While some banks are pushing the envelope on technology-enhanced customer engagement, many are still catching up to customer demands for self-service features in their digital banking channels.
The vast majority of banks with retail franchises seem to recognize that a user-friendly, feature-rich digital banking experience stopped being optional some time ago. Now even that is not sufficient for financial institutions looking to thrive amid intense competition for consumers' time, attention and wallet share. Bank apps do not exist in a vacuum, and customers are holding digital banking channels to the standards set by tech-forward players in other industries.
S&P Global Market Intelligence's 2018 US Mobile Banking Market Report discusses trends in digital banking from biometric authentication to mobile payments to artificial intelligence. It includes mobile banking survey data and mobile app details for 27 national and large regional banks, as well as for 45 institutions with less than $50 billion in assets spread across the nine U.S. census divisions.
Click here to read the full 2018 US Mobile Banking Market Report and to access data exhibits.
Many of the largest U.S. banks already have feature-rich mobile apps. Companies such as JPMorgan Chase & Co., Citizens Financial Group Inc. and PNC Financial Services Group Inc. are heavily focused on attracting more core deposit funding through nationwide digital campaigns. These initiatives are not necessarily tied to the banks' primary mobile channels. For example, JPMorgan's Finn online banking product, which primarily targets younger consumers, is separate from the bank's other mobile channels. And the new Citizens Access savings and CD products are not linked to an app; instead customers access account information by phone or online via desktop or mobile browser.
Our February 2018 mobile banking survey shows that many banks still have work to do when it comes to meeting customer demand for mobile app functionality. Card controls, biometric authentication and credit score information rank high on the list of features customers would like to see in their apps. The survey also showed that bank app users value mobile payment capabilities, which is an area that many banks are focused on improving, especially through the adoption of the Zelle payment network.
As they focus on improving the overall client experience and solving customer problems, some banks are exploring how automation and artificial intelligence technology can help supplement the self-service capabilities that already exist in digital banking channels. This can mean looking for both inspiration and potential competition at big tech companies such as Amazon.com Inc. and Google LLC.
S&P Global Market Intelligence identified 35 U.S. depository institutions, mostly credit unions, that had Alexa skills available through Amazon.com as of Nov. 9. Alexa is Amazon's cloud-based voice service that serves as a virtual assistant through various connected devices; Alexa skills are voice-driven capabilities that add functionality to Alexa-linked devices. Only 15 of these banks and credit unions have Alexa skills that give access to account information, and even fewer facilitate actions such as transfers and payments. Most of the Alexa skills we reviewed provide only publicly available information such as branch locations, hours, product rates and routing numbers.
Bank customers likely have not pushed hard for Alexa skills as a regular part of their service, at least not yet. Less than 40% of the U.S. mobile bank app users we surveyed in February expressed interest in accessing account information through home assistant devices such as Amazon Echo and Google Home. Lack of smart speaker ownership was the biggest reason for the lack of interest, followed closely by security and privacy concerns. But research by Kagan, an S&P Global Market Intelligence media research group, suggests that smart speaker adoption is growing quickly, and our survey results show that younger generations are much more open to use of this technology for banking.
National deposit market share leader Bank of America Corp. is showing its commitment to AI not through Alexa but through its own in-app chatbot, Erica. BofA said in mid-October that about 3.4 million people had used the virtual financial assistant since its launch in April. That number represents about 13% of the bank’s mobile user base and was up from 2 million Erica users reported in July.
Users can consult Erica for various tasks, including payments, card controls and spending analysis. Erica is arguably most useful for surfacing features and settings more quickly than users can find them through app menus. This could represent a significant advantage in customer engagement, at least among individuals who already use mobile apps, since many banks struggle to make customers aware of all the tools at their disposal. Some are putting so-called digital ambassadors in branches to help drive digital education and adoption among customers and other employees.
More banks are looking to utilize digital channels to not only play offense but to defend the customers they already have. Institutions that fail to innovate and invest in their digital experience could see customer engagement wane.
The mobile banking survey was fielded online between Feb. 8 and Feb. 21, 2018, across a nationwide random sample of 4,000 U.S. mobile bank app users 18 years and older. Results have a margin of error of +/- 1.6% at the 95% confidence level based on the sample size of 4,000. Survey results presented for the entire U.S. are weighted by geography to be nationally representative. S&P Global Market Intelligence researched mobile bank apps between June and November 2018 for more than 70 financial institutions. These included the largest retail banking franchises in the U.S., regional banks of various sizes and a few large community banks. The analysis included each census division’s top five retail deposit market share leaders with assets under $50 billion. The app research is based on product descriptions available on bank websites and in app stores, as well as company-provided information. Some companies may have subsequently updated their apps or may offer additional features and services. This analysis does not reﬂect functionality or services available through text banking, mobile browsers or secure messaging.