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Since the advent of smartphones in the mid-2000s, the global banking industry has accelerated its transition to a digital-first service and engagement model. While online banking was already pervasive, mobile devices were the major catalyst for the digitalisation of retail banking.


Mobile apps offer richer functionality than browser-based solutions and cater better to the always-on, instant transaction capabilities that modern, digitally-savvy consumers demand.


This evolution in customer expectations prompted a wholesale review of the financial services sector's ability to serve clients digitally. As a result, banks and wealth managers have invested significantly to build out their digital capabilities, with mobile banking apps emerging as the core component in their integrated digitalisation strategies.


The result was that, around 18 months ago, mobile banking traffic reached the tipping point and surpassed browser-based online banking, according to Investec data. 

A rise in engagement frequency

When mobile banking became the dominant online channel, interesting user trends emerged. For instance, clients logged on up to five times more often to view balances when using the mobile app.


This rise in engagement frequency means mobile apps have become the primary touchpoint through which banks connect with customers and meet their financial needs. Any bank without a mobile-first digital strategy risks losing relevance in a rapidly evolving consumer environment.


However, as consumers transition en mass to mobile-centric lifestyles, banks no longer just compete against other financial services providers. In the new digital marketplace, consumers expect intuitive user experiences and personalisation across all their digital services, pitting banks against the global tech giants such as Netflix, Uber, and Facebook in terms of customer experience.


And the global coronavirus pandemic has significantly raised the stakes in the digital services arms race. Covid-19 lockdown restrictions and social distancing requirements accelerated digital adoption across the board, with remote working, e-commerce, contactless payments, and virtual engagement emerging as the world's 'new normal'.


And these trends will likely remain permanent as the world transitions into the post-pandemic era, which has significant implications for the traditional high-touch private banking industry. 

Lyndon Subroyen
Lyndon Subroyen, Global Head of Digital and Technology, Investec

 In the new digital marketplace, consumers expect intuitive user experiences and personalisation across all their digital services, pitting banks against the global tech giants such as Netflix, Uber, and Facebook in terms of customer experience.

Private banks leading the charge

Most private banks were early adopters of digital technologies. The sector leads the market in mobile app adoption and usage due to the types of clients it serves and the high rate of smartphone penetration in this consumer segment. These clients are also digitally savvy, which allowed private banks to reach critical mass in a short space of time.


And financial services providers that invested the time and resources to craft compelling, engaging, and user-friendly digital experiences via their mobile banking channels have experienced a surge in adoption and usage amid the pandemic.


Despite more people working from home on laptops and computers, our mobile banking traffic exceeded browser-based online banking for the first time last year. Private banking clients have embraced the low-friction access and comprehensive functionality offered from intelligently-designed mobile banking apps.


Users value features like easy-to-navigate interfaces that offer a consolidated view across all their services, from banking and investments to wealth management and insurance, both locally and internationally.


Empowered with enhanced functionality and usability, private banking clients have embraced more self-service functionality, using apps to view balances and transactional histories, make payments, trade stocks, open new accounts and submit and access documentation.

Trust and intuitive experience are key

These capabilities have also helped banks streamline operations and automate administratively-onerous tasks. The benefits to back-end operations help to reduce costs, increase responsiveness, and allows banks to divert human resources to value-adding functions within the organisation, which benefits both the bank and the client.


However, encouraging and supporting this user behaviour requires trust and an intuitive experience. For instance, access must be seamless without compromising on security. Most clients now use biometric authentication to access mobile banking platforms, making it an essential feature for any app.


And as cyber threats and fraud and security risks continually evolve, banks will need to advance this part of their digital ecosystem in lockstep with efforts to improve other aspects of the mobile banking experience. 


In this regard, secure mobile banking is not a destination. It is a continuous journey that requires renewed focus each day and consistent investment to ensure all digital infrastructure is secure, both for themselves and their clients.


Beyond these non-negotiable features, banks increasingly realise the benefits that added value brings to the customer's mobile banking experience. In this regard, simple design elements like the ability to personalise the interface meet a growing demand among mobile-first or mobile-only users.


For example, enabling clients to view their net asset value from different perspectives, such as a currency or geographic split, offers the personalised insights that consumers demand from intelligent digital solutions.


Clients also derive great value from value-added services like the ability to purchase voucher-based goods like prepaid airtime or electricity. And banks are also taking mobile-app digital innovation beyond conventional features and capabilities by offering services such as secure document storage and retrieval in a digital briefcase.


READ MORE: Staying cyber secure requires a healthy dose of scepticism

Mobile-first vs mobile-only models

Discovering, understanding and catering to these constantly evolving client preferences requires the appropriate digital tools to track and analyse app-derived data, especially as usage continues to increase.


Usage-based analytics play an important role in formulating decisions around user experience and design, supported by testing with clients in a controlled setting to refine updates and introduce new features. Data on our client behaviour can also prompt the creation and launch of new services.


Given the ubiquity of mobile phones and broadband internet access, coupled with the transformational shifts to digital services that occurred due to the pandemic, consumer behaviours have indelibly changed. And this trend applies to financial services.


Banking will continue to evolve from a mobile-centric to a mobile-first model, especially in private banking where clients still expect and demand a human element, while mobile-only offerings will emerge in the broader retail banking space as seen across many of the neobanks and fintechs that have already had incredible success with this approach.


Ultimately, mobile is now part of banking's DNA. However, it's not about having a separate digital strategy alongside a business strategy, it's about having a business strategy that is relevant in a digital era. And mobile is now the central tenet in any future-ready digitised banking operation.


This article originally appeared in Banking CIO Outlook.

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