Should banks and credit unions be building fun and engaging mobile apps that go beyond basic banking functions? Or should they just stick to what they know? And what kind of apps do consumers expect from retail financial institutions?
By Niklas Olsson, Senior Consultant at Mapa Research
More and more financial institutions are looking beyond their core mobile banking apps and wondering what else they can deliver in this crucial channel. In what ways can banks and credit unions engage consumers with financial apps that offer an experience going beyond the management of accounts?
A Flurry of Property Related Apps
Housing and mortgage related apps are, by far, the most common offered by financial institutions to extend their app offerings beyond mobile banking. This is also the app initiative outside core banking that we see providing the best business case.
In 2011, we saw the launch of Commonwealth Bank’s Property guide and in May this year Halifax (a UK mortgage lender) launched a Home Finder app. The Halifax app contains features similar to the Commonwealth Bank app including advanced augmented reality, built-in mortgage and repayment calculator, local area and home buyer guides.
One of the key triggers for building this app was that customer research revealed (in relation to searching for new homes) “the percentage of buyers looking to use a smartphone to purchase their next property is expected to rise three-fold over the next five years.”
“We know that today’s house hunters want to be able to carry out their searches on a daily basis and when they are on the move,” explained Stephen Noakes, Mortgages Director at Halifax. “The Home Finder app is perfect. You can search properties, book viewings, rate properties and get an indicative mortgage calculation all in one place.”
Noakes’ aim is to provide house hunters with information and guidance that helps them make sense of the residential property market and make better-informed property decisions. Halifax is part of the Lloyds, which has around 25% of the mortgage market in the UK, so the Home Finder app makes commercial sense.
There are of course other examples of financial services launching non-core mobile apps. Loyalty schemes and deals featured like those tapping GPS functionality give consumers the option to redeem vouchers quickly and easily.
We had expected that there would be a large number of app initiatives aimed at youths and students: considering them a digital savvy generation that banks would want to tie closer to. Surprisingly, few such initiatives exist. One exception is SpareBank1’s Child Allowance app.
The allowance app is designed to teach children and teenagers the relationship between tasks, allowances and savings. “With an increasingly larger share of payments being done with cards, many children have trouble seeing where the money comes from and what value they represent,” says May Wasmuth, project leader at SpareBank 1. With this app, the children, with their parents, learn the importance of money, work and savings.
This is one of the first initiatives of its kind. It has a certain appeal from a corporate social responsibility perspective, as it serves a practical need while also helping children become more financially aware.
American Express recently launched ReceiptMatch, which allows a company’s employees to capture images of receipts on the go and add notes to their transactions.
Looking to the Future
Examples of non-core mobile apps from financial institutions certainly aren’t common. That’s not to say that in the future, financial institutions won’t invest more time and money into this area.
Why? Because the strategy offers a number of advantages:
- Provide real value for customers
- Increase loyalty
- Attract new customers
- Extend product and service offerings
- Boost saving volumes and interest in investments
- Improve corporate social responsibility
We are already seeing non-core banking apps, allowing people to take their financial institution with them where the last hurdle (house hunting, acquiring goods/services, etc.) ultimately comes back to paying for something. Device developments and the explosion of data will give consumers apps so they can navigate these experiences more seamlessly.
Non-core banking apps not only have a role to play commercially, but also from a brand and reputational viewpoint. They particularly allow banks to connect with denizens of the mobile world — one of the most important consumer segments going forward.
Niklas Olsson a Senior consultant at Mapa Research, and provides research and consultancy services across mobile banking, internet banking and online share dealing and funds. He heads up the delivery of research to Scandinavian clients and is also the product manager of Mapa’s innovation reports series. Mapa Research has been providing research and benchmarking services for the last 15 years for financial services clients in the UK, Scandinavia and globally.