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Firstly, why?
Banks have many reasons to motivate their customers to use their mobile apps more often. First, it can increase profitability because banks can offer their products and services directly on the app. Secondly, improving the customer experience (for example, by enriching payment data) or increasing efficiency are other reasons why banks want customers to use the app. If customers use the app for their banking transactions, the number of personal visits to the bank will be reduced, which means faster and more efficient services for all customers.
Personalization and targeting, competitive advantage, and improved security and fraud prevention are other reasons why banks should encourage their customers to use the mobile app more often. Overall, quality banking apps can be a key factor in attracting new customers and retaining existing ones.
COVID-19 accelerated the transition to digital banking channels dominated by banking apps
We look at a survey conducted by Morning Consult on behalf of the American Bankers Association.
Prior to the COVID-19 pandemic, 33% of bank customers used apps on their phones or other mobile devices as their primary way to manage their bank accounts, while 24% used online banking most often via a laptop or computer and 21% (1 in 5 customers) conducted their transactions most often in person at a bank branch. During the pandemic, the frequency of use of digital channels increased even further (44% mobile apps, 26% online), while branch banking dropped to 10%.
The full survey can be found on the American Bankers Association website.
"Digital banking was on the rise long before COVID-19, but the growth in mobile app usage accelerated when the pandemic made in-person banking more difficult," said Rob Morgan, ABA senior vice president of innovation strategy. "Today's banking apps are extremely sophisticated, and this survey shows that many consumers who try them will quickly choose preffered mobile banking."
Now, let's think about how to take advantage of this trend of moving clients to a mobile app. Below we present an overview of 6 possible reasons to motivate users to visit more often and make the most of it.
6 ways how to motivate users:
Transparency: the standard in banking today is clarity of payment data. Customers want to see where they spent their money. That is, they want to see the exact merchant’s name, merchant logo, transaction categorization, or GPS location for their transactions. With visibility, clients can keep track of their payments and better manage their personal budgets.
Personalization
Offer personalized services and offers that adapt to each client's unique needs. Ensure clients receive information about benefits and offers that match their financial situation and interests. Payment data enrichment can help you do this and is a key element in understanding client behavior.
Mobile payments
Increase convenience for clients by allowing them to make mobile payments in real-time. Enabling mobile payments can increase user activity on the app as they will use the app to pay more often. For example, being able to split joint spending with friends or family.
Push notifications
Push notifications can be useful for users as they get instant feedback and alerts on important information such as new products or discounts. Push notifications can also provide helpful reminders, such as installment payments or deadlines, which can help users keep their finances in check. Make sure notifications are personalized and not too intrusive so as not to put users off.
Virtual assistants
Give clients the ability to interact with a virtual assistant who can answer questions and help solve problems. For example, a virtual assistant can provide users with transaction and payment information, such as account balance information or transaction history. This feature will make it easy for users to get information and improve their experience with the app. An example of a smart banking assistant can be Czech Fintech's AddAI solution.
Cash back programs
Offer clients bonus programs that reward regular activity in the app. This way you can motivate users to use the app more often and take advantage of additional features. For example, you can offer Moneyback. By analyzing customer buying behavior, you can get personalized promotions. Your clients will save money on goods they normally buy and will visit your app more often.
You can also read about how to motivate users in our case study with bunq.
The Impact of Specialization on bank capitalization
Given the increasing competition in the banking sector, specialization is becoming increasingly important. If we want to understand the value of publicly traded banks and fintechs, we need to focus not only on geography and customer segmentation but also on specialization. According to the data, "P/B" and return on equity are high for specialized players and fintech that focus on products such as deposits, payments, and consumer finance.
Traditional banks face challenges and insufficient return on equity, while fintechs and specialist players with innovative products can generate profits. Differences are evident across geographies, with banks in Asia and the Middle East currently the best-valued, while European banks face increased pressure from a potential recession.
By leveraging data enrichment, we can improve payments and other products to improve the overall value of the bank. Specialization is therefore becoming a necessity in the banking sector and a key factor for success in the market.
This overview is based on data from McKinsey's Global Banking Annual Review, which identifies key trends and risks in the banking sector. The research shows that the best specialisms, depending on capitalization, are banks with a focus on payments, which can be improved through data enrichment and the use of innovative technology. These trends are impacting banking markets around the world, from European and US banks to banks in emerging Asian countries.
Conclusion
The strategies mentioned above can help banks increase customer activity on the app and improve the user experience with banking services. In today's digital age, it is crucial for banks to be innovative and offer modern solutions that meet customer needs and expectations. Investing in mobile app development and creating an environment that actively engages customers can be beneficial for a bank both financially and in terms of acquiring new customers and retaining existing ones.
