Incumbent banks’ money management apps face rocky future

By Emma Olsson | 17 February 2020

Large banks are struggling to develop money management apps to rival challengers, according to Mark O’Keefe, Payments Systems Regulator (PSR) panel member and founding director at Optima Consultancy.

“There's a lot of talk, and I think this is probably a theme that you see from the incumbent banks is that they often talk a good game about the billions that they are investing, but it doesn't translate necessarily into tangible results,” says O’Keefe.

Large banks have been making moves into the money management space, spurred by challengers such as Monzo, Revolut and Starling. On February 5 the Telegraph reported that Bó, a digital banking platform under NatWest – formerly RBS –  had asked more than 6,000 customers to dispose of their cards, following an update to the new cards’chips to comply with secure customer authentication (SCA) under the Second Payments Services Directive (PSD2) by the March 14 deadline.

“If you opened a Bó account prior to January 3, we will be sending you a new card in the next few weeks. Once it arrives cut up and dispose of your old one. We're introducing these cards because they will make it easier for us to make sure that the person using your card is actually you,” Bó stated in a blog post.

According to a person close to the project, Bó’s plan for compliance had always been to install the chip, which alerts customers via the payment terminal when they need to make a chip and pin transaction. The chip solution was not yet available when the company launched publicly in November 2019. Bó issued cards in November with the knowledge that they would need to be re-issued once the new chip solution arrived. The re-issuing process cost the company under £10k.

“I think it’s probably more embarrassing from the perspective that they have so few customers that they’ve already put through a painful boarding process and have to say ‘Here’s another set of cards, you’re going to have to activate again.’ I think it’s just another example of where they talk like they’ve created a challenger, but the reality is it looks nothing like a challenger,” says O’Keefe.

“I don’t see others taking the same challenger brand approach as RBS are. HSBC have partnered with Bud, to try and deliver some of these bells and whistles, but again that’s a great example that when HSBC were piloting their connected money app, that Bud were running in the background, you saw it look a bit more like a challenger. They were experimenting and they were dropping releases, they were talking with the community, etc.

“Then they've said: ‘All that's really successful, we learnt loads, what we're now going to do is absorb that all into our main apps’ … What we have seen since is very little extra functionality deployed into their main apps, so it's almost like it gets back into the treacle of the main bank and stuff just doesn't move at the pace that it needs to.”

The past year has seen several bank money management projects fall through. Mimo, a money manager app launched by NatWest in April 2019, has since been switched off.

“Rather than continue the Mimo beta test, we'll introduce the best bits of Mimo into our main NatWest banking app (not overnight – but soon),” NatWest stated on its website.

In March 2019 HSBC shut down its pilot of money management app Artha, also promising integration into the bank’s main app. According to a study conducted by Optima Consultancy, only one of Artha’s features made it into HSBC’s main app. The study also pointed out that Bó does not support touch-ID authentication for log-in and that there is no intention to support regular payments such as standing orders and direct debits, in contrast to challengers.

“I think if banks believe as customers migrate into digital offerings as they’re doing in their millions, and with the mobile phone in particular – if customers use that device to manage their money, is it going to be natural that they go to their current account app to do all of that, or might they go to a third party that can provide a much better user experience?” says O’Keefe.

“If they really want to be the money dashboard of the future for their customer, are they better outsourcing that capability to someone that’s good at it, or partnering with someone that’s good at it or acquiring someone that’s good at it?”

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