7 Mobile Banking Trends That Will Be Huge in the Next 3 Years
Innovation in mobile banking is the next competitive differentiator for banks. We’re exploring which mobile banking trends will have the greatest impact on the industry in the next few years.
- The Future of Mobile Banking Is Now
- Trend No. 1: Voice Payments Will Be Gaining Ground
- Trend No. 2: Fraud Detection Will Be More Effective Thanks to Big Data
- Trend No. 3: Machine Learning and Smart Bots Will Enhance Customer Service
- Trend No. 4: The Use of Cardless ATM Withdrawals Will Continue to Rise
- Trend No. 5: Debt Payoffs Will Go Up Thanks to Paydown Apps
- Trend No. 6: Mobile Service Offering Will Expand with Open Banking
- Trend No. 7: The Use of Blockchain in Banking Will Continue to Grow
- The Bottom Line
- How Iflexion Can Help
When was the last time you used a pocket coin dispenser? If you are a millennial, chances are you may have no clue it exists. As research by Finder.com shows, half of 18- to 38-years-olds use digital wallets regularly, while eMarketer expects that by 2022, almost 78% of the US millennial population will become digital banking users. Although debt-conscious millennials still predominantly use cash for their everyday purchases, they are increasingly turning to cashless payments and online banking solutions, leading the trend for mobile banking adoption.
The percentage of cash transactions in some countries has already hit a record low of 13% (Riksbank). By 2021, credit cards, debit cards, and mobile wallets are projected to surpass cash at all point of sales (Worldpay). We’re essentially heading toward a completely cashless society. Soon not only coin holders, but also wallets and credit cards will be doomed to extinction, and this is just one of the trends in banking that will transform our lives in the next few years.
The Future of Mobile Banking Is Now
Digital transformation does not happen overnight. It is a complex and time-consuming process that fundamentally impacts all aspects of an organization. Therefore, many banks are currently going for enterprise mobile application development to start realizing the value of their digital investments shortly. According to Deloitte’s 2019 Banking and Capital Market Outlook report, over one-third of all banking institutions have already invested in technologies such as open APIs, big data engines, or chatbots, to accelerate digital adoption and modernize their offering.
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. And it’s the consumers who often act as the prime movers of innovation. They’re increasingly demanding and want self-service, personalization, and immediate assistance. To keep up with these evolving customer preferences and stay competitive, banks and financial institutions have no other option but to tap into the latest mobile banking trends. But what are they?
Let’s find out what the current trends in mobile banking are and what will be coming and growing for us in the digital banking realm in the next few years.
Trend No. 1: Voice Payments Will Be Gaining Ground
Voice-activated commands are making waves with global consumers. As Gartner predicts, by 2020, nearly one-third of all browser searches will be screenless. Already now, your smart refrigerator can take voice commands to order groceries from the store, pay for them, and have the groceries delivered to your door.
How does that translate into banking services? As consumers are highly conscious of security concerns, several banks have already introduced voice recognition as one of the methods for two-way authentication. Another application for voice-first technology in fintech is providing access to private banking through smart devices such as Alexa or Siri. Individual banks such as Santander have already gone one step further, allowing customers to conduct money transfers to trusted payees, inquire about transactions, or report stolen cards, all using voice only.
Trend No. 2: Fraud Detection Will Be More Effective Thanks to Big Data
As banks and financial institutions grow their revenue and expand services, they run into a heightened security risk. The problem is severe, as by 2020, the expected fraud losses incurred on credit, debit, and pre-paid cards could surpass $12 billion (Forbes). When we consider the additional cost of other mobile banking fraud types, such as phishing, account takeover, or identity theft, it’s hardly surprising that fraud detection makes one of the top priorities in mobile banking.
Fortunately, another significant trend in mobile banking can help fintech businesses safeguard their resources and protect their customers’ identity. The use of big data engines enables banks and financial institutions to improve risk assessment processes and jump ahead of the competition by providing streamlined customer experience while reducing the impact of fraud.
Thanks to big data, banks and financial institutions can extract and aggregate vast pools of customer data from a variety of sources, such as financial statements, mobile banking history, or even social media. This capability makes it possible for them to investigate every customer’s historical behavior, identify common patterns, and develop a holistic view of each account. Based on that analysis, predictive models of fraud detection can be developed, which will raise the red flag whenever some irregularities are detected.
Trend No. 3: Machine Learning and Smart Bots Will Enhance Customer Service
The ability to offer highly personalized real-time experiences is becoming one of the critical differentiators for financial providers. The pressure to deliver on that consumer expectation is high, as 61% of mobile banking customers say that they would switch banks if their bank offered a poor experience (Business Insider). Despite this claim, a staggering 94% of banks fail to deliver on the personalization promise (The Financial Brand). One of the ways to enhance user experience with banking and keep customers loyal is through the introduction of machine learning and chatbots.
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, fintech giants such as JP Morgan Chase, Bank of America, or Wells Fargo implement their smart bot solutions to improve services across various customer touch points.
These smart bots use machine learning, predictive analytics, and cognitive communication to help consumers conduct every piece of financial transactions, from making payments and saving money to paying down 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, deeper insights into consumer behavior thanks to smart bots.
Trend No. 4: The Use of Cardless ATM Withdrawals Will Continue to Rise
While opinions vary on whether or not our attention span is shrinking, consumer patience is definitely narrowing. Who likes queuing at an ATM? To deal with our collective restlessness, banks have introduced another innovation, namely cardless ATM withdrawals.
