young couple on phones

Within the span of just a few years, mobile technology has changed virtually every aspect of the world that we live in. That’s because the mobile devices that we now happily or dutifully carry around have evolved from basic communication tools into portals that we use to not only engage with others, but also manage countless aspects of our lives. Banking is no exception. Today’s consumers increasingly want to have all of their banking needs met from the palm of their hand. In fact, according to research from Roy Morgan the amount of Aussies that only use their mobile or tablet to do their banking has tripled in the last three years.

While that may seem like a narrow point at first glance, it actually underscores a much broader trend: these days customers strongly prefer using their mobile phones to do their banking over all other channels they have available to them. Meanwhile branches, ATMs, call centres and even internet banking are on the decline. A UBS Survey from August this year (“Is a bank in your pocket the next big thing?”) estimated that Australian banks can expect an 11 per cent reduction in branches as a result of mobile banking.

Consider, for example, that 80 percent of millennials would rather do their banking digitally than in person. For a generation that has grown up with smart phones and tablets, that typically means banking via mobile apps. Interestingly, according to one survey, 26 percent of respondents reported having switched banks just to get a better app.

What it means to bank in a mobile world
Recent research from RFi and Visa showed that digitally engaged customers (ones who engage with their bank via a mobile device) hold the most products with their MFI, are the most likely to approach their MFI if they want new products, and even have longer home loan tenures. Not surprisingly, that’s part of the reason why we’re seeing a spate of new advances in mobile banking technology, such as the introduction of:

  • Cardless cash from ATMs, which allows users to text message codes to each other, which can then be used to withdraw cash from nearby ATMs.
  • Mobile apps that include bill splitting functionality to make it easier for friends to share bills and request money owed. Apps like these divide group bills and then send texts to the relevant contacts in your phone, telling them how much they owe and providing a unique reference number. They also track payments so you can see whether or not you’ve been paid.
  • The ability to store loyalty cards on your mobile device and then simply scan it at the checkout, removing the frustration of not remembering (or being able to find) a different card for every store

Other recent innovations in Australia’s digital and mobile banking include the rise of biometrics and wearables. With the introduction of fingerprint technology, financial institutions are offering easier and more secure options for logging into their banking apps. Meanwhile the growth of smartwatches means that financial institutions are using wearable technology to give customers their financial information from their wrists.

With the arrival of the New Payments Platform, apps like these will give you the ability to do all of your banking in real time from your mobile, tablet or computer. If you can imagine being able to use your mobile to make secure payments to anyone in Australia in a matter of seconds, to apply for and open new accounts, and to set up limits and blocks on those accounts, then you’re beginning to get a sense for what will soon be possible.

Last but not least, many financial institutions are trying to perfect the omni-channel experience for their customers. That means they are using the data they already have about their customers to create seamless experiences no matter how, or on which channel, the customer interacts with them. While many banks are still enhancing the omni-channel experience, leading organisations are taking things a step further. The next evolution of better customer experiences will be the Internet of Everything, where transactions integrate seamlessly into consumers’ day-to-day lives. In that way, payments are not only virtually undetectable, but also add far greater value than the actual transaction itself.

To navigate the future you need the right partner
The evolution of digital and mobile banking in Australia is inevitable and is happening at break neck speed. For financial institutions that presents a number of challenges. For instance, developing new mobile applications is not only expensive, it’s also a potential money-trap. Today’s million-dollar investment could very well be obsolete in just a year’s time. The Commonwealth Bank’s executive general manager of digital channels, Lisa Frazier, said recently at the Agile Australia 2015 conference that its annual funding cycle couldn’t cope with their agile development needs. As a result, she had to institute monthly funding meetings combined with fortnightly risk and compliance catch-ups to get things moving quickly enough.

For most financial institutions that don’t have the scale of CBA, it’s important to find the right partner to help you navigate the challenges — one that’s building communities of interest that you can be a part of. When you do, you’ll not only benefit from economies of scale, but also wind up with a customised, agile solution that you can easily refine and enhance based on customer feedback. That means that getting to market becomes faster, easier, and cheaper, as well as more effective. In an age when the alternative is to lose your competitive advantage, it’s a compelling choice.

By Colin Sultana, Head of EFT, Acquiring & Digital