Mobile banking – The great app frontier


As mobile banking services have essentially become table stakes for major financial institutions in the US, many banks are now shifting their focus to the development of handset-specific mobile banking applications.

In particular, the Apple iPhone has been a key area of banks’ mobile focus in recent months, with a multitude of mobile banking applications hitting the iTunes App Store within the past year. This charge has been led by mobile banking pioneer Bank of America, whose application for the iPhone has been available since July 2008. The app’s popularity has grown at a staggering pace, with approximately 43% of Bank of America’s 3 million plus mobile customers now accessing the service via iPhone or iPod Touch. Within the past year or so, nine of the top ten banks in the US have launched an iPhone app, and over twenty US banks have launched apps.

Following in the iPhone’s footsteps, Blackberry and Android have also launched their own “app stores,” and banks are beginning to take notice. So far, FIs like Bank of America and USAA have launched Android-specific mobile banking apps tailored to the Google-powered platform, and other large banks are likely to soon follow in their footsteps as more and more Android phones hit the marketplace. Apps for the Blackberry have been launched by Bank of America, Discover, and Regions, among others, and we will continue to see more and more Blackberry apps in the marketplace.

The typical iPhone, Blackberry, or Android user – a technologically savvy, affluent professional between the ages of 25 and 50 – is a key revenue-generating demographic for banks. By providing useful and convenient mobile banking capabilities utilizing the advanced technology of such mobile devices, banks can gain additional business from existing customers while at the same time attracting new customers from this valuable demographic.

For example, in August 2009, USAA became the first major financial institution to launch remote deposit capabilities via its iPhone mobile banking app, enabling its customers to take pictures of checks and send them directly to the bank for deposit. USAA’s app additionally offers other value-add services for its customers, including auto insurance information, incident assistance, stock information, trade execution, and a loan calculator, among others. Due largely to its highly comprehensive mobile offering, USAA now has over a 15% penetration rate of its 7 million plus customers, with over a million actively using its mobile banking services.

The future potential for growth in handset-specific mobile banking and payments applications is significant. While most major banks currently have one iPhone mobile banking app, some have started to launch additional applications for their segment-specific online banking platforms, like PNC’s Gen Y-focused Virtual Wallet app and Wells Fargo’s CEO Mobile app for small business customers.

Wells Fargo is the first major bank to offer wire transfer capabilities through its CEO Mobile app, whereas most major banks have thus far extended their mobile payments functionalities only as far as bill pay. It is likely, however, that as customers become increasingly comfortable making bill payments on their smartphones, banks will begin offering additional apps with more advanced, revenue-generating payment functionalities. Mobile payments technology is also moving towards more open access to handset capabilities for banks to leverage along with the accelerating mobile banking app trend.

The trend of banks offering multiple banking and payments apps is likely to intensify going forward, and we may eventually see each bank offering dozens of apps specifically targeted toward its various lines of business and/or customer segments. However, these won’t all be concentrated on the iPhone, as the mobile market is far too large to have it all consolidated at one player. Instead, banks will need to offer comprehensive, handset-tailored apps across multiple key platforms in order to continue to drive customer loyalty and new business through the mobile channel.