Not All Mobile Banking Apps Are Created Equal

While retail banking consumers now prefer the mobile channel to all other channels for interaction, not all mobile banking apps are created equal, according to a study from J.D. Power.

As consumers become more comfortable with digital channels, there is a greater demand for mobile banking experiences that replicate those from non-financial companies like major retailers, technology companies, airlines and hotel chains. Consumers want an appealing design, ease of use and navigation, the ability to personalize the experience and real-time alerts for important updates.

In an effort to satisfy increased consumers demands and move more people to lower cost channels, many banks and credit unions have significantly increased their investment in digital channels. The investment has resulted in greater mobile banking usage across demographic segments according to J.D. Power, with 31% of consumers using their bank’s mobile banking app. Usage is even higher among younger consumers.

For maximum benefit, not only do people need to use mobile banking – they need to enjoy the experience. To reinforce the importance of mobile banking experience, J.D. Power found that better digital banking applications have been a primary driver in better overall retail banking satisfaction scores. This correlation has helped the largest financial institutions the most because of their ability to invest more aggressively in digital channels.

Another benefit of high mobile banking satisfaction is that satisfied users are also advocates. These highly satisfied mobile application users are likely to recommend the app (81%), are less likely to switch providers (62%) and are more likely to buy additional products and services (55%).

Satisfaction Driven by Five Key Attributes

The J.D. Power 2017 U.S. Banking App Satisfaction Study provides a great perspective on how an organization can differentiate a mobile banking application to drive satisfaction. The independent attributes in the Mobile App Satisfaction Index include (in order of importance), ease of navigation, appearance, range of services, clarity of information and availability of key information.

By identifying what content and tools are most desired by consumers, banks and credit unions can prioritize app enhancements. The study found that ease of use is the key differentiator among top-performing mobile apps. The components of ease of use include the login process, access to account information, and overall ease of managing the account. Possible enhancements include:

  • Use of biometrics to login with clear access to input login credentials
  • Providing key information front and center (balances, rates, etc.). Also allow deeper access to information such as statements
  • Ability to easily make deposits, manage alerts, P2P payments and transfers

Competition Between the Best Mobile Banking Apps is Tight

Capital One ranked the highest in overall mobile banking application satisfaction with a score of 870 (on a 1,000-point scale) with Bank of America only 5 points behind, with a score of 865. In fact, only 32 points separated the highest and lowest performing mobile banking app, illustrating the importance of constant innovation and development.

Rounding out the top 5 mobile banking apps were TD Bank (with a score of 860), U.S. Bank (859) and BB&T (852). The average score of all of the top banks ranked was 855. Not surprisingly, while not included in the official rankings due to the unique nature of their customer base, USAA had a score that all banks could aspire to … 910 out of 1,000.

Mobile Banking Adoption Impacted by Security Concerns

As mentioned, the survey found that mobile banking consumers like the channel more than any other way of dealing with a bank. But despite this advocacy among users, overall adoption is still surprisingly low overall (31%).

The primary hurdle to overcome is trust, with less than half of respondents (44%) saying they perceive their online information to be “very secure.” Additional research from J.D. Power has found that just 32% of bank consumers say they trust mobile banking. Given that consumers are skeptical about security banks should focus on alleviating some of the concern through marketing and customer education, stated the research.

“Even with the mobile channel having the highest satisfaction and consistency of all channels, adoption is stubbornly low – particularly when compared with overall smartphone penetration,” said Bob Neuhaus, director, financial services at J.D. Power. “The challenge for both retail banks is to establish accessible entry points that ease resistant consumers onto the mobile channel where they will, in all likelihood, quickly find that they are very satisfied with the experience.”

Mobile Payment App Usage Strong Among Younger Consumers

A bright spot in the research by J.D. Power was that younger consumers are quickly embracing mobile payment apps. In fact, more than two-thirds (69%) of study respondents indicated they had used a mobile payment service in the previous 30 days.

The usage numbers jump to 76% among Millennials and Gen Z segments. This trend reinforces the strategy to integrate mobile payments with the mobile banking app experience.

According to J.D. Power, “As banks consider integrating mobile payments into the banking experience, it is important to understand which services consumers are using and what they like about the payment services providers.” Among the survey respondents, PayPal is the most commonly used mobile payment service, with 56% of  respondents indicating they have used the service in the past 30 days. Not surprisingly, the primary reason people used PayPal (or any mobile payment app) … ease of use.

Learning From High Performers

The importance of this study (or any similar ratings study) is the ability to learn from the high performers. For instance, understanding how Capital One provides quick access to key information upon logging into their mobile app is a model for other banks and credit unions.

Most leaders give account balances pre-login and are beginning to integrate biometrics to alleviate security concerns. Other leaders provide personalization capabilities, budgeting tools and even larger fonts and icons for ease of use.

While organizations used to conduct ‘shopping studies’ of competitor branches in the past, doing a competitive analysis of mobile banking apps is an excellent way to prioritize app enhancements.

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