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It’s Time to Respond to the Needs of Digitally-Savvy Consumers

Today more than half of the world’s population owns a mobile device.1  The evolution of digital banking has moved from Automated Teller Machines (ATMs) to internet banking, and we are now in the era of mobile banking. The number of mobile banking users is expected to more than double from 0.8 billion in 2014 to 1.8 billion by 2018.2  And while the age of the mobile-activated consumer has arrived, many banks have yet to take full advantage of these trends.

Mobile is fast developing as a key growth channel for banking worldwide

Consumers’ appetites for everything mobile are evolving rapidly all over the world. Not only do 87 per cent of U.S. adults have a mobile phone, but 71 per cent of those mobile phones are Internet-enabled smartphones.3 60 per cent of smartphone owners surveyed who switched banks reported mobile as “important” or “extremely important” in their decision.4

However, in the U.K., recent research conducted by YouGov uncovered a surprising fact - 58% of respondents had never used a mobile banking app, even though smartphones are fast becoming the UK’s number one device for browsing the internet and using social media.5

In Asia, mobile phone penetration rates are outstripping rates of western countries. According to GSMA Mobile Economy, Asia Pacific will add an incremental 1.7 billion smartphones by 2020 to reach 3 billion, more than half of the global smartphone total.6 According to McKinsey research, the number of digital banking customers in Asia is expected to almost triple to 1.7 billion by 2020 from 670 million in 2012. About 40% of Asian mass affluent customers prefer online or mobile banking and overall brick-and-mortar branch usage across Asia has declined by 27% since 2007, signalling a shift in channel preference.7

We see a huge market opportunity and a strong potential for banks to gain market share. On the flip side, banks that are least prepared for the digital game will likely lag behind their regional peers in terms of market share and profitability. According to McKinsey analysis, it is projected that banks who adopt and implement digital banking systems could see a fairly positive impact on net profits. The majority of those profits are projected to come from cost savings with the rest coming from new products and market share gains. On the other hand, in alternative scenarios, inaction could potentially result in banks losing between 29-36% of their bottom line.8

Are banks really ready to be digitally disrupted? How do they win the digital game?

Early adopters are not guaranteed to be the ultimate winners in this changing digital game. Our study reveals that many customers are ready for more apps and richer overall in-app functionality but banks are missing opportunities to deliver what their customers crave.  The most effective mobile banking strategy is one that best aligns with customers’ real-world needs. That’s why recognising how consumers are currently relying on mobile apps to conduct their banking versus how they would prefer to use them is absolutely critical.

In the age of cyber security, consumers are becoming more concerned about cyber fraud, which has discouraged many from taking full advantage of mobile technology. Banks can turn this challenge into an opportunity by helping customers protect themselves with solutions that meet their functional and real-world security needs.

New, digitally-savvy customers are looking for a more transparent, secure and efficient banking experience. To continually attract, retain and build a more loyal customer base and drive more incremental revenue, banks must remain focused on implementing the newest and most innovative mobile banking features that their customers truly desire. By offering the right mix of features and functionality, banks will not only be able to keep pace with their customers’ ever-changing needs, but also surpass their expectations, and gain the competitive edge they need to win in today’s mobile-activated world.

The game starts with the consumer. And it starts NOW!

Ready to evolve your mobile banking strategy?

To understand the appetite of mobile-activated consumers and the importance of customer centric approach in mobile banking, check out our exclusive infographic about “New Insights, New Opportunities in a Mobile-Activated World

 

1Mobile Banking 2015”, KMPG, July 2015.
2 Global Mobile Economy Report”, GSMA, 2015.
3 Consumers & Mobile Financial Services 2015," The Board of Governors of the Federal Reserve System, March 2015.
4 "AlixPartners Mobile Financial Services Tracking Study," 2014.
5The UK is now a smartphone society”, Ofcom, August 2015.
7 “Digital Banking in Asia: What do consumers really want?”, McKinsey & Company, March 2015.
8 “Digital Banking in Asia: Winning approaches in a new generation of financial services”, McKinsey & Company, March 2015.
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