Smartphones have gone well beyond the cell phone’s initial purpose of making calls and texting. People today use their smartphones as hand-held computers, personal digital assistants, and online shopping carts. Talk to any one of the estimated 4.77 billion smartphone users in the world in 2017 (Statista), and they’ll tell you they can’t get through the day without one.
Millennials account for about one-quarter of the world’s population, and 70% of them use mobile banking apps. This push by millennials and the proliferation of smartphones in general mean mobile banking is exploding, and brick-and-mortar banks not yet on the bandwagon are at risk of being left behind.
Consumers using mobile wallets, on-demand banking apps, and the new trend of digital assistants like Siri and Alexa are at the forefront of the mobile banking wave. Add to that the expanding collection of wearables and IoT devices, and the stage is ripe for mobile banking to be the hottest topic in 2017.
Here are a few trends to watch for in 2017.
Millennials lead the way in the skyrocketing rise of mobile payments in 2017. The trend will likely see the demise of credit cards in the near future as people use their mobile wallets to pay for goods and services. Services like Apple Pay, Android Pay, and Samsung Pay are growing steadily and exponentially. Apple Pay alone reports growth of one million new users per week.
Machine Learning & Smart Bots
Long gone are the days of standing in line at a customer service counter to conduct your banking or get advice on making financial decisions. Today, smart bots like Bank of America’s “Erica” are taking over mobile banking to interact with consumers via voice or text.
These smart bots use machine learning, predictive analytics and cognitive communication to help consumers conduct every piece of financial transactions from making payments to saving money and paying down a debt. It’s anticipated that a smart bot can make much better predictions and decisions than a bank clerk could, so look out for increased, deep insights into consumer behavior thanks to smart bots.
The Internet of Things (IoT) is rapidly gaining ground and, as a result, so are voice payments. Your smart refrigerator can now take voice commands to order groceries from the store, pay for them, and have the groceries delivered to your door.
Other manufacturers are escalating their use of voice payments, too. Companies such as Daimler Financial Services who recently acquired PayCash are creating their own mobile wallets. You can soon pay your car installment using voice commands while driving to work.
Banking as a Service
Third-party APIs are allowing banking to become a platform that offers complete customization to customers. For example, the German company SolarisBank lets customers pick and choose from a selection of financial modules to let them create a completely customized banking experience that meets their needs.
In addition, banking as a service allows consumers to track stock behavior, sending automated notifications to help consumers with investment management, as in the case with TradeStop Mobile.
This trend will expand in 2017 to focus on better mobile app development and more innovative ways for consumers to interact with their money. This is facilitated by the growth of open APIs to streamline development.
The rapid rise of challenger banks is threatening brick-and-mortar financial institutions, causing them to step up their mobile banking game. Challenger banks are cropping up completely online, engaging customers through mobile apps and digital media while offering no branches. Consumers are responding very well to these new ways to bank through unique mobile banking experiences.
With vast experience in mobile banking technology, challenger banks are creating a different avenue that traditional banks are hard-pressed to match.
Peer-to-peer payment apps are taking over center stage thanks to their ease of use. This can be evidenced by the fact that many consumers use “Venmo” as a verb today. With no more need to visit an ATM to get out cash, people can share money easily, eliminating the headache of trying to split the bill at the restaurant.
This trend will intensify in 2017 as people use their smartphones to share on a more personal level quickly and easily. On-demand apps and other mobile technologies will continue to crop up, offering services that consumers didn’t even know they needed.
Customer-centered Banking Experience
The Financial Brand’s ‘State of the Digital Customer Journey’ reports that most financial institutions today don’t let consumers open a new account entirely on a mobile device. Yet consumers are clamoring for the mobile experience.
2017 will see a fundamental shift in the way consumers can consume financial services. Banks that allow a comprehensive, positive, end-to-end banking experience that is personalized and customized to each and everyone will gain the market share this year.
Banking and Fintech Partnerships
Because of the rising demand by consumers for digital banking solutions, traditional financial institutions will need to partner with fintech offerings to provide the digital advances found in many other sectors like retail, hospitality, and travel.
In the World Fintech Report 2017 by Capgemini and LinkedIn, in collaboration with Efma, 50.2% of financial consumers around the world use products or service of at least one fintech provider. The early adopters of technology supplement their traditional banks with fintech platforms amount to 67.3% as compared to only around 30% of those who are less tech-savvy.
You’ll see a widening gap between financial institutions who are embracing fintech partnerships with those who go for thea wait-and-see game. Look for an explosion of fintech offerings in 2017.
The smartphone is the future of mobile banking, and millennials are leading the way. The BI Intelligence survey of millennials found:
- 71% of millennials say it’s very important to have a banking app.
- 60% say it’s very important to have an app to make payments.
- 51% say that they have made a purchase through a mobile website or through an app in the last month.
- 27% say they have used their phone to make a payment at a checkout in a store in the last month.
Traditional financial institutions are behind the curve in developing those considerable resources needed to offer digital solutions to consumers. 2017 will see mobile banking evolving as the IoT continues to grow and as new technologies and apps proliferate.
Technology presents both an opportunity and a challenge for traditional financial institutions who need to strike a balance between their brick-and-mortar branches and their smartphone apps and mobile banking offerings. 2017 might be the year of banking services transforming from buildings to smartphones as mobile banking continues to innovate.