Managing finances has become increasingly complex as there are many different financial services to choose from: credit cards, bank transfers, payments, investing, and more. We are all looking for a quick, easy and accessible solution when it comes to handling our money. More mobile-first companies are creating apps that can assist customers to manage their banking, while simultaneously banking intuitions are expanding their mobile platforms.
The largest financial banking institutions have seen a significant decline in the last five years, with over 1,700 U.S. bank branches closing at a steady pace since June 2017; this is primarily due to the adoption of mobile banking by consumers. As of January 2018, 67% of customers globally have adopted digital banking platforms, and 515 million customers have opened a bank account with a mobile bank in the last three years.
This blog will provide insights into the mobile banking revolution: its adoption, growth potential, perks and pitfalls, and lastly our predictions for the latest Fintech revolution.
The Adoption of Mobile Banking
97% of adults in Asia – specifically China – are using mobile banking services, making China one of the early adopters of mobile banking. The statistic can be directly compared to 62% of Americans who use a mobile banking app and are more apprehensive to hand over their confidential information to a banking system with a branchless bank.
This global trend can be seen in several different continents, such as Indonesia, Southeast Asia, China in Asia, India, Brazil, and most of Europe. We will highlight the key mobile banking players in Europe and the U.S. specifically.
There are several types of mobile banking solutions. The first is the traditional banks, such as JP Morgan, Bank of America, Citi Group and others who have an app as an additional platform where customers can view their account and make different banking transactions. The second type is a traditional bank that offers a separate brand usually targeted toward a niche target market, for example, students or Millennials. The third type is the mobile-first and branchless banks that are revolutionizing the banking industry while providing banking services via their app only.
Here are a few examples of rising stars in the mobile banking vertical that are offering innovative branchless solutions in different countries in Europe and the U.S., and we expect them to produce headlines in the upcoming year:
- N26 – the German banking app, has reached one million customers in just three years. N26 has no physical branches and offers a free bank account and a black Mastercard when signing up. As Maik Koltz, the senior consultant at N26 describes, “Smartphone users, Millennials, and digital natives” are the primary target audience.
- Orange – one of the largest telecom operators in France, launched its digital lending banking system in October 2017. It is targeting to reach 10 million users within ten years – which is roughly 2.5% of the entire French market. It has even started launching its banking solution in West Africa and making banking available to countries without that privilege.
- Monzo Bank – providing you a complete banking solution with a physical card that comes with an app with benefits and no international fees. The app is not connected to any bank account but provides a pre-paid MasterCard debit card. You can load the card with cash and use it at an ATM, in store, and even online. The lack of international fees makes the card attractive for travel and for uploading receipts to keep track of finances.
- Revolut – the London-based mobile bank started as a mobile app that allowed users to send and receive money and exchange over 28 currencies at a real rate. Revolut has been built for the mobile age and offers an option for both a free and paid premium plan. This mobile banking giant has recently raised over $83 million total in funding.
- Simple – an online bank that helps people reach their savings goals by tracking spending habits and allows users to get a free payment card.
- Starling – provides their users with a smart way to lead a healthier financial life. There is the added benefit of zero transaction fees, numerous services, and smart spending insights.
- ATOM – one of the fastest growing mobile banks in the U.K. It helps small and medium businesses with mortgage rates, fixed accounts, and service loans.
Perks and Pitfalls
The Millennial generation will become mobile banking’s target audience in the next ten years, which means mobile banking will gain popularity.
Mobile banking has its perks and pitfalls, like any revolutionary concept. As far as perks go, thanks to their fresh and trendy look and feel, mobile banks can quickly be adopted by the Millennial generation. Mobile banks are branchless – you don’t have to visit in person. They offer better and more competitive exchange rates, and, overall, a smarter and faster way to access finances.
With that, there are some pitfalls to overcome. One of the main mobile-only banking pitfalls, besides the difficulty of the transition for the older generation and the stability of a “startup bank,” is the area of fraud. Most consumers of not understanding the technology their bank is using, which hurts their trust in mobile banking experience. Even though mobile banking apps are adding features such as multi-factor authentication, mobile-only banks still need to address the issues with consumer security and trust.
What Does the Future Hold for This Vertical?
Mobile-first banking companies are growing faster than ever in 2018, and the future for this vertical is only expected to expand even more. Here is what we anticipate happening:
- Mobile banking goes mainstream – Mobile banking adoption is only likely to increase and grow. It’s not just Millennials who’ll adopt it, but also older age groups.
- Mobile banks and Fintech startups funding – There will be a significant funding boost for both existing as well as new players in the ecosystem. It’ll allow them to expand into new markets, hire tech talent and extend their product offering.
- Traditional banks are shifting to mobile to stay relevant – Traditional banks will need to advance their mobile products and improve the overall user experience to compete with innovative mobile-first banks. If they do not innovate, they will lose market share.
- Traditional banks are buying Fintech – The classic ‘Make or Buy’ dilemma. Traditional banks will become more innovative via the acquisition of disruptive mobile banks or alternative personal finance apps. By doing this, traditional banks will hold on to their competitive edge and will be able to offer more to their customers.
- Mobile banks are expanding digital presence and focusing on growth – Companies have already started developing their digital footprint on social media – Facebook, Google, Twitter, Snapchat and additional platforms – both organically as well as by using paid promotions. Aggressive and fast growth will be the focus in 2018.
We believe 2018 will be the year of remarkable growth for mobile banking and Fintech startups, and we are looking forward to seeing more innovation and disruption in the industry.
Webpals Mobile works closely with Fintech startups and personal finance apps, effectively helping them with their growth strategy by offering full-service campaign management, creative solutions, and data-driven methodologies across Facebook, Google, media buying and exclusive websites and apps.
Contact us if you’d like to speak with our experts about growing your finance app.