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Is The Mobile Banking Industry Taking Over Traditional Banks?

by uma

 

 

By Otávio Tranchesi, Finance Industry Lead, AppsFlyer

In the past, people were once said to be more loyal to their banks than to their partners. Fast-forward to the present, we see a significant change in how customers interact with financial institutions. Nowadays, their standard practices tend to include switching banks, having numerous accounts, mobile banking, and using various financial apps.

Across the African continent, mobile technology has been crucial to the rise of fintech. Africa’s mobile banking adoption is high and sub-Saharan Africa (SSA) is currently the world’s fastest-growing mobile phone market. Within the SSA region, it is predicted that by the end of 2025 unique users of mobile banking will rise to 50% of the population. Additionally, the number of smartphone connections in SSA is predicted to almost double and surpass 678 million by the end of 2025. 

Leading mobile-first banks like Kuda Bank, TymeBank, and Bank Zero continue to challenge established high-street banks, by providing streamlined and robust mobile banking experiences for each of their users. Other fintech apps have also become popular, including those used for investing, budgeting, buy-now-pay-later, cryptocurrency, lending, and other functions.

Building Trust between Banks and Consumers 

Nigeria, South Africa, and Kenya’s financial banking ecosystems have undergone remarkable growth over the past few years. The rise of financial digitalisation led to an increase in new service providers, who offer a wider range of mobile money operators and payments service providers to fintech firms and other financial services providers. Currently, South Africa is leading the financial hub in Africa, with around $1 trillion in annual cross-border transactions. Nigeria is currently home to over 200 fintech organizations, not counting fintech solutions provided by banks and mobile network operators, and over half of consumers in Kenya use mobile banking.

The sudden rise of digital financial services has meant consumer trust and security are vital as the industry is a commonly targeted sector for cyber attacks. The foundation of any successful connection with a consumer is trust, especially when handling a consumer’s sensitive financial information. In addition to having efficient security and fraud prevention measurements in place, banks must also effectively communicate their commitment to security. This can be illustrated through offering transparency in their terms and conditions, fees, and human-centric language to gain clients’ trust.

As such, it is increasingly important for Nigeria, South Africa, and Kenya to prioritize financial transparency, with a secure Cybersecurity Framework and Guidelines when users deposit and move money with their banks. 

App Adoption Trumping Acquisition 

Within the new banking landscape, traditional banks are expected, at the very least, to offer a seamless mobile app solution. Studies have shown that many users in sub-Saharan Africa have successfully adapted to mobile, with more mobile money accounts than bank accounts in several countries. For instance, 96% of Kenyan households utilize mobile money in some capacity, making Kenya the world leader in mobile money usage. Customers state when choosing a bank, the option of having an intuitive mobile app significantly impacted their decision. This is partly because current account consumers value the convenience of the accessibility of an app, where they have the ease of accessing their account without having to continuously enter their bank details. In today’s cutthroat marketplace, ease of access, user-friendly, adaptability, and high security are expected features that all banks need to adhere to in order to compete.

So while there’s ongoing pressure on traditional banks to innovate, they have the benefit of sizable existing client bases, and a strong brand presence. The challenge then, is ensuring their app offering meets customer expectations, and then placing a high priority on migrating existing customers to their app. 

QR Codes Posing Questions

In contrast, many mobile-first fintech organisations place a high emphasis on user acquisition. Without a pre-existing user base, their main mission is to find a way to appeal to new users and stave off competition. 

There are many avenues an organization can undergo to achieve this, but one method which consistently proves popular is QR codes.

This deep linking technology strategy has ensured the success of many fintech brands. When customers scan the QR code, they are either immediately directed to the app store to download the app, or to the relevant place in the app if they already have it installed. QR codes have proven a great method for brands to measure the effectiveness of their marketing campaigns as they have access to each data scan. They are able to see how frequently the code has been scanned, who was a new customer, who was an old customer and if they made purchases or generated income.

Let’s take the case of a customer looking for a new credit card. They locate a bank with a competitive offer, visit their website, and begin entering the necessary data. The bank provides the customer with a QR code so they may complete the application and obtain the credit card inside of the app in an effort to attract additional users to their app. The business can then evaluate the effectiveness of the campaign and these users’ performance.

Additionally, QR codes can be used to connect online and offline worlds. For instance, including a tiny QR code on the envelope when mailing a new credit card can make it quick and simple for a user to scan it and be taken to the app.

Is Data Pivotal to Success?

Data plays a vital role in defining the success of mobile banking, whether you’re a traditional bank or a mobile-first one. Organizations that are able to measure the success of their marketing campaigns – whether they’re aimed at migrating existing users to the app, or acquiring new users – will have a greater advantage over their competitors. Not only will they be able to scale quicker, but they’ll have a better understanding as to what’s working, where budgets should be invested, and what messaging and content resonates with customers. This in turn, will help companies attract more customers, increase revenue, build scale, and offer more accessible and profitable products and services. 

Ultimately, in this new era of banking, consumers aren’t tied to one company or service. There’s never been more choice and flexibility as to how people bank and manage their money. The key for anyone operating in this space, is understanding what marketing methods will work best, and how to cut through the noise. There’s no one size fits all solution, but having an overarching view of the customer journey and being able to measure the success of marketing campaigns are all key elements for success.  

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