How New Apps Will Change the Way You Bank
Just as the Internet provided consumers with an alternative to brick-and-mortar banks in the '90s, in coming years smartphone and tablet apps will take over the bulk of financial transactions, market researchers predict.
A Swiss study of 50 banks worldwide that have dedicated iOS and Android apps found that while most were extremely basic, a few of the apps demonstrate great potential.
"In terms of the future of mobile banking, it's very clear to us that when we talk about banking in general, a big part of this will be mobile," said Steffen Binder, research director of the Swiss market research group MyPrivateBanking that released the new report.
The best standalone application hailed from the Bank of China's Hong Kong division: "a jack of all trade" app that includes a comprehensive brokerage tool for trading "all sorts of stocks," Binder said. While U.S.-based investors can currently trade stocks using a Web browser on their smartphone, users of the BOCHK app can access a wealth of market information designed for easy viewing on a small screen.
"It’s just so comprehensive — we haven’t seen that in any other app," Binder said.
Other interesting apps offered by banks worldwide include features such as peer-to-peer payments via mobile phones, real-estate search tools or innovative digital client magazines, he added.
The report determined that two-thirds of the 200 applications studied handle only very basic banking needs, "with limited functionality and little content," the researchers said in a statement.
But mobile banking could soon revolutionize even simple transactions, especially as demand reaches critical mass and the U.S. adopts the safer European Visa Mastercard (EMV) security framework now being used in Europe, said banking channels adviser Edward O’Brien of Mercator Advisory Group in the U.S.
Chase now allows consumers to skip a trip to the bank or ATM altogether and deposit checks on the spot by scanning them with their phone camera. Other banks are expected to offer the service soon.
Now in Canada, the EMV standards that govern higher-level security for mobile financial processes will arrive in the U.S. in two to four years and allow American banks to catch up to European counterparts, O’Brien said. Currently, not even a "very significant" U.S. bank like Goldman Sachs offers a mobile app for private clients, Binder said.
A younger technology known as near field communication (NFC) will allow cellphones to function like credit cards at point-of-sale, communicating account information in a contactless swipe. Merchant systems that support this application will grow as the EMV protocol leads "smartchips" to replace magnetic stripes on debit cards, O’Brien said.
Future generations of mobile banking applications will go beyond ordinary tasks of making payments and trading stocks and embrace personal financial management, experts say.
Currently Citibank, the only U.S. bank to make the Swiss top ten, allows users to compare spending habits on groceries with the aggregated spending habits of the average person by age and geographic location, Binder said. This type of budget management will naturally progress into banks using mobile channels to cross-sell financial products tailored to a consumer’s needs, O’Brien said. Live chat tools that use video to enhance communication with financial advisors could also make their way into apps soon, Binder said.
As mobile banking applications free up services now handled by tellers, bank branch offices could undergo a renaissance of their own. Greater staff time and a shift in focus would allow tellers to be conduits to financial advisors and physical space to host rich discussions about one’s financial future, O’Brien said.
"You could actually discuss with someone investment opportunities. Instead of just withdrawing or depositing, talk about where you want to be this year or next year. You could use the branch to really take investment to the next level," he said.