Banks must ramp up their mobile banking apps - KPMG

Monday 31 August 2015 | 11:39 CET | Background

The development of mobile banking applications has become a major influencer of what makes a bank successful, KPMG notes in a recent report. The UK branch of the global advisory KPMG has published 'Mobile Banking 2015' in cooperation with UBS Evidence Lab. The report has looked at the state of play in mobile banking across the globe.

Mobile is already the largest banking channel for the majority of banks by volume of transactions, but even with that in mind adoption may continue to grow exponentially over the next 5-10 years, from around 600 million (Juniper Research and KPMG estimates) in 2013, to 800 million in 2014 and growing towards one billion in 2017 and 1.8 billion in 2019.

Advanced users

The average mobile banking user is younger than the non-mobile banking user. This picture however varies per country. In markets like Kenya and Nigeria, mobile operators dominate mobile banking. With traditional branch banking playing only a minor role, the average age is almost the same for mobile and non-mobile users.

However in Western European countries, where the vast majority of adults is banked, the mobile user does tend to be younger and more smartphone literate. The age difference is 13.1 years in the UK and 15.3 years in the US. But as penetration grows, that difference is likely to shrink.

The quality of the services will become a differentiator between banks. A mobile banking app has to offer the basics – account checking, balancing between savings accounts, historical transactions, an ATM or branch locator and receive alerts. At the same time, the banking app must be real-time, 24/7 available and offer bulletproof security.

Payment services are a welcome addition, ranging from money transfers and to peer-to-peer payments or payments at point of sale (a challenging area).

KPMG has scored 18 different major banks in a comparative analysis. The banks include JP Morgan Chase, Barclays, BNP Paribas, Bank of America, Deutsche Bank and Lloyds.  All apps cover the basics and some but not all offer payment services. Notably, NFC payments at point of sale in particular show variance between countries.

The report then goes on to tally value-added-services, such as camera based banking (check capture, which is relevant in the US), social media banking, the availability of wearables and forms of biometric security features.

Pockets of innovation

Importantly, these services can be pockets of innovation or a disruptive offering. Being able to launch the app with Touch ID is a major thing for those users that have an iPhone 5s or higher. Not having that feature will hurt the star rating in the App Store.

According to KPMG, that is where banks may make a difference. Integrating social media is a post on the roadmap in particular, as social media and big dot com platforms are almost certain to challenge banks.

Unencumbered by legacy IT infrastructure, frequently with no aspiration for full banking licenses and often with stronger capital positions and consumer brand trust than the banks themselves, non-traditional players will certainly continue their march across the banks' turf.

Being able to continuously develop the app and services is therefore paramount and a cautious approach will probably not be enough in the long run. KPMG is therefore expecting a wave of innovation to come in the next five years.

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