“Mobile devices, high-speed data communication, and online commerce are creating expectations that convenient, secure, real-time payment and banking capabilities should be available whenever and wherever they are needed”
———Jerome Powell, Chairman of the US Federal Reserve
We are fundamentally moving towards a completely cashless society. Soon, not only wallets, but also debit and credit cards will disappear. This is just one of the banking trends that will change our lives for years to come. Findings by Riksbank (2019) indicate that cash transactions percentage in many countries has already hit record low and Worldpay (2019) projects that by close of 2021, mobile wallets, credit & debit cards will surpass cash at all point of sales.
Digital transformation doesn’t happen overnight. This is a complex and time-consuming process that has a fundamental impact on every aspect of the organization. According to Banking and Capital Market Outlook report (Deloitte, 2019), over one-third of all banking institutions have already invested in technologies such as open APIs, big data engines, or chatbots, to accelerate digital adoption and modernize their offering.
Mobile wallets, on-demand banking apps, and the new trend of digital assistants are at the forefront of the mobile banking wave. And it’s the consumers who often act as the prime movers of innovation. They’re increasingly demanding and want self-service, personalization, and immediate assistance.
To keep up with these evolving customer preferences and stay competitive, banks and financial institutions have no other option but to tap into the latest mobile banking trends. There are innovative differentiating trends to consider in 2022 and beyond.
Trend #1: Rise of the usage of cardless Automated Teller Machine (ATM):
Opinions indeed vary on whether our attention span is shrinking but consumer patience is narrowing. Who likes queuing at an ATM? To deal with our collective restlessness, banks have introduced another innovation, namely cardless ATM withdrawals.
While this mobile banking trend is not entirely new, the increasing adoption of this solution by banks attests to its swelling popularity. First, credit and debit cards were pushed out by mobile wallets for online and in-store purchases; now, it’s their turn to step down at ATMs.
Depending on a bank or financial provider, two ways are available to withdraw money including an app-generated code or near-field communication (NFC). The first method involves validating transactions with a QR code displayed in your banking app.
The use of NFC resembles contactless ‘Tap and PIN’ card transactions; however, this time, you tap the ATM sensor with your phone to take out money, with no card required. This mobile banking technology attracts consumers for its speed and convenience.
However, apart from these two benefits, cardless withdrawals also help reduce clone card fraud, as all assets are secure in encrypted transactions, even if the ATM is tampered with.
Trend #2: Open banking expansion with mobile service offering:
Open banking is a new standard for financial institutions that allows banks to share user data with third-party vendors using open application programming interfaces (APIs). This standard aims to create a personalized customer experience with the proliferation of new products and services.
By leveraging this concept, banks and financial institutions can build a network of financial services accessible from a single integrated control point of consumer choice. Benefits include a more transparent view of finances, faster and direct payments, faster and more convenient credit reporting, and improved user experience.
How does this work in real life? Here’s an example. Most of us have several bank accounts. One bank offers an attractive saving scheme, another has low interest rates on personal loans, and yet another provides debit cards at no fees.
Open banking makes it possible to choose a provider that will act as a centralized hub for all these accounts and services, so that you no longer have to log in to each service individually but get a single, comprehensive dashboard to manage all of them.
Regions such as the UK, Hong Kong, Singapore, Sweden, and the Netherlands lead the way in open banking, while others follow. The standard offers numerous advantages, but it’s still an emerging trend that will need a few years to catch on, also for regulatory reasons.
Trend #3: The banking usage of blockchain will continue to grow:
Blockchain has finally become one of the leading transformation drivers in the banking sector, including mobile, from a ubiquitous and annoying buzzword. Technology has the potential to solve problems in many industries, which banks and financial institutions are familiar with.
According to Accenture (2019), 9 in 10 bank executives explore the use of blockchain to enhance security. Big guns like JP Morgan Chase, Bank of American and Goldman Sachs envisage the help of blockchain to improve efficiency, increase cost-effectiveness and better protect their assets.
Blockchain closely monitors transactions and displays them to all participants in real-time, increasing data transparency and reducing fraud. As a decentralized platform, blockchain mitigates some of the risks traditionally associated with data centralization, such as unauthorized disclosure of sensitive user data and manipulation of information by third parties.
The technology also reduces transaction times and facilitates settlement and adjustment. Ideal for enhancing mobile banking in the areas of faster authentication, money transfers and payments, interbank payments and credit history checking with unique blockchain features such as data immutability, node distribution and asymmetric encryption. Other implementations can be applied to this technology, and it is certain that it will redefine mobile banking in the future.
Trend #4: Big Data will make fraud detection effective:
As banks and financial institutions increase their revenue and expand their services, they face increased security risks. According to Forbes (2018), the problem is serious as credit, debit and prepaid card fraud was projected to exceed $ 12 billion by 2020. Given the additional costs of other types of mobile banking scams, such as phishing, account hijacking, and identity theft, it’s no wonder that scam detection is a top priority in mobile banking.
Fortunately, another significant trend in mobile banking can help fintech businesses safeguard their resources and protect their customers’ identities. The use of big data engines enables banks and financial institutions to improve risk assessment processes and jump ahead of the competition by providing a streamlined customer experience while reducing the impact of fraud.
Thanks to big data, banks and financial institutions can extract and aggregate vast pools of customer data from a variety of sources, such as financial statements, mobile banking history, or even social media. This capability makes it possible for them to investigate every customer’s historical behaviour, identify common patterns, and develop a holistic view of each account. Based on that analysis, predictive models of fraud detection can be developed, which will raise the red flag whenever some irregularities are detected.
Conclusion
The banking industry is known for its resistance to change. Today’s banking systems rely heavily on manual processes and lengthy procedures, and traditional financial institutions are lagging in developing the substantial resources needed to deliver solutions.
Digital for consumers. However, innovation is constantly evolving, as the mobile banking trends above show. Technology is evolving at an alarming rate, creating a wave of opportunities for financial institutions aspiring to adapt. To stay successful, modern banks need to balance physical branch offices with mobile banking services.
As consumers spend over 5 hours a day on smartphones, and the number of mobile devices is anticipated to reach 16.8 billion by 2023 (Statista), banks that will be the first to leverage the emerging mobile banking technology trends are bound to gain a competitive edge.
SMS banking and a basic mobile banking app are not enough. Consumers seek a comprehensive, positive, end-to-end banking experience that is personalized and effortless. They won’t stay loyal if a bank doesn’t live up to their expectations and will vote with their thumbs tapping on smartphone screens.
References
https://www.brainyquote.com/quotes/jerome_powell_857783?src=t_banking
[Accessed 14th August 2021]
https://www.iflexion.com/blog/mobile-banking-trends [Accessed 14th August 2021]
https://thefinancialbrand.com/120076/most-people-make-deposits-via-mobile-apps-and-thats-not-stopping [Accessed 15th August 2021]
https://thefinancialbrand.com/119723/banking-and-payment-cx-jeopardized-by-surging-digital-fraud/ [Accessed 15th August 2021]
https://www.iflexion.com/services/enterprise-mobile-application-development
[Accessed 15th August 2021]
https://www.iflexion.com/blog/ewallet-apps [Accessed 15th August 2021]
The writer is a Development Communication Specialist, an SDG Mkt Building/SME Researcher and Finance/Investment & Banking Nomad. He`s Senior Project Manager & Ag. Country Director with PIRON Global Development GmbH, Ghana (www.piron.global). Contact him via ([email protected])
