The main advantage of mobile banking to both customers and bank institutions is the opportunity of being on the same page. If a bank satisfies the clients’ needs and meets their’ expectations, it will attract more customers to the bank and expedite its growth. The high number of mobile banking users proves that mobile banking has a lot of advantages. In many traditional bank institutions, leadership seriously considers digitalization in the nearest future. They need companies experienced in digital transformation to assist, as the rise of app-only banks continues.
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Advantages of online banking. Background
When talking about mobile banking, we all probably imagine customers that swipe-and-tap something in their fintech application. A lot of people do this every day. Young people and the elderly are smiling on advertising prospects when they get notifications of a successful transaction. Why do mobile fintech applications make everyone's life easier? There are still a lot of people who don't use internet banking.
The percentage of individuals that use internet banking is growing in the European Union (28 countries, including the United Kingdom) from 36% in 2010 to 58% in 2019. However, things are different in various European countries. In Bulgaria, for example, only 3% of consumers were using mobile applications in 2010. After a decade, this number has tripled to 9%. Still, it seems traditional finance institutions should not hurry to introduce new mobile services there. After all, the balance between supply and demand must be maintained.
As an illustration, it is interesting to see numbers from such countries as Denmark or Norway, where almost all people access their bank accounts via a mobile app (91% in Denmark and 95% in Norway in 2019). This means that consumers need such services and financial institutions respond to the demand. On the other hand, the competition in fintech business in countries with a high percentage of the population that has already been using mobile banking applications will be harsh.
The most tangible benefits of the investment in the development of mobile banking apps can be seen in such countries as Sweden (84%), United Kingdom (78%), Switzerland (73%), Belgium (71%), Luxembourg (71%), Ireland (67%), France (66%), Austria (63%), Germany (61%), and also Estonia (81%), Latvia (72%), Lithuania (65%), and Czech Republic (68%) with the well-developed fintech infrastructure and free room for brand new financial applications.
The number of individuals who use internet banking in the United Kingdom, for example, was high all time from 2010 till now and count around 80% today. It grows by 5% a year from 2015. It means that mobile applications are hot in the UK, and there will be more consumers who join the tendency.
Disadvantages of mobile banking. Background
A couple of years ago, UBS published its report, which noticed that more than 50% of transactions in the UK were made online. The young customers that are coming to banks go mobile. Banks also become more agile with using technologies. This can impact those who, for example, will never download any fintech application. They will lose access to banks as hundreds of branches are closed per year.
CEO of Intelenet Global Services Bhupender Singh says that from the closure of the local branches may suffer such categories of people as residents of villages and areas with the slow internet providers and the elderly. Moreover, some customers just prefer the attention of in-person service. It is one of the reasons why such big banks as Metro Bank have been keeping big branches open for a long time, despite a big shift to online.
Offline banking can go the same way as online services. If they optimize mortgage and loan procedures, reduce fees and paper-based bureaucratie, speed up basic services, and focus on customer-facing roles, then branches-based banking could attract more people. After all, the main disadvantage of online applications is that there is no human assistant that could help you if needed.
Pros and cons of mobile banking
Among the advantages of online banking is that a customer needs less time to perform simple transactions. Checking accounts, accessing information, and getting notifications about bank news are available at any time. All you need is the internet and no branch visiting is needed. Customers appreciate it. On the other hand, there are some disadvantages of mobile banking, too. The main disadvantage of online and app-based banking is the lack of support for big operations like mortgages, home or auto loans, etc. People are not getting that kind of detail that they would get from in-person communication.
Thus, the bank system should not radically reduce the number of branches, as people will more likely trust other people rather than the application. For example, 60% of Americans would prefer to open a new checking account at a branch rather than in a mobile application. 86% of customers desire face-to-face human interaction. But it also is a good idea to develop the fintech sector to meet customers' expectations and support them in day-to-day finance activities.
The obvious advantage of mobile banking for both banks and customers, however, is the mobile app is available 24/7. Banks don't need to open new branches and hire people. After investing in fintech solutions, traditional bank institutions offer their customers the access to their personal account via the internet and make a new transaction using financial applications, while bank employees are out of offices.
And now, let's see what are the advantages of mobile banking more carefully.
1. Saving your time
Sometimes customers rate banking applications not very well. Indeed, they have different UI/UX designs, tools, speed, accessibility, but often we forget the main thing. It is not the easiest thing in the world to create a perfect banking application. Nevertheless, at our team, we have extensive experience building mobile-only banks and complex banking systems. We are well-equipped to deliver secure digital banking solutions. We develop a robust back end, appealing design, and intuitive user experience.
Meanwhile, isn't it amazing that we can pay for things even if we left our wallet at home or to transfer some funds to our friends or relatives, not looking for an ATM nervously? A decade ago all this was unimaginable. Today we can perform hundreds of actions without wasting our time to go to the bank branch. It could be enough, but some more features of online banking deserve attention.
2. Access your account 24/7
The newest banking applications allow its customers to access an account, for example, to make a transaction whenever they need and wherever they are. 74% of UK residents are using mobile devices to manage their finances. This is the European leader in this field. Moreover, Europeans aged 55-64 years use banking apps more often than their counterparts in the US, DataProt wrote. It means that these people mainly manage their finances online.
3. Safe and save
The fintech industry creates a lot of security instruments. Data security is a fundamental rule for fintech these days. For the last 6 years, the fintech industry has become revolutionarily secure to provide customers with instant P2P payments, online-only banking, and financial solutions, living without which is hard to imagine. Nevertheless, it is possible that some solutions won’t be secure enough. Due to this reason, the worldwide application security market is going to grow for around 25% till 2023 and rise from $2.56 billion in 2017 to $9.64 billion by the end of 2023.
4. Taking control
Nowadays, financial applications have become easier and more intuitive. You can not just perform a financial transaction, but also manage your income, expenses, and savings. For example, the Kindgeek team has a fresh experience of creating such fintech applications as HyperJar. This is a fintech platform that grants unprecedented budgeting customization. It is an ecosystem, which also helps monitor how and where a user spends their money.
Benefits of mobile banking to banks
1. There are impressive mobile banking benefits for banks itself. Banks can serve customers at any time. Customers will access and check their accounts, make a purchase, and transfer money independently. Banks can also provide consumers with chatbot-services to help them with simple problems immediately and without big call-services needed. Such options attract customers as it is shown by the successful existence of online-only banks.
2. By implementing online banking, the traditional bank institution will save on time. People that can deal with their accounts digitally will not come to the branches often. So, bank employees will have more time to assist those people who need personal attention. This will significantly improve the workflow. Both employees and clients will be more satisfied with the situation. Bank institutions without long queue lines attract more customers.
3. Other benefits of developing mobile banking apps are saving on operational costs, reducing costs by helping banks go paperless, saving money on printing. Meanwhile, the financial institution can carefully study customer analytics to measure their experience and make the services better. Additionally, digital customers are engaged with brands and mobile services, so they hold more products from their banks.
We at Kindgeek believe that any company is with its clients in the same team. If you are looking for someone who can help you with the development of a mobile banking app, you can be sure that you've found a perfect teammate. Contact us if you are about to start your next fintech project.