With an estimated 1.2 billion users worldwide at the end of 2016, mobile banking is fast becoming the main touch point for banks. This shift in user needs is a grand opportunity – for incumbent banks and also for new tech-focused challenger banks.
Mobile banking has expanded way beyond just apps on smartphones – wearables, IoT devices and smart assistants like Amazon Echo have all greatly impacted the emerging mobile banking system.
With this interoperability of technology, the number of ways to interact with customers is growing rapidly. 2017 will bring more innovation to the mobile banking arena – and there are 5 trends to watch for this year:
#1 Challenger banks
In 2016, in the UK alone, 5 new digital banks received licenses or launched services. These so called challenger banks have no branches and only engage customers through digital media. The response from both customers and regulators has been highly receptive – and a further 20 known UK challengers are hoping to be granted banking licenses this year.
In mainland Europe, mobile telecoms giant, Orange, plan to launch Orange Bank later this year. The bank plans to offer all essential banking services, with the added promise of a unique mobile banking experience. With plenty of expertise in mobile technology, it seems banking is no longer the domain of financial institutions.
#2 AI and bots
Rather than having a branch in which to chat with financial advisors, banks need to find a user friendly way to interact with their customers. Using AIs and chatbots that learn about user habits over time, the banking system can offer advice on a large scale, to great effect.
Set to launch in 2017, Bank of America’s new chatbot “Erica”, is to help customers make smarter financial decisions. Erica will be available inside the bank’s mobile app and can be interacted with through voice or text. It will use artificial intelligence, predictive analytics and cognitive messaging to help customers do things like make payments, check balances, save money and pay down debt. Other banks will have to step their game up.
As AI use becomes more ubiquitous, the opportunities in AI banking are high. A bot can potentially give much deeper insights into financial behaviour than bank clerks. Expect to see banks join this trend in 2017.
#3 IoT and voice payments
The vocal revolution is becoming more mainstream, with gadgets from cars to smart home devices all predicted to have a significant number of voice-control commands.
The large companies, with the existing infrastructure are leading the way here – Mastercard and Samsung, as well as Amazon and LG, have jointly developed new additions to their smart fridges. These will allow users to order and pay for their groceries using only their voice.
Not to be outdone, car makers are also getting in on the act. Daimler Financial Services, the financial arm of the group that owns Mercedes, has just announced the acquisition of PayCash. This is a part of their plan to have their own eWallet, Mercedes Pay, which they see as crucial to expanding automobile services such as ride-sharing, car-sharing and all car related payments.
Whilst the move by consumer tech companies into voice-enabled payments is a real disruption to banks, they are planning their own voice enabled technologies. From security features to smart assistants, voice technology will add a new dimension to the mobile banking landscape in 2017.
Asides from bitcoin and cryptocurrencies, blockchain technologies have the potential to overcome many of the hurdles that mobile banking still faces.
Security is the biggest concern as transactions go digital. Blockchain technology’s main priority is hyper-security and this will help prevent scams like fraud, double-spending and price gouging. In addition, as the world becomes less cash and card driven, electronic wallets are on the rise. Blockchain security features, such as multi signature verification, will help ensure trust in these new systems.
With blockchain, mobile payments can also be fast. Instantly fast. As developers design and implement faster blockchain networks, the latency seen in current transactions times will be a thing of the past.
Not only do speed and security improve, transaction costs also come down. As smartphones themselves are becoming cheaper, the result is a banking infrastructure that is much more accessible to the world’s unbanked population. 2017 surely promises to be a big year for them.
#5 Banking as a Service
The use of third party APIs has been slow in the banking sector, but this promises to be the future of banking. As financial companies start sharing expertise, they’ll become much more flexible in the operations they can offer.
Banking platforms like SolarisBank are already doing this for fintech start ups. Granted a banking license in 2016, the German company allows their customers to pick and choose their own banking modules to develop a banking experience customised to their needs.
This lets those new challenger banks, other fintech start ups and even the incumbent banks to focus on their customers – you. They’ll be able to offer better mobile apps and cleverer ways for you to interact with your money.
The Open Bank Project is offering a service to facilitate the growth of open APIs. They offer an app store of APIs from a strong community of partners and third party developers. 2017 should see strong interest in the project and open APIs in general.
We’re seeing banking rapidly shrink from buildings to smartphones. However mobile banking is still a relatively new concept. As access to mobile services becomes so much more available, the industry will change. Innovation will intensify in 2017 and the banking industry might not quite look quite the same come next year.