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Mobile banking apps: now more than a hygiene factor

June 04, 2020 | Banking
Mobile banking apps: now more than a hygiene factor

We've published our 5th edition of the Mobile Banking App Review, now tracking 125 features, an additional 30 features since our last report was published and the largest increase in number of features since we started back in late 2017.

For those of you who have not read our previous reports, the underlying motivation of the research is to track and measure digital transformation in banking. Never before, with the impact of coronavirus, has this transformation been more pertinent, as we witness a steer away from cash and a move to digital tools to manage our money. The 5th edition looks at the hygiene factors we now come to expect to be able to do in our mobile apps and shines a light on who is leading the way.

No excuses

Covid-19 has been seismic in accelerating the shift to mobile. The question is, when digital is more important than ever, can the big banks really compete? Will the current digital divide with their fintech rivals become more prominent to customers? Enough to make them switch allegiance in significant numbers?

Evaluating which apps are best serving customers in light of coronavirus restrictions showed some incumbents fare better than others. As expected, although challengers Starling Bank and Monzo were at the top, Halifax, Lloyds and Barclays were strong in delivering features that allow a customer to interact remotely: preventing customers needing a branch or calling customer service (like amending or cancelling a regular payment or paying in a cheque through their app).

Competing in the market is tough and, in this study, N26, Tesco and Bo join the grave habited by Loot and Fidor. Unsurprisingly, RBS’ digital spin-off Bo, having launched only six months ago, has also decided to exit the market. It appears Covid-19 and Brexit may have given a few the excuse they needed to get their coats and leave without too much embarrassment.

Haves and have-nots

We can understand customers feeling frustrated at a lack of progress. The lack of functionality from some major banks’ apps has increased the pressure they have on their limited staff resources during the pandemic. The feature gap is evident when we report in this 5th edition that many mainstream banks have 5 to 8 features missing that are offered by two-thirds of the market! It was fascinating to read the post from TSB COO Suresh Viswanathan recently on LinkedIn, who commented “we had been considering an online chatbot to answer queries for some time…we were able to introduce [it] in just five days”. Why did it take a global pandemic to deliver something which ultimately took such a short time for the bank?

No time to stop

Apps across the board are getting faster to log-in, with a median of 6.4 seconds (down a second from the previous study). There remains a notable difference between the quartiles, with the quickest 25% of apps take an average of 4.6 seconds to log-in and the slowest 25% double this!

Not only are the apps noticeably different to log-in, they update and release app updates at a very different pace. Fintechs on average, are on track to release more than twice the number of app updates than traditional providers in 2020.

On the whole though, challengers are faster, more reliable and they release more features more often.

Next destination: super-app?

The growth in features and functionality in finance apps, together with the thriving open finance ecosystem may be laying the groundwork for the super app. Revolut top the table for the number of features supported and having now integrated into open-banking also have a strong money-manager proposition. In fact, just as we finalised this report, they released a redesign of their app “focused on creating one app from which you can manage all your finances with safety and ease, every day”.

Will customers choose a range of specialist providers such as a bank, an everyday spending account, an AISP (of which there are many new entrants coming to market) or will they gravitate to one super-app that does it all?

The new digital ‘space’ race

SpaceX’s recent successful mission transporting US astronauts to the International Space Station, illustrated the challenge ahead in this new digital landscape with one of the images being circulated around social media. Many traditional banks are trying to compete hamstrung with the Apollo-like 1960’s infrastructure. Some of the first wave of direct banks launched in the last couple of decades have a slightly more flexible and cost-efficient structure. In reality though, it is the Dragon2-like challengers that are setting the course of travel with their cloud-based, open architecture. Are they heading off with ambitions of Mars and beyond, going where no bank can follow? It’s a race we’re intrigued to watch evolve. Find out which app would get Elon Musk’s approval in the full report, out now.

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