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Banking apps a bright spot as banks struggle with loyalty: IBM

As conducting financial tasks on smartphones gains widespread adoption, consumers are increasingly using mobile banking applications, with 86 percent believing they are easy to use, according to a new report from IBM.

Mobile banking is ultimately fueling satisfaction among customers, who likely find smartphones apps a convenient way of completing errands without visiting their nearest bank branch. However, while mobile affinity may rank high, banking executives are overestimating customer trust, proving there are major gaps in loyalty that must be filled.

“Financial institutions are stepping up their mobile app development to include onboarding capabilities: by using device-based cameras to digitally capture data, mobile onboarding capabilities can eliminate the need for consumers to manually enter data and will set the stage for the rest of the customer relationship,” said David Albertazzi, senior analyst at Aite Group, Atlanta.

“Financial institutions will also extend mobile banking capabilities to wearables such as the watch, giving their customers new personal finance management capabilities to include timely and relevant context-based insights such as projection of savings potential based on end-user income cash flow and expenses, insights on the optimal number of credit products to own based on debt ratio and optimal borrowing limits, funds allocation insights based on credit card and savings account balances, mortgage refinancing options based on end-user data and current market conditions, or financial projections for long-term savings.”

Mobile’s critical role
The sheer ease and convenience of conducting withdrawals, depositing checks and checking account activity on smartphones and tablets is helping to revitalize the financial industry. Half of consumers using these apps feel that banks answer their questions accurately, resulting in a seamless process of completing necessary tasks.

Furthermore, 80 percent of users view mobile banking apps as user-friendly, with 86 percent claiming they are simple to use. This statistic is significant when considering that many older consumers also use these tools, underscoring the fact that mobile-enabled features do not have to be confusing for users if implemented correctly.

“One area which banks and merchant services are experimenting with now is biometric verification—allowing people to confirm purchases utilizing facial recognition or through tracking irises or finger veins,” said Shuli Lowy, marketing director of mobile at Ping Mobile, New York. “While fingerprint verification is already available, many banks are hesitant to use it as it is easy to replicate.

“Another growth possibility within the mobile banking sector is using geo-data to verify purchases. Mobile provides opportunities for banks to verify a consumer’s location which can be used as a fraud prevention tool as well as a means to provide more personalized services.”

Banking from a smartphone has now become accepted on a global scale, with one in five adults worldwide leveraging mobile finance services, according to a new report from Juniper Research (see story).

Forty-one percent of individuals surveyed believe their transactions will be conducted via a personal device in the forthcoming three years. Only ten percent of banking executives, however, expect that the majority of transactions will occur on mobile.

Ultimately, if consumer demand for banking apps remains high, banks will need to adjust their suite of services to cater to those needs.

Banks may determine what customer demands are by engaging in alternative ways of garnering feedback. A Canadian bank, Tangerine, recently introduced a new app that enables users to offer their opinions by shaking their device.

This feature was able to deliver innumerable nuggets of advice to the financial marketer in just several days.

Boosting customer loyalty
Research also found that banking executives are overestimating consumers’ trust. Forty-eight percent of banks believe themselves to be doing a commendable job at fostering strong loyalty, while only 35 percent of individuals agree with that notion.

Ninety-six percent of bankers think their clients trust them more than other competitors not in the industry. Seventy percent of consumers concur with this statement.

“Customer loyalty becomes ever important as non-traditional banks can easily swoop into the market and replace functions that banks have historically been used for,” Ms. Lowy said. “Creating a better product requires investing in reformations which can improve the user experience for consumers.

“Those reformations should consider how banking can be personalized, simplified, and how consumers can get a richer experience from their bank,” she said. “As individual banks grow and roll out globally scaled technology-based services, the human relationship can easily get lost.

“Without that personal relationship, customers are likely to jump ship when a better alternative comes along. Banks should consider ways to personally interact with their customers to create a more meaningful affinity to the bank.”

Wells Fargo & Co. is reaping the benefits from its mobile-first outlook by revealing that it has sent more than a half-billion SMS and email alerts to consumers’ smartphones, offering information on topics ranging from ATM withdrawals to bank account activity (see story).

Additionally, social media is not a key strategy for the banking sector to leverage. Executives are under the impression social is imperative, with 54 percent believing it will foster future prospects.

However, only 18 percent of those surveyed anticipate engaging this way.

“[Banks] should focus on the 360-degree view of the customer rather than individual transactions or processes, and develop next-generation customer engagement activities to create a more consistent experience across all channels,” Aite Group’s Mr. Albertazzi said. “Current experiences are often disjointed, and focused around a single channel.

“Business units are siloed, knowledge and operations exist in functional silos leading to brand dilution and diminished customer loyalty.”

Final Take
Alex Samuely, staff writer on Mobile Commerce Daily, New York