Global retail banking markets have become a hotbed of agile fintechs and digitally progressive incumbents, driven by market forces and a regulatory ethos that supports competition in the name of better consumer services. Providers of all sizes are pushing customers away from websites and toward mobile channels that advance the banking experience.
The goal is to attract high-quality customers and deepen engagement.
The mobile push is working: 80% of U.K. checking accounts are opened digitally and roughly 70% of onboarding journeys happen on mobile, according to Curinos data. (See Figure 1.) Mobile-first challengers set the standards for smooth onboarding; one U.K. provider offers new users the ability to open an account in less than 30 clicks.
Mobile features are a mixed bag in the U.S., where half of national banks allow full mobile account opening, according to Curinos Banking Analyzer. Smaller institutions often lag those numbers significantly.
Some of these trends can be attributed to the pandemic, which forced branch-centric customers to use their mobile device to open an account. Customers have steered clear of branches ever since, many of which have been shuttered. Indeed, sales volumes through mobile continue to grow steadily. And in the U.K., checking account volumes now exceed pre-pandemic volumes.
Figure 1: Percentage Of Accounts Opened Through Channel
Percent Of Current Accounts Opened Through Mobile And Digital
Percent Of Digital Current Accounts Opened Through Mobile
Source: eBenchmarkers Analyzer
Mobile As A Starting Point
In the U.K. where open banking makes it easier for customers to switch providers, leading banks have prioritized using the phone’s technology to drive smooth onboarding. Friction that historically has occurred during the “know your customer” process, for example, has been removed with image verification, document uploading and QR code scanning that are enabled by well-integrated camera functionality. And with most institutions having signed up to Current Account Switch Service (CASS) that makes account-switching easier in an era of open banking, a customer can select their new provider as their primary bank from day one.
Mobile is also a critical starting point in the U.K. because providers believe that customers who buy through the mobile channel will service their accounts that way too. This will become increasingly important in the U.S. as banks continue to close branches and transform the role of the workforce.
The motivation to empower the user to self-service has been a great driver of change across digital banking, and technological advances have quickly made the phone the channel of choice. And U.K. providers are aggressively steering customers that way.
At one leading U.K. bank, for example, customers who want to open an account in a branch must bring a mobile device with them; the advisor then helps the customer to open the account digitally. That means the branch is considered as a support channel rather than the main servicing channel. This strategy and rapid reductions in branches have been largely successful. Servicing data show a steady divergence between higher digital usage levels and lower branch levels.
In another example, some U.K. consumers who try to open an account on a desktop receive a QR code that must be scanned on a mobile device; access is entered through the provider’s app.
Many transactional, card and security tools are more likely to be found on mobile over desktop, and those features that encourage everyday banking — such as personal financial management (PFM) capabilities and notifications — provide a rich service while building engagement. Indeed, some features — especially card blocking, view pin and transactions control — exist in mobile, but not in desktop. As a result, mobile customers enjoy a richer service with features that build engagement.
The mobile focus is also having an impact on the long-running issue of customer quality and value in digital channels compared with the branch. Although branch-opened accounts historically are of higher value, the supply of high-quality digital customers is clearly increasing. Additionally, brands are getting better at driving value through mobile. For example, a majority of U.K. loans sales are now cross-sold through mobile apps.
U.K. fintechs have set a high bar for incumbent banks to develop the mobile channel for account-opening journeys. These mobile-centric fintechs have been leading the way in recent customer surveys that are required by the U.K.’s Competition and Market Authority.
More Advancements Needed
Progressive providers in the U.S., meanwhile, have rolled out advanced functions like AI chatbots and customer-centric functions like low-balance alerts.
Overall, however, U.S. mobile offerings are much more divergent than in the U.K., with as many leading-edge providers offering advanced mobile onboarding and servicing journeys as there are digital laggards. Many financial institutions don’t even encourage customers to download the app, leaving customers to visit the website through a mobile browser, which is awkward and less efficient. That is especially the case with smaller institutions.
Of course, open banking hasn’t been formalized in the U.S. so changing a main service provider is often unwieldy.
But mobile can also help providers stem the flood of fraudulent activity that has many of them struggling to create effective security controls. In the U.K., new customers upload identification photos in-app as part of the new-account verification process. This also smooths the onboarding process because it ensures the new customer has downloaded the app, paving the way for instant engagement.
In any case, customers seem ready to embrace more mobile functionality. A recent Chase survey found that two out of three U.S. consumers say they couldn’t live without their banking app.
That means time is running out for digital laggards.