Are mobile banks really offering anything new?
As reported in the press Atom Bank has finally opened it virtual doors for business, so we thought it timely to take a look at the changing personal finance landscape and what the entry of these new mobile-only banks means for marketers and consumers.
Since 2012, the Bank of England has granted licences to 21 new providers aiming to rival the big four banks. That shows just how much things have changed since Metro Bank declared its status as the first high-street bank to be granted a licence for over 150 years in 2010.
Joining Atom, there are four other digital-only contenders that have either recently launched or are hot on their heels: Tandem, Mondo, Starling and Fidor.
Atom Bank, the mobile-only start-up, launched in the UK on the 6th April with a package of fixed term savings for consumers and secured lending to SME businesses. By the end of the year the company hopes to have access to fixed savings, current accounts, overdrafts, debit and credit cards, instant access savings and residential mortgages, all of which will be serviced through the app. The app will be available to all those who pre-registered interest in the bank through its new website. This is only available for iPhone and iPad users, but an Android version is set to follow shortly. For security, face and voice biometrics are used to log-in to the app, resulting in a paper-free account opened in a matter of taps.
The company was formed by several major players in the industry – including chairman Anthony Thomson, formerly of Metro Bank and CEO Mark Mullen, who previously ran HSBC’s telephone-banking branch First Direct.
Tandem Bank was offered a full banking license in December 2015, joining Atom Bank in offering products online. Positioning itself as “The Good Bank”, Tandem is aiming to attract customers who are happy using mobile apps and online services, rather than needing to visit a branch. Tandem will have a contact centre in its London HQ and is the brainchild of Ricky Knox, who set up international money transfer service Azimo and Matt Cooper, co-founder of Capital One.
Fidor Bank offers “Smart Online Banking” and the Fidor Smart Community, giving customers access to a platform where they can openly discuss financial decisions and get cash rewards for being an active member. With Fidor, you can make contactless payments everywhere, whilst the Fidor Smart Account offers attractive interest rates – which you influence with your Facebook likes. The website promises that more products are coming soon, including a 60-second product range.
Mondo Bank claims to be “Finally, a bank as smart as your phone”. It launched in Beta back in October 2015 and is due an official launch in 2016. Mondo is banking built for your smartphone. It updates your balance instantly, gives intelligent notifications and is easy to use. For example, the app will automatically apply for a refund if you forget to tap out on London Underground and let you block your debit card with just one tap.
Starling Bank suffered a setback as Tom Blomfield (originally Starling’s chief technology officer and co-founder) left the company and formed Mondo in February 2015. Launching in 2016, Starling says it is “A smarter bank for an ever-changing world”. Much like the rest of them, Starling will offer real time intelligence – meaningful insight that’s in tune with your day to day life, complete personalisation and smart simplicity for intuitive money management on the go.
And as if that’s not enough, there’s also the “Challenger Banks”, those who are also taking on the big four by focussing on convenience, for example, Metro’s 7-days-a-week opening hours and Secure Trust’s outstanding customer service; competitive, sustainable rates for borrowers and savers – enter Charter Savings and Paragon Bank; or tempting the SME market as is the case with Shawbrook and Aldermore.
So how do we choose?
One thing is clear, we are witnessing the ‘platformication’ of banking, as financial institutions work tirelessly to remove friction from the customer journey and make big data actionable. Biometric technology, personalisation and gamification are all key buzzwords we’re hearing from across the sector, as consumer personal finance trends shift towards mobile.
Even the big four are striving to increase the use of mobile banking. According to KPMG’s Mobile Banking 2015 Report, mobile is already the largest banking channel for the majority of banks by volume of transactions.
However e-Marketer reported in its US mobile phone banking usage forecast, published in August last year, that Millennials are adopting mobile banking at a much higher rate than their parents and grandparents. According to e-Marketer nearly 59% of 18-to-34-year-old mobile phone users in the US accessed their bank, credit union, credit card or brokerage account via mobile browser, app or SMS on their phones at least monthly last year. In contrast, fewer than 28% of baby boomer mobile phone users used mobile banking in 2015.
Game of Phones
Deloitte’s Mobile Consumer 2015 report identifies 18-24 year olds as the demographic with the largest proportion of data-exclusive usage, claiming that this proportion is likely to increase further as children are given touchscreen MP3 players and WiFi tablets to be used for messaging, apps and other types of data functionality.
So it makes sense that these new mobile only banks target the young, but at the same time they will need to do more to boost app usage figures among those aged over 34 if they don’t want to lose out on the more lucrative Baby Boomer and Senior Age demographics.
So apart from the platform, what is new?
The big question in all of this is are they actually offering anything different? At the moment, we’re not seeing much between them and the traditional banks. All of the new banks have been created by people who worked for traditional banks, so is there any new thinking? In what is a highly competitive marketplace are they really going to be able to disrupt and be different?
We think disrupting the financial services sector shouldn’t be too difficult. The approach should be the same as any other service driven brand that wants to disrupt – put the customer first!! Take a cue from the Airb’n’b and Uber model – take something that everyone uses (money) and solve their problems, make things easier. What do people actually need? Don’t just sell them the same old thing in a fancy new digital wrapper. The bank to do this, will be the one that cracks it.
We are seeing some innovation in usability and security, but are we really seeing the reimagining of banking? So far we are yet to be convinced….