The mobile banking race is now in full swing involving more and more banks, credit unions and other financial institutions. Since 2010, the number of mobile users has increased 2.7 times reaching 51% of the U.S. population (Statista). As customers are getting more familiar with smartphones, banks should consider introducing their own banking app to allow users perform financial transactions with mobile.
But right before setting about a project on mobile banking development, banks that look to become leaders need to consider the aims they want to achieve with a mobile app. In case a bank just wants to keep up with competitors, it can stick to the "we too" approach. In this case, banks can do with basic mobile banking features that allow to schedule payments, set up customizable alerts, check an account balance or transactions history, etc. In many cases, it’s enough to provide banks’ customers with the level of service comparable to your rivals.
But mobile banking can do more than just deliver banking essentials. It can be the tool that sets a bank apart from its competitors by providing valuable, A-class features to customers. In this case, banks need to adopt a truly marketing mindset.
Generally speaking, there’s a significant difference between these approaches. While providing banking essentials firstly aims at reducing costs, the marketing approach is laser-focused on retaining customers and attracting new ones. Let’s explore further where the dividing line goes.
Banking essentials or brand differentiators?
1. Lower transaction costs vs. customer-oriented service
By providing the possibility to perform basic transactions online, banks can save up to $50 annually with each mobile-using customer (Javelin Strategy & Research). However, banks can go further and differentiate their mobile app from those of their competitors. To achieve this, a bank should conduct a careful marketing study of customers’ needs and preferences to avoid introducing a flashy new mobile banking feature that nobody needs. JPMorgan Chase is a brilliant example of a customer-oriented service provider. Lately, the bank introduced a Spanish-language mobile banking app showing its commitment to the Hispanic community. This upgrade seems especially well-thought as the Hispanic community shows the highest usage of mobile banking reaching 56%, while the average number is 43% (2016 FED Consumers and Mobile Financial Services research).
2. Useful features vs. brand recognition
Banks can choose to go for a mobile banking app with essential features, such as paying bills, checking transactions history, etc. But since this functionality is a must-have in any online app, it won’t help to gain any points in brand recognition. To get a market advantage with the help of a mobile banking app, financial institutions need to introduce an exceptional functionality triggering the word of mouth. For example, Bank of America has a strong brand marketing campaign by introducing extra mobile banking features like checking any pending transactions, sending money via email or text, and even accessing mobile banking on Apple Watch. Simple is another example of a company that provides unique and highly appealing mobile banking features. Those Simple customers who need help with budgeting can enjoy the possibility to set saving goals or try out a safe-to-spend feature that predicts available balances after making all monthly payments.
3. A standard set of services vs. brand differentiation
With marketing thinking, a bank can appropriately reflect its brand personality through a mobile banking app. To avoid cloning the standard mobile app functionality, larger banks can develop a distinctive mobile app adopting smaller banks’ effective and flexible approaches to gain appreciation from mobile-savvy audiences. For example, Radius Bank, a $900 million asset Boston-based community bank, decided to differentiate their brand by adopting a new digital marketing strategy. For this purpose, the bank closed all but one branches and switched to provide user-friendly products via online and mobile banking. Now the bank’s main goal is to discover customers’ needs and figure out the ways to build and deliver appropriate solutions. For example, after Radius found that customers wanted to open checking accounts using their mobile phones, it introduced a fully online application and approval process that eliminated the need to visit a branch or print out and mail any documents. Instead, customers simply have to snap a picture of their driver’s license and all the data gets automatically uploaded into the form.
Such innovations primarily aim at reaching a certain target market that includes millennials, technophiles and travel enthusiasts. Carie Kelly, AVP/Direct Channel Manager at Radius Bank, underlines that the bank wants to attract those who are excited about banking virtually instead of trying to change the traditional branch user’s perception. To differentiate itself as a real digital banking services provider, Radius Bank presented short ads reminiscent of an 8-bit game Super Mario Bros. These videos introduced the bank’s core functionality such as Apple Pay, premium rates, no ATM fees, Radius Pay and Radius Pay-A-Friend. After taking these steps, Radius went from opening 5 accounts a week on average to over 500 accounts a week in 2 years.
Resolving the dilemma of mobile app functionality
When mobile banking was initially introduced to customers, the majority of banks delivered functional but fairly simple apps. With the rise of digital-only companies and fintechs launching their own mobile payment platforms, banks soon have found themselves competing within a rather crowded marketplace. Now mobile banking has grown out from being just a fashionable toy. It can become a hub of customer relationships and the point of gaining competitive differentiation and subsequent market leadership for progressive banks. As mobile banking apps become more prevalent, banks and financial institutions can take advantage of the mobile platform as their marketing opportunity. While service approach may be enough for providing the essential functionality, only the marketing mindset will help a bank to lead the market.