The move to mobile banking
“The Way We Bank Now” report from the British Bankers Association (BBA) revealed that there were 347 million payments made via banking apps in 2015 – a 54% increase over the previous 12 months. Customers now log into mobile banking apps 11 million times each day. Anthony Browne, Chief Executive of the BBA states in the report: “Banks have long competed against one another over interest rates on loans and savings accounts. Now the new battleground is offering the best app or video-banking service.”
Mobile apps offer clear advantages for engaging with Millennials and high net worth/time poor customers, offering around-the-clock access to their balance and transactions. The BBA reports that customers now engage with their bank 3.5 times a month, up from 2.3 times a month in 2011. By comparison, visits to physical branches have fallen by 32 per cent since 2011, according to CACI.
In addition to the time-saving benefits, the BBA report also points to the benefit of using smartphone technology to assist customers with special needs; offering biometric authentication for older customers who struggle to remember passwords and providing deaf customers with texts and video links to staff who can communicate using sign language.
Pixels not paper
In the B2B space, wealth managers and insurance brokers are benefiting from using phone-based features such as pre-filling forms, GPS stamping and barcode and QR code scanning, reducing reliance on paper-based transactions. The ability to call up customer information on their tablets or smartphones helps them to generate quotes while they are still with customers.
All roles point to IT
In the cloud-first, mobile-first era, every role should involve IT. However, this fundamental change in the channels of engagement is putting pressure on organisations to deliver and manage a constant supply of robust mobile apps. In 2015, Gartner forecasted: “By the end of 2017, market demand for mobile app development services will grow at least five times faster than internal IT organizations' capacity to deliver them."
Managing app demand
One of the challenges voiced by the financial services sector is the scarcity of developer resources in meeting the demand for apps.
An October 2015 survey of 200 IT decision makers from private sector organisations in Western Europe and the U.S., undertaken by Vanson Bourne on behalf of Red Hat, revealed clear changes in the way that IT professionals are working with their counterparts in business departments to meet the demand for mobile apps and digital transformation.
We have seen with Royal Bank of Scotland's Open Experience initiative that app demand can encourage successful collaboration between IT specialists, entrepreneurs and business managers.
IT and business collaboration has become key to progressing digital transformation initiatives. However, success depends upon clear responsibilities and agreements on the decision-making roles in the relationship.
Three key trends have emerged:
1. IT professionals and lines of business managers are working more closely on mobile app strategy and delivery
2. More organisations are using lightweight scripting languages and rapid mobile application development (RMAD) tools
3. Telcos, handset vendors and cloud service providers are expanding their offerings to support enterprise mobility and digital transformation
Changing role of IT professionals
Mobility, cloud and the Internet of Things (IoT) are transforming business processes. We are in a period of major digital innovation that is enabled by collaboration. IT and business departments are working more closely to support continuous mobile app delivery.
Business managers are at the edge of innovation and this should drive many of the decisions around engagement channels, use cases, app features, design and UI/UX, workflows, citizen developer tools and analytics – all in partnership with IT.
Greater use of lightweight development tools to meet app demand
We anticipate that RMAD tools will play a greater role for lines of business as they try to meet the growing need for apps, without placing heavy demands on IT departments. Integration of mobile apps with existing back-end systems is an important success factor and this is driving changes in the technologies selected.
In the October 2015 survey, Vanson Bourne researchers found that 71 per cent of respondents were using Java and 56 percent of respondents were using .NET for back-end integration; however, respondents predicted this to fall to 15 percent using Java and 19 percent using .NET in 2016, with a quarter (26 percent) planning to primarily use Node.js for back-end integration over the same period.
This change in the mobile ecosystem and technologies to support mobile app delivery and management are important trends for IT professionals to track during 2017 so that they can guide the selection of platforms that are expected to be around to support financial sector organisations’ mobile strategies over the longer term.
Business selects the destination, IT specialists navigate the channels
While business managers are increasingly making the decisions and holding the budgets for mobile and digital initiatives, we believe that IT specialists are likely to continue to drive the key decisions and implementation of modern architectures that are based on microservices and APIs, including platforms (cloud, container-based, self-service developer components, infrastructure) and processes (DevOps, agile) and that they should hold budget and control for these areas.
We predict that platform technologies will emerge in the near future that support these modern architectures and processes and enable organisations to transition away from traditional approaches that can stifle digital innovation. These new platforms should empower IT professionals to respond to demands from the business for more agility in getting new applications to market and modernising existing applications.
The financial services sector has an opportunity to mirror the customer experience provided by consumer apps and deepen its engagement with customers through well-designed apps with easy-to-use features. Compelling apps can deliver enhanced, personalised customer services, combined with more robust security and tight integration with back-end systems. Mobile devices also offer financial services providers a source of rich customer data, which can aid future marketing and app development efforts.
The BBA report lists several “Challengers” entering the arena, with mobile-first or mobile only offerings, including Atom Bank and Mondo Bank, which only offer banking via apps and Starling which describes itself as mobile-first.
Traditional financial services organisations should prioritise the key business processes that lend themselves to quick successes and match apps and use cases to consumer expectation. By focusing on their customers, delivering great user experiences, driving continuous innovation and providing as many security safeguards as possible, financial services apps are more likely to gain adoption and usage and influence customer loyalty.
Cathal McGloin, Vice President, Mobile Platforms, Red Hat