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 tasks, while simultaneously banking intuitions are expanding their mobile platforms.
The largest financial banking institutions have seen a large decline in the last five years, with over 1,700 US bank branches closing in a steady pace since June 2017; this in largely due to the adoption by consumers of mobile banking. As of January 2018, 67% of customers globally are adopting 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 on the mobile banking revolution; its adoption, growth potential, perks and pitfalls, and lastly our predictions for this fintech revolution.
Adoption of Mobile Banking:
97% of adults in Asia, specifically China, are using mobile banking services making China one of the early adopters in mobile banking. This 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 from Indonesia, leading in Southeast Asia, China, India, Brazil, and most of Europe.
We will highlight the key mobile banking players in Europe and the US specifically.
There are several types of mobile banking solutions. The first are the traditional banks, such as JP Morgan, Bank of America, Citibank 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 banks, who offer a separate brand usually targeted toward a niche target market, for example millennials. The third type are the mobile first and branchless banks who are revolutionizing the banking industry while providing banking services only via their app.
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 in the US.
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 main target audience.
- Orange, one of the largest telecom operators in France, has launched their digital lending banking system in October 2017. They are targeting to reach 10 million users within ten years- which is roughly 2.5% of the entire French Market. They have even started to launch their banking solution to West Africa and make banking available to countries without that privilege.
- Monzo Bank, is providing your full banking solution with a physical card attached to a app with benefits and no international fees. The app is not attached 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 benefits of no international fees, makes the card attractive for travel and for uploading receipts for keeping 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. Now, Revolut offers and is built for the mobile age with an option of both a free and paid premium plan. This mobile banking giant has recently raised over $83 million total in funding.
- Simple, is an online bank that helps people reach their saving goals, by tracking spending habits and allows users to get a free payment card.
- Starling Bank 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 Bank is one of the fastest growing mobile banks in the UK. It helps users with mortgage rates, fixed accounts and service loans for small and medium businesses.
Perks and Pitfalls:
Mobile banking is becoming more accepted as the millennial generation will be the main target audience in the next ten years. Like any revolutionary concept there are perks and pitfalls. The perks of a mobile bank range from being adapted by the millennial generation quicker with a more young, trendy and fresh feel to a branchless bank, not having to make time to visit your local bank, competitive exchange rates, reduced fees and an overall faster way to access finances.
Even though the above perks, there are some pitfalls to overcome. One of the main pitfalls of mobile only banking besides for the difficulty of the transition for an older generation and the stability of a “startup bank” is the area of fraud. Most consumers expressed the concern of not understanding the technology their bank is using which hurts their confidence in trusting the experience of the mobile bank. Even though mobile banking apps are adding features such as multi factor authentication, the security and trust consumers feel will need to be addressed by these mobile-only banks in order to gain trust and grow.
What does the future for this vertical hold?
Mobile 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 expect will happen…
- Mobile banking goes mainstream- Mobile banking adoption is only expected to increase and grow, not just by millennials, but also by older age groups who will access and transact on their phones.
- Funding of mobile banks and Fintech Startups- There will a significant new funding of both existing as well as new entrants to the eco system allowing them to expand to new markets, hire tech talent and extend their product offering.
- Traditional banks shifting to mobile- Traditional banks will need to advance their mobile products and improve the overall user experience to be competitive with the innovative mobile banks. If they will not innovate – they will lose market share.
- Traditional banks buying Fintech- The classic ‘Make or Buy’ dilemma. Traditional banks will innovate via acquisition of disruptive mobile banks or alternative personal finance apps. This will assist them to remain competitive, be relevant and offer more to their customers.
- Mobile banks expanding digital presence and focusing on growth- Companies will have to expand their digital footprint on social media – Facebook, Google, Twitter, Snap and additional platforms – both via organic as well as using paid promotions. Aggressive and fast growth will be a focus in 2018 and a key driver for success as the market will become highly competitive.
We believe 2018 will be a remarkable growth year for mobile banking and Fintech startups, and we are looking forward to seeing more innovation and disruption in the industry.
DAU-UP ClicksMob works closely with Fintech startups and personal finance apps, effectively helping them with growth strategy, 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 growth experts about growing your finance app.
Posted by Daniel Neumann & Marketing Team