With the GSMA predicting that the world will have over 1.75 billion smartphones by the end of the year, mobility has become the hub of computing and connectivity. As smartphone adoption rates grow year after year, and broadband penetration becomes a norm in daily life, banking, commerce and payment sectors are also transitioning through the mobile channel. If the banks don’t realize this tectonic shift, they risk remaining behind in the wake of mobile innovators serving consumers anywhere, anytime.
Today, banking apps enable us to log-in without a password, withdraw money from ATMs, send money, and pay anyone anywhere, all without a bank card. A measure of how investment in customer service is moving to digital, SNL Financial reported that U.S. banks closed 1,487 branches last year, the highest number of net closures since it began tracking the statistic in 2002. Across our own business, we see customers click on their mobile banking apps an average 30 times a month. The success of mobile banking in particular means that consumers are even rejecting traditional online banking in favor of mobile, and banks are seeing massive waves of adoption.
Smartphones are poised to take over the user experience of paying and buying. For example, more than half of Amazon customers used mobile devices to make purchases during last year’s holiday season. Banks must follow this trend to satisfy their consumer base, track their customers and understand their spending behaviors by delivering innovative services to their customers that deliver real dividends: attracting new users, increasing relevant offers and loyalty programs and driving customer retention.
Today we work with some banks whose transactions via mobile are passing the 20 percent threshold of their all transactions via all channels. At the end of 2015, mobile will become a “main channel” for the banks that have a powerful mobile strategy.
In extending a key pillar of the bank-customer relationship, mobile payments solutions, including mobile peer-to-peer (P2P) transactions, increase the frequency of consumer interactions with banks, and drive new revenue opportunities. It’s therefore an area ripe for banks to add value and differentiation through user experience. Turkey is a good example of a market where banks, driven by regulatory requirements around user security and authentication, have transformed into technology-first financial institutions and demonstrated this in the payments experience they offer.
Yapı Kredi Bank, one of the country’s largest private banks, integrated a “bump-to-send” feature into its award-winning mobile banking app which was a market-first for this type of technology. It allows customers in the same location to initiate P2P payments to each other by logging into their mobile banking service and shaking their phones simultaneously. The system was developed using features such as GPS and an accelerometer, transferring data by establishing a communication channel between the devices. Once the phones recognize each other, both parties simply confirm the secure transaction. This is a great example of optimizing user experience, in this case by providing mobile gamification to better serve its customers wherever they are.
CEPTETEB, the mobile banking service from Turkey’s TEB (a BNP Paribas affiliate), successfully integrated digital innovation into its brick-and-mortar service when in 2013 when it launched Turkey’s first cardless cash ATM withdrawal function via a QR code through its mobile banking service. With this feature, a customer who has lost or forgotten their card can walk up to an ATM, set up the withdrawal on their phone, and scan the resulting on-screen QR code to dispense cash instantly. This ease-of-use drove customers out of branches and to ATMs, decreasing the burden on customer service representatives and giving CEPTETEB a competitive advantage.
Retail banking is changing as the evolution of technology is transforming the interaction between consumers and their service providers. Connected customers demand not only seamless experiences, but also innovative solutions for their ever-changing needs. Banks need to stay competitive as the guardian of people’s finances in an increasingly digital world, success in which will not only preserve their relevance, but open new doors to revenue.