Looking at the Digital Channel

Less than 1,000 banks and credit unions remain that have not launched a mobile banking app, representing only 14% of the 7,346 total financial institutions nationwide. This is such a small percentage that grows smaller every day and is reflective of how important mobile devices have become to our everyday banking needs. Interestingly, the iPhone holds a sizeable majority in which device consumers actually use to bank remotely, accounting for 65% of overall usage, any way you measure it. Android users, even though they represent such a higher percentage of the overall smart phone market, still lag in mobile banking.

Despite the imbalance in device usage, mobile banking ubiquity has long since been achieved and is now pushing the industry closer and closer to a plateau. Year-over-year growth rates are expected to remain close to the 3% and 4% mark, with slow growth in the future for each financial institution that gains a mobile app. Additionally, every year the number of banks and credit unions shrink due to closings, mergers and acquisitions, causing the number of financial institutions to decrease while the percentage of mobile banking apps increases.

What we can expect to see grow, however, are the additional features within the apps. Apps have progressed not only in popularity, but in ability. From the bare bones balance check functionality available 10 years ago to the dynamic apps that are dictating the competitive landscape today, mobile banking will only get easier, smarter and more convenient for consumers and businesses alike.

Malauzai, a Finastra company, examined the growth of mobile banking apps in number, vendors and the features within to help shed some light on the data surrounding these growth trends. Below are the standouts paving the way for the future of this important banking tool in an era of mobile growth and explosive digital adoption.

• Convenience: This is the hallmark of real digital engagement. A single feature from a few years ago has helped increase usage and digital engagement: Quick Balance. This easy balance check that does not require a standard log is bolstering the digital channel with 6.5% of digital users choosing to use this feature in excess of 22 times a month.

• Remote Deposit Capture: Officially, depositing a check via a digital device has broken into the top five tasks performed with mobile banking. The other top activities include balance check, transaction history, money transfer, and reviewing deposit or check images.

• Money Movement: Overall, the total amount of money movements (transfer, BillPay, check capture, P2P (person-to-person)/A2A (account-to-account) is growing and so is the average amount of money moved via the digital channel. The dollar value of a payment has recently increased by 24% for BillPay, 19.5% for check capture and 21% for account transfers. Only P2P/A2A bucked the trend, with the value of a P2P payment remaining flat. A majority of people use P2P for relatively small amounts of money; roughly 56% pay less than $50 per use, and less than 20% of the surveyed people use it to send amounts more than $100. Large format money movements (iPad and desktop) are again higher by about 65%. People seem to trust larger devices and thus, they transfer higher values.

• P2P and A2A Activity: Most money is being moved away from the financial institution; nearly 80% of A2A transfers are outbound, meaning people use the service mostly to send money away from the bank or credit union, to another financial institution. A total of 1,139 apps this year have P2P capabilities, a 45% increase from last year. P2P payments are a relatively new, but highly popular feature of mobile banking apps and their growth year-to-year reflects this.

• Card Management: Debit and credit card control allows users a variety of ways to control and ensure their card’s security. Some of the common functions of card control include turning the card on and off, restricting transactions to specific geographic areas and types of merchants, and setting spending limits for a card. The number of mobile banking apps offering in-app debit or credit card controls grew to 633 – a 125% increase. An additional 181 offer card controls in a standalone app, usually offered by the card processor. The most popular feature is consistently the ability to turn the card on and off. Approximately 5.75% of end-users manage their cards via mobile banking every month.

In just a decade, the mobile banking industry has taken off and changed the way we bank. Approximately 87% of financial institutions within the asset range of $50 million to $15 billion have mobile banking apps. This is a huge majority of the total financial institutions, and is indicative of the central role the digital channel plays in our day to day lives.

Allan Brown is Vice President, Digital Community Markets for Malauzai, a Finastra Company. He can be reached at allan.brown@finastra.com.