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Mobile banking transactions to double by 2020

Mobile banking – on the up and up or never never?

Figures out today from two different sources indicate that mobile banking transactions will more than double by 2022, while branch visits may dwindle to as little as just four visits each year for the average consumer.

The research, published by CACI, reveals that customer interactions with their bank will increase by 54% in the next five years – largely driven by the continued rise of mobile banking. Banking app transactions will increase by 121%, meaning that log-ins, balance checks and payments will more than double.

Interactions made using a laptop or desktop, claims the report, will decrease by 63% between 2017 and 2022, as more and more consumers switch to smartphones to carry out transactions. This means that mobile banking, as it has so far, will continue to dominate the agenda for banks and financial institutions with customers across all demographics going digital.

Those aged 18-24 and starting out in life will visit their bank around six times this year, and this again may dip to just two visits annually by 2022.
The report claims here will be five times more elderly, low-income customers using mobile banking in 2022 than in 2017, and consumers aged 50 plus will account for almost a third of all mobile banking log-ins in 2022. This highlights the ongoing trend not only of mobile banking, but of older generations embracing the technology available to make handling their finances simpler.
The logic of this claim is slightly suspect since the drop in visits to a branch may be caused by the fact that there are fewer branches open in the first place. In the same way that a rise in rural journeys by foot is not necessarily a new lifestyle choice if it is caused by the cancellation of the bus route.

Speaking to IBS Intelligence Jerry Mulle, director of customers & partners at Intelligent Environments, said: “Digital banking is now truly king. This is further proof of the need for banks to continue to monitor the landscape, listen to consumer demands, and innovate technologically – all while ensuring security isn’t compromised. Is there a real choice or not?

Is this a real choice?

The fact that this may not be a real ‘choice’ but a matter of what is available was reflected in what Mulle said: “We don’t see this trend as signifying the end of the high street branch. There is still a need for bank branches – our 2016 research found that in-branch banking is still popular amongst the older generation, with almost a third (31%) of over 45-year-olds stating it as their preferred method of money management. Certain services also require more face time than others, for example, mortgage advice and loan applications. Branches still have a place and a role to play – as with everything, they will simply have to adapt, combining the human touch with technology to continually improve customer service and efficiency.”Customers are increasingly relying on banking apps to manage their money with app transactions rising by 57% during 2016 – according to a report by the BBA and EY.

An appetite for banking’, the latest edition of the Way We Bank Now series, also builds upon previous findings acknowledging the consumer-led trend towards digital banking. The research shows how over 19.6 million people used banking apps in 2016, an increase of 11% on the previous year5, corresponding to almost 4 in 10 (38%) of the UK adult population.6
Customers are using banking apps to do more than just check their account balance, with significant growth in customer numbers using apps to manage their savings (30%), credit cards (46%) and mortgage/investment accounts (86%) grew significantly in 2016.

There is still a place for banks in mortar 

The report nods in the direction of some concerns over the lack of branch access by pointing to the increase in the numbers of mobile ‘banks on wheels’, helping people in some rural communities get better physical bank access.

Eric Leenders, BBA Managing director, retail and commercial banking, said: “Banking apps are now the principle means by which we access our current accounts. And this doesn’t appear to be a fad with more and more people moving beyond payments, increasingly using apps to access a broader range of banking services, such as savings, credit cards, mortgage and investment accounts. Latest developments in the consumer-led digital revolution are empowering customers to manage their finances more conveniently.”

Dan Cooper EY UK banking and capital markets lead partner said: “This latest report highlights how customers are increasingly using digital banking, which in turn is driving innovation. This growing customer comfort with digital financial services sets the scene for the launch of Open Banking in 2018, when both banks and other providers will have the opportunity to present customers with greater choice and control over their financial lives.”

Jamie Morawiec, associate partner at CACI said: “The speed and convenience of mobile banking is a huge contributing factor to its ongoing popularity, especially as banks add more and more functionality to their apps. Understanding who is using it, and how, is key for banks to ensure it works for everyone. However with more than half of the population still expected to visit a branch in 2022, the branch still has an important role to play. Banks and FIs must ensure that the function of the branch remains relevant, complements the digital channels, and meets the specific needs of the demographics that are using them.”

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