or transaction history (DDA, Savings) 89%
- View credit card balances, statements and/or transaction history 12%
- Bill payment 86%
- Bill presentment 30%
- Transfer funds between same owner’s accounts within owner’s bank 91%
- Transfer funds between same owner’s accounts at different banks 35%
- Mobile person-to-person payment (P2P) 44%
- Mobile remote deposit capture (RDC) 72%
- ATM/branch locator 81%
- Personal financial management (PFM) 12%
- Access to brokerage services 2%
- Cross-border payments 1%
The same survey included statistics for 177 credit unions. The percentages were very similar, apart from the item ‘View credit card balances, statements and/or transaction history’, offered by 53% of the credit unions, compared to just 12% of banks.
Banks and other financial institutions should analyze their own existing and targeted customer populations to understand how best to serve them with mobile banking functionality and interfaces. A mobile banking solution vendor may also be able to contribute insights and experience to help the bank optimize its mobile banking decisions.
Design of a Banking App for Mobile Devices
The user interfaces in mobile banking apps should as be user-friendly and intuitive as the mobile phone technology allows. Banking apps can take inspiration from mobile app best-sellers in other domains, whether for social media, news, games or other uses. A minimum number of taps or swipes to reach a desired function or information must always be the goal. Many non-banking apps manage to do this within one or two taps from a clear, uncluttered, attractive interface. This is a standard of usability that mobile banking apps should achieve too.
Inside the app, the priorities are performance, robustness, and rapidity of development and release. Suitable development frameworks offer significant help in meeting these objectives. They also make the app software architecture modular and intuitive, allowing for a maximum of code reuse. This, in turn, speeds up a time to market and reduces costs.
How Should the Back-End Systems be Implemented?
Flexibility in mobile banking back-end systems is also important. As front-end functionality changes to meet new customer needs, the back-end systems must keep pace. They must also be scalable to handle increasing numbers of connections and transactions, as the popularity of the mobile app rises. Outages and long waiting times must be avoided. Customers expect ‘always-on’ availability for online services, and minimum or zero wait times for their requests to be handled.
A microservices architecture is often well-adapted to this requirement. Self-contained functions or functional components, each running as a microservice, communicate with others to serve the front-end. New features can be implemented in one or just a few of the microservice modules, for faster, more reliable releases. A well-designed back-end architecture will also allow a bank to run the software on web servers and databases of its choice. This will give even smoother integration into existing IT infrastructure.
As added advantages, microservice-architecture solutions can be faster to install, integrate, and launch. When front-end and back-end components are available as an integrated solution, updates and extensions to the microservices can be better synchronized with releases to customers of new mobile banking apps.
Security and Compliance
Security is a critical consideration. It must be built into a mobile banking solution from the outset. However, while giving maximum protection, it must not unduly limit functionality, performance, or usability. 2-factor authentication is a suitable level of security for customer actions such as registration, authorization, and confirmation of transactions. 2-factor identification should then also be available for all interactions and events in the application. Back-end systems must be hardened before the operation, removing vulnerabilities and tightening platform security beyond default configurations of IT database operating system, server, and storage unit vendors.
Compliance with regulations is essential. New or recently introduced laws and directives affecting mobile banking include GDPR (General Data Protection Regulation for the European Union) and the EU-wide second payment services directive (PSD2).
Market Overview of Mobile Banking Solutions
We consider examples of mobile banking software and solutions available for licensing and use by banks, credit unions, and similar financial establishments. For this reason, we leave out of our list any solutions specifically designed for just one bank or financial institution.
- Digital Insight. Mobile banking is one of the applications offered by NCR’s Digital Insight. Others include retail Internet banking, electronic bill payment and presentment, personal financial management, funds transfer, and financial institution website development and hosting. NCR announced in 2017 that its Digital Insight software powered mobile banking for ‘nearly half of United States’ top-performing financial institutions. Digital Insight offers Android and iOS mobile banking apps, with biometric access.
- FIS™ (Fidelity Information Services). Mobile banking is part of the FIS payment processing and banking software solutions for retail and investment banking. The FIS customer base includes Bank of America, Key Bank, PNC Bank, People’s United Bank and BMO Harris. Features include mobile commerce, business mobile banking, P2P/on-demand payments, and financial calculators for customers, with analytics for financial institutions.
- Malauzai. Mobile and online banking solutions for community banks and credit unions. Solutions utilize the SAMI (SmartApp Management Infrastructure) platform for real-time updates and REBA (Real-time End-user Behaviour Analytics) for customer insight and decision making. Other products include SmartwebApps, SmartwearApps, and MOX™ mobile business wallet. Customer references include Bank of Hope, Capital Bank, and First Financial Bank.
- Metryus. Provides mobile front-end and back-end banking technologies for a full mobile banking solution. Metryus uses the React Native framework for its CAVU mobile app development for both iOS and Android operating systems. Security includes 2-factor authentication and biometric access control. The server component uses a microservices architecture. Clients range from FinTech start-ups to large banks, like the International Bank of Azerbaijan.
- Q2. Solutions include mobile banking, web development, security assessments, and marketing for banks. Customer references include A+ Federal Credit Union, Broadway Bank, Inwood National Bank, and First Financial Bank. Features of Q2 mobile banking for customers include a consistent design and user experience regardless of device, fingerprint login for Android and iOS, user-customizable alerts, and contextual personal finance management (PFM) for improved customer engagement.
- SAB. Makes mobile banking services available via mobile phones and SMS messaging, including withdrawals from authorized outlets if there are no ATMs close by. SAB shareholders include IFC, a member of the World Bank Group. SAB’s mission is to improve financial system infrastructures in the Middle East, Africa, and Asia. References include Banque Palatine, Banque de l’Industrie et du Travail (Lebanon), and Compagnie Monégasque de Banque (Monaco).
Mobile Banking in the Future
The general principles of good mobile banking solutions will continue. Efficiency (making a task easier), effectiveness (saving time or money), and contextuality (using personalized insight) will all be priorities. Financial institutions are already turning to mobile apps with unique abilities to enhance customer experience and improve banking revenues. Ease of use and digital value will continue to rise. To meet expectations, outsourcing mobile banking technology requirements to a suitable third-party technology provider will continue to be the right solution for many banks and financial institutions.