By Gaurav Mittal, Executive Vice President, Ethoca
In the 15 or so years since the introduction of smartphones, most people can’t imagine life without them. Consumers have embraced the purchasing power provided through their advanced technology. One-third of consumers use digital banking channels daily, and if not getting the services they need, as many as 50% would consider switching banks to access advanced features.
I remember when these processes were not quite simple: if you wanted to check your bank balance, you needed to find an ATM or go to a bank branch. Customers would be out of luck if they wanted to set up a standing order on a Friday evening and simply have to wait until a branch opened on Monday morning.
With all their advantages, it’s not difficult to see why digital banking apps have become so popular. They bring extra security and enable consumers to keep tabs on their spending and ensure no suspicious activity is happening on their accounts. In short, these new features can help to build trust.
Given the substantial progress made, the question arises: what does the future hold for digital banking apps? What can banks offer their customers to engage them further and build trust between them and their financial service providers? Put simply, what do customers want from their banking apps?
Changing consumer expectations
Through our research, we can see that consumers want richer merchant information. Examples include brand logos and easily recognizable business names – information that gives them more insight into their purchases. This means if customers are unsure whether they made a transaction, then the rich data, like logos and location data, can help jog their memory.
Consumers are also looking for newer features and capabilities in these apps, including tools for managing or tracking subscriptions, shipping status, loyalty programs, and managing spending limits. Banking apps also provide the opportunity to use digital receipts, which bring a wide array of advantages. They are convenient, always accessible, and they don’t suffer from the problems of thermal printed physical equivalents – such as fading, getting lost or damaged or taking up space.
These are the key elements that build both trust and loyalty between the consumer and the brand. It means customers will have an easier time managing their subscriptions and will develop positive associations with the retailer in question.
This ‘banking app revolution,’ as it is being described, is being taken a step further by its digital-first pioneers. We have seen a marked increase in the number of online banks without a street presence. There are now 66 of these ‘neobanks’ in the US and 23 in the UK – they cover 27% and 23% of the banking population in these two countries, respectively. It is projected that there will be 28 million neobank customers by 2027.
Upping your customer game
With more innovation in the market, we know it’s our responsibility to create an ecosystem of trust between issuers and merchants. As a result, we help enhance the experience for consumers by providing the functionality they seek.
This is always at the forefront of Mastercard’s strategy, expanding what is possible for consumers and retailers alike. With the banking app as a consistent touchpoint, merchant discounts and loyalty programs have a higher potential to reach increasingly engaged consumers with greater regularity and impact. As I mentioned earlier, people want to interact with the places they buy from within their banking app – and if the opportunities are there, consumers will take advantage of them.
Introducing new features within digital banking apps contributes to a seamless experience, – reducing any necessity to switch between multiple applications and adding any additional friction. The consumer experience can also be personalized without becoming obtrusive. For example, if an app notices that a customer is making many purchases from a particular vendor, it can highlight special offers and deals. This delivers higher value, continually surprising and delighting customers above and beyond, giving them the functionality that potentially saves them money and provides a great user experience.
As well as the obvious consumer benefits, adding these capabilities creates value for merchants and issuers – by driving customer loyalty behavior for consumers and fewer disputes – and increasing consumer lifetime value.
What’s next for digital banking apps?
Given the trajectory of digital banking apps so far, the likelihood is that they will become ‘super apps,’ with an ecosystem of features that allow for a wide range of financial interactions and services that will drive massively increased value for brands and consumers alike. I believe there is limitless potential for more enhanced features that will improve our everyday lives.
Meeting consumer expectations remains vital to ensuring engagement and trust with loyal users. To achieve this, banks, brands, and payment players must collaborate to create a digital banking ecosystem that genuinely caters to evolving consumer needs. As we continue to innovate and deliver greater lifetime value, the digital banking experience will become increasingly accessible and enjoyable.
About the Author
Gaurav Mittal is Executive Vice President of Ethoca, a Mastercard company. Gaurav focuses on executing and evolving Ethoca’s global strategy to help businesses reduce fraud and disputes and create better digital customer experiences. Gaurav joined Mastercard in 2014. Immediately before his role at Ethoca, Gaurav led Global M&A for Mastercard. He has also held leadership positions across Product Development and Enterprise Strategy. Prior to Mastercard, Gaurav worked at Booz & Company, where he helped customers develop and focus on their strategic initiatives. Before Booz, Gaurav worked as an early employee and senior executive at GEP, a B2B procure-to-pay technology company, where he oversaw the firm’s rapid growth. Gaurav received his MBA from Columbia University and an undergraduate degree in Computer Science from Denison University.
Ethoca is an award-winning provider of collaboration-based intelligence and technology solutions that empower businesses worldwide to fight fraud, prevent disputes and improve the customer experience. Powered by the ever-growing Ethoca Network, its solutions provide rich intelligence throughout the customer purchase journey and close costly communication gaps between all stakeholders in the payments ecosystem. Mastercard acquired Ethoca in April 2019. To learn more, visit www.ethoca.com.
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