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By Michael Allen, Solutions VP, Dynatrace

Michael Allen
Michael Allen

The financial crisis of 2008 left the banking industry in ruins, and none of the established institutions emerged unscathed. To prevent a similar meltdown, the requirements to obtain banking licenses were relaxed to encourage market competition through the creation of new banks. This paved the way for the emergence of a new generation of mobile-only challenger banks, who are seeking to rejuvenate the industry. The big question is: Should traditional banks be worried?

The march of mobile

The British Bankers Association predicts that in 2020 consumers will use their mobiles to manage their current account 2.3 billion times – more than all other channels, including internet and telephone banking, combined.  Mobile banking is particularly popular with the younger smartphone natives; the generation that will become the lucrative banking customers of tomorrow. From taking out student loans to fund education and credit card spending on travel, right through to the time when they come to get a mortgage, it is this generation who will be most profitable in the years to come. Getting mobile right is therefore increasingly important, so it’s unsurprising that we’re seeing a number of new players – such as Number26, Ospel, Simple and Atom – cashing in on this insatiable appetite for mobile. These new contenders are cutting out the shop-front and going mobile first.

Mobile-only banks have a strong potential to entice millennials, who are more interested in app store ratings than interest rates. Without a branch or website to distract them, these pure mobile offerings have only one thing on their mind – delivering a flawless mobile experience. With mobile being the number one channel for most customers, for high-street banks to compete effectively, they need to ensure that their mobile applications are just as good – if not better – than their upstart competitors. When you consider the new Current Account Switch Service, introduced by The Payments Council – which enables consumers to switch banks in just seven days, rather than the 30 days it took previously – this should act as a wakeup call to banks with underperforming mobile services, as it will be even easier to switch after a bad experience.

Competing with the challengers

Atom has already been granted a license to operate in the UK, but it has been reported that the company has refrained from launching its mobile application until it is confident it can deliver a flawless user experience. The resources invested into the performance of Atom’s application prior to launch highlights how seriously the company values the user experience. Research suggests Atom is getting its priorities spot on, particularly if they want to get to that lucrative millennial market: 49% of millennial smartphone and tablet users would go elsewhere if a mobile site or app fails to load in three seconds or less.

Yet mobile services from the established banks are still often plagued by high profile outages. Many of these outages resulted from the complexity in merging new technologies with legacy systems, but as mobile-only banks don’t have these legacy systems underpinning their services, they should find it easier to deploy new technologies and minimise service degradations. With mobile-only banks geared-up to better serve customers in the digital age, how can high street banks compete?

Turning threats into opportunities

For high street banks to reduce the impact these new banks have on their market share, they need to focus on the performance of their mobile application with the same gusto as mobile-only banks. If they can integrate their mobile application with their IT infrastructure effortlessly, and manage performance effectively, they stand a much better chance of outperforming their rivals.

To create and deliver an outstanding mobile application, it’s essential that banks monitor the digital performance of those services throughout the entire development lifecycle. If banks can identify problems early on that could eventually lead to service degradations, they can iron out any issues before they impact the customer. This can be particularly important when dealing with a complex web of legacy infrastructure – by seeing how each element interacts in the testing and development stage, you can have a clearer picture of where problems may occur and spot any integration issues before customers start using it.

During deployment, banks need to view the performance of their mobile application through the eyes of users in real-time, so they can intervene to resolve issues as they arise. By closely monitoring user experiences, banks can also identify the most popular interactions and determine which mobile transactions need to be improved to benefit the most customers. However, protecting the performance of a mobile application once deployed is easier said than done, as the service is at the mercy of external factors, such as the behaviour of a user’s device or network. To protect the user experience successfully, banks need the ability to profile user behaviour in relation to experience and monitor the underlying performance of their transactions across a range of devices and locations.

Committing to the customer

If banks can channel resources to maximise the quality of their mobile services, they’ll stand a good chance of nullifying the impact mobile-only banks have on their market share. As the market becomes increasingly crowded, the ability to manage performance to protect end users will be essential for banks to stay ahead of the competition. To put it simply, to compete with mobile-only banks in the future, the established institutions need to invest in digital performance today.