The banking industry is evolving every day. Mobile banking services are transforming from being a service for the tech-savvy to a mass-market provision availed by all customer segments. Moreover, banks have observed the convenience, ease and increased ROI of providing banking services over the mobile platform.
Mobile banking service is relatively new, however, it has immense capabilities of expanding customer base by providing ease, convenience and handy information of customers’ accounts. On the other hand, banks using this facility must also consider competition from other financial institutions and FinTech innovators that enables customers to bank on-the-go.
This blog is a brief on the mobile banking market, opportunities for banks and the challenges faced by them.
Factors influencing the Rise of Mobile Banking Services
Listed under are the factors that have contributed to making mobile banking a reality…
1. Increase in the number of smartphone users
It is no surprise that smartphones have become a way of life. By the end of 2016, the number of smartphone users crossed 300 million, with 3 of the 4 devices sold having 4G (LTE) capability.
2. Availability of more preferences and options
Further to the services being offered by internet banking and ATMs, mobile banking platforms have been showing a tremendous growth in banking options that can be performed on hand-held devices.
3. Access to innovative modes of banking
With facilities like P2P payments, remote deposit of cheques, stopping cheques, detecting frauds and more, mobile banking has brought revolutionised how customers bank.
Opportunities for Banks on Adopting Mobile Banking
1. Cutting down operational costs
Banks can save high on their operational costs with mobile banking. The difference in the cost associated with each transaction at a branch and that on a mobile device is significant. Have a look at this image.
2. Delivering need-specific products and services
Banks can strategically plan and execute campaigns for a particular customer segment via mobile banking applications. They can push tailor-made investment and savings options directly to the mobile screens of customers for quick turnaround, ultimately adding on to the profits.
3. Offering rewards and discounts to maximise revenues
Banks can associate with partner places to build business relationships while extending benefits in the form of discounts/reward points to the customers for each transaction/purchase. This maximises banking revenues by making mobile banking apps as a preferred payment mode.
Major Challenges for Banks Using Mobile Banking
Mobile banking will continue to evolve, but certain challenges must be overcome for banks to be successful in their journey.
1. Technological awareness in people
Though mobile banking apps are popularising amongst the youth, there is a large audience who aren’t familiar with this channel. Banks must take initiatives in promoting this service by educating the masses while also simplifying its use.
2. Security concerns
With more technology entering the banking industry, greater chances of phishing, spamming, identity thefts and money laundering cannot be ignored. Banks must adapt to best practices as defined by RBI and NPCI to minimise any risk related to customer security and funds.
3. Scalability on all platforms
Banks must consider that their users may be scattered across the platforms like iOS, Android, Windows, Symbian or any other (that may evolve in future). Therefore, mobile banking applications must cater to all customers, while also adhering to telecom standards, technical know-how of software and more that may keep changing with time.
This is the era of mobile banking! The changing customer demands and rapid progressions in the banking sector are prompting financial institutions to embrace this trend. They must avail this opportunity and act swiftly in order to market themselves as a provider of premium mobile banking services and thus secure their future.