Consumers in the UK are increasingly turning to mobile banking apps to manage their finances, as evidenced by the increasing number of in-app transactions over the past year, according to data from the British Bankers Association and EY cited by Finextra.
As banks continue to shift their focus from the in-branch experience to the digital one, usage will grow further:
- Banks are focusing on providing their customers with a full suite of on-the-go capabilities. The number of users who leverage mobile banking to manage their savings jumped 30%, the number of consumers who track their credit card usage increased 46%, and the number of consumers handling larger accounts like mortgages and investments jumped 86% from last year. And this is giving banks greater opportunity to push other offerings — in 2016 alone, banks sent out more than 400 million text alerts to customers and facilitated over 4 million webchats.
- The increased focus on digital is paying off for banks. Three of the UK’s largest banks have continued to see adoption of their mobile banking offerings — Lloyds Group, Barclays, and the Royal Bank of Scotland (RBS) added millions of mobile users in 2016, reaching 8 million, 5.7 million, and 4.2 million mobile banking customers, respectively. This has resulted in skyrocketing usage — from 2012 to 2017, consumer use of banking apps increased 356%.
- By pushing mobile banking, banks are not only able to increase engagement with customers, but also move away from traditional banking infrastructure and high costs. As more consumers flock to mobile banking, banks will no longer have to bear the brunt of running a large number of branches — over the last two years, more than 1,000 branches in the UK have closed, and RBS has announced thatit’s closing 128 of its NatWest branches and 30 outlets in the UK this year.This enables banks to not only save costs associated with running a branch, like rent, but also on everyday banking transactions; JPMorgan Chase recently shared that depositing a check digitally is 96% less expensive for the bank than depositing a check via a human teller.
More broadly, peer-to-peer (P2P) payments, are on the rise. These informal payments made from one person to another have long been a prominent feature of the payments industry. That’s because individuals transfer funds to each other on a regular basis, whether it’s to make a recurring payment, reimburse a friend, or split a dinner bill.
Over the next few years, though overall P2P spend will remain constant, a shift to mobile payments across the board and increased spending power from the digital-savvy younger generation will cause the mobile P2P industry to skyrocket.
That poses a problem for firms providing these services, though. Historically, most of these players have taken on mobile P2P at a loss because it’s a low-friction way to onboard users and won’t catch on unless it’s free, or largely free, to consumers. But as it becomes more popular and starts to eat into these firms’ traditional streams of revenue, finding ways to monetize is increasingly important.