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Here’s Why Smartphones and Account Aggregation Are the Future of Omnichannel Banking

April 22, 2016|0 min read
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The Wave of Mobile Banking Users

Recently we wrote about the oncoming wave of users who prefer mobile banking to other channels, and last week Juniper Research confirmed how real this wave is. Juniper predicts that mobile banking users will exceed online banking users within five years. In addition, they predict that within five years the 800 million people worldwide who currently use their phones for banking will more than double to 1.75 billion.

There’s no reason to think that this wave toward greater convenience will ever reverse. In fact, Nielsen shows that mobile media consumption has skyrocketed since 2012. One of their recent studies reveals that while TV is still king when it comes to captivating consumer audiences, the future isn’t trending in TV’s favor. Instead, people are increasingly drawn to their smartphones.

Mobile banking users will exceed online banking users within five years.

What’s even more telling is that since 2012 the amount of time spent using the Internet on a computer has decreased in parallel with the increased time spent browsing the Internet on a smartphone:

What does all of this mean for financial institutions? Well, for one thing, it means that if you’re not pursuing mobile banking aggressively, you’re not prepared for the future. It also means you need to start thinking about mobile as the keystone of the banking experience. Your users now expect to start interacting with your products via a smartphone and then be able to continue the process exactly where they left off when they use a desktop or visit a branch. This mobile-first concept is a core part of any omnichannel experience.

Omnichannel Banking

A majority of retail banks understand this. A survey from CEB TowerGroup shows that 66 percent of respondents said delivering a consistent customer experience across channels will be a major focus for the next 12 months:

This segment of respondents understands the state of the financial industry. They understand what BAI’s internal data showed them, which is that omnichannel banking can:

  • Boost sales of complex products such as mortgages by up to 60%
  • Dramatically increase productivity of valued specialists
  • Deliver double-digit improvement in customer net satisfactions

Omnichannel banking does away with the siloed and fractured banking experience, replacing it with something cohesive and seamless. It’s the key to winning wallet share in the digital age.

The Problem

The problem is that many financial institutions aren’t anticipating how account aggregation could drastically help or hinder their mobile strategy. That is, many banks and credit unions don’t realize that once a competitor offers a mobile banking app with the ability to aggregate outside accounts, users will lose the need for multiple financial apps.

Picture this: You have two financial apps on your smartphone. One lets you aggregate all your accounts in one view; the other doesn’t. Which one do you think stands the best chance of becoming your primary financial application? If you’re drawn to the one that lets you see all your accounts in one place, you understand the increasing consumer impulse to enjoy that same benefit.

Once consumers choose a primary financial application, they’ll spend more and more time with the institution that offers it. At that point the institution that offers the primary financial app will quickly steal wallet share from their competitors. The smartphone then becomes the portal to the total banking experience.

A recent study from Google shows why this is the case. It says, “[Smartphones] have the highest number of user interactions per day and serve as the most common starting point for activities across multiple screens.” The Google study also shows that 59 percent of financial management activities were started on a smartphone, and 56 percent of those activities were continued or finished on a desktop. It’s clear from data like this that the smartphone opens up a way for users to become more loyal to particular financial institutions — institutions that offer a primary financial application.

59 percent of financial management activities were started on a smartphone.

The Future

Within a few years, a majority of financial institutions will understand how the convenience of account aggregation affects their wallet share. The institutions at the frontier of fintech already understand this. They know, for instance, that 72 percent of millennials would bank at companies like Wal-Mart, T-Mobile, or Google if these companies offered such services. They also know that companies likeLending Club have already started to encroach on the traditional lending business model. For the first time, major competitors to financial institutions can build a banking experience that fits in a user’s pocket. Never before has banking been so easy to access. Clearly, fintech is the way of the future. 

In order to meet the demands of the rising wave of mobile users, financial institutions should quickly adopt the fundamentals of fintech and offer a primary financial application that will pull them through the next five years and beyond.

Banks that respond now, rather than wait for the ‘all clear’ signal, will be handsomely rewarded by attracting new generations of customers, retaining existing customers, avoiding disintermediation, and generating new revenue streams by delivering the innovative omnichannel services customers are demanding. — Cisco
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