While this mobile banking trend is not entirely new, the increasing adoption of this solution by banks attests to its swelling popularity. First, credit and debit cards were pushed out by mobile wallets for online and in-store purchases; now, it’s their turn to step down at ATMs.
Depending on a bank or financial provider (you may use Google Pay or Apple Pay, for example), two ways are available to withdraw money: via an app-generated code or near-field communication (NFC). The first method involves validating transactions with a QR code displayed in your banking app. The use of NFC resembles contactless ‘Tap and PIN’ card transactions; however, this time, you tap the ATM sensor with your phone to take out money, with no card required.
This mobile banking technology appeals to consumers with its speed and convenience. However, those two advantages aside, cardless withdrawals can also help reduce cloned cards fraud, as even if an ATM has been tampered with, all your assets are safe with encrypted transactions.
Trend No. 5: Debt Payoffs Will Go Up Thanks to Paydown Apps
We all know that incurring debt is much easier than paying one off. Today’s consumer society facilitates overspending, and we’re all pressurized into purchasing more than we can afford. This issue is reflected in statistics. In April 2019, the U.S. consumer debt reached the record $4.07 trillion (The Federal Reserve), while the average American household credit is estimated at $135,065 (NerdWallet).
The next mobile banking trend offers a quick and easy way for consumers to get back on track with their finances. A range of mobile savings apps and repayment tools are available that help loan holders get hold of their debt fast.
Round-up apps automatically round up a user’s purchases to the nearest dollar and deposit the difference to their saving’s account or toward paying off debt. Other debt reduction solutions like Debt Payoff Assistant or Undebt.it help users better manage debt by providing detailed spending breakdowns, tracking debt and interests, and suggesting the optimal, customized payoff strategies.
Trend No. 6: Mobile Service Offering Will Expand with Open Banking
Open banking is a new standard for financial institutions that enables banks to share user data with third-party providers through the use of open application programming interfaces (APIs). The standard aims to create a complete personalized customer experience with a proliferation of new products and services.
By leveraging this concept, banks and financial institutions can build a network of financial services accessible from a single integrated point of control chosen by the consumer. Benefits include a more transparent view of one’s finances, quick and direct payments, faster and more convenient credit reporting, and enhanced user experience.
How does this work in real life? Here’s an example. Most of us have several bank accounts. One bank offers an attractive saving scheme, another has low interest rates on personal loans, and yet another provides debit cards at no fees. Open banking makes it possible to choose a provider that will act as a centralized hub for all these accounts and services, so that you no longer have to log in to each service individually but get a single, comprehensive dashboard to manage all of them.
Regions such as the UK, Hong Kong, Singapore, Sweden, and the Netherlands lead the way in open banking, while others follow. The standard offers numerous advantages, but it’s still an emerging trend that will need a few years to catch on, also for regulatory reasons.
Trend No. 7: The Use of Blockchain in Banking Will Continue to Grow
Blockchain has finally evolved from an irritating, all-over-the-place buzzword to one of the key enablers of transformation in the banking sector, mobile included. The technology has the potential to solve numerous industry problems, and banks and financial institutions are well aware of that fact.
As a report by Accenture shows, 9 in 10 bank executives are currently exploring the use of blockchain to enhance security. The banking and finance sector is the largest consumer of the technology as high-profile institutions such as JP Morgan Chase, Bank of America, and Goldman Sachs hope blockchain will help them improve efficiency, increase cost-effectiveness, and better protect their assets.
In blockchain, transactions are closely monitored and visible to all participants in real time, to enable data transparency and fraud reduction. As a decentralized platform, blockchain reduces some risks traditionally related to data centralization, such as unauthorized disclosure of confidential user data or manipulation of information by third parties. The technology makes it also possible to shorten transaction times and facilitates settlement and reconciliation.
The inherent properties of blockchain such as data immutability, node distribution, and asymmetric encryption make it an ideal candidate to enhance mobile banking operations within the areas of authentication, transfers and payments, interbank settlements, and acceleration of credit history checks. There are many more possible implementations for the technology, which makes it one of the trends that will undoubtedly redefine mobile banking in the future.
The Bottom Line
The banking industry is notorious for its resistance to change. The current-day banking systems are heavily reliant on manual processes and lengthy procedures, and traditional financial institutions are behind the curve in developing considerable resources needed to offer digital solutions to consumers. However, as the above mobile banking trends demonstrate, innovations are constantly unfolding. Technology is moving at lightspeed, and it presents a wave of opportunities for financial institutions willing to adapt. To remain successful, modern banks must strike a balance between their brick-and-mortar branches and their mobile banking offerings.
As consumers spend over 5 hours a day on smartphones, and the number of mobile devices is anticipated to reach 16.8 billion by 2023 (Statista), banks that will be the first to leverage the emerging mobile banking technology trends are bound to gain a competitive edge. SMS banking and a basic mobile banking app are not enough. Consumers seek a comprehensive, positive, end-to-end banking experience that is personalized and effortless. They won’t stay loyal if a bank doesn’t live up to their expectations and will vote with their thumbs tapping on smartphone screens.
How Iflexion Can Help
Iflexion is a software development company delivering full-cycle custom software development services to partners and clients in over 30 countries. Our experience in building commercially viable software solutions for the banking industry spans nearly 20 years.
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