Mobile Banking: The Revolution of Financial Services

Innovations in mobile technology acted as a catalyst for transformations in the banking industry. They provided extended convenience to the existing customers and offered new services to those without a bank account. The potential of mobile banking is huge, unlocking opportunities and promising more to come in the next few years. 

However, every great story has its history which is crucial for a better understanding of the future ahead.

How did it all start? 

It all started with ATMs that were introduced in 1969, serving as “away-from-banks” machines helping to conduct a number of financial transactions without the need to visit a local bank. ATMs enabled so-much needed automation that helped to save on human-labor and speeded up many processes. In the 1990s, the world was introduced to internet banking that allowed users to access accounts from a home computer. In 1999, Telenor Mobil and Ericsson made it possible to buy movie tickets with the help of a mobile phone while in 2003, there were already more than 95 million purchases all over the world conducted through a smartphone. 

Paypal, being released in 1998, made a huge difference as well, allowing online and mobile person-to-person money transfers. The boom started from the early 2000s with the Google Wallet release, followed by the emergence of Apple and Samsung Pay. Banks, in the face of very strong competition, had to adapt and develop their mobile applications, adding new features, and educating customers on the benefits of their online services. Advanced technologies resulted in a massive revolution in financial services making it possible for people all around the world to complete financial transactions within a matter of seconds. 

What is the reason behind mobile banking?

While people had an opportunity to access their bank accounts from their home computers for quite some time, it was still not enough to satisfy the needs of the “on-the-go” lifestyle. People wanted maximum mobility and convenience, with the ability to perform transactions anywhere and anytime. That is when companies decided to push beyond the limits and provide their customers with an opportunity to escape endless lines and irritating paperwork in the banks, saving their time and effort.  

Nowadays, there are more than 70% of millennials using mobile banking and expecting a consumer-driven approach with a wider variety of services that can be executed online. If before everyone was overwhelmed with first payments conducted through their smartphone, banks now need to adapt and make sure to meet customer expectations and carry on with the business, as mobile banking keeps expanding, upgrading, and adding more perks. People are now able to use a single smartphone with a good internet connection to:

  • Manage loans;
  • Settle payments;
  • Transfer money;
  • Open saving accounts;
  • Set monthly targets;
  • Deal with Investments;
  • Access stock markets.

While mobile banking has great advantages for tech-savvy people, it opens new opportunities for those who are still getting acquainted with new technologies. Citizens of India, Pakistan, and Bangladesh, for instance, have access to mobile phones but are in the top list of unbanked countries. Mobile banking services have great potential there, as they are an inexpensive way to manage and keep track of all the finances. Startupers have evaluated it as a good opportunity to expand to new markets and cover the yet unbanked regions. 

The future of Mobile Banking

With constant attempts to respond to evolving customer expectations and hectic lifestyle, the top priorities for financial institutions remain unchanged: enhancing clients’ experience, cutting down costs, and improving possibilities of data analytics. The current trends in digital banking are expected to be the main reason for an upcoming industry shift, so it is crucial to understand where things are going and how to respond to evolving changes.

Deeper integration is something to look for when it comes to the mobile banking future. As people are getting used to a very personalized service level from platforms like Netflix and Spotify, they expect no less from banks. It means only one thing: financial institutions will decide on the ways to bill themselves, create new products to meet customer needs, and serve as marketplaces to connect clients with vendors. Integrating their services with customers' daily life, through proactivity and relevance, will allow banks to increase their value and earn more trust. 

Making clients' life coherent while being unnoticed is another go-to strategy of digital banking. Integrating seamless and intuitive services is something many companies are now aiming to achieve to make things faster and more efficient for every customer. One of the companies, serving as a perfect example, is Uber. Do you remember the way you shifted from paying to taxi drivers with cash to letting the application do it all for you? Hence, post factum payments will be getting more popular with time, replacing the necessity of human interaction with absolute automation. This is a great opportunity for banks to collaborate with retails to initiate faster payments and provide overall convenience. 

Understanding the collected data, on another note, gives banks the capability to react on time and adapt their approach accordingly. Artificial intelligence and machine learning, blockchain and IoT (internet of things), PSD2, and Open Banking API are opening new opportunities for the financial institutions, providing valuable insights into buying habits and empowering them to offer customers more personalized and relevant services. Besides, having all these technologies at easy reach allows people to manage finances more wisely.

Apart from the above, there are, of course, more to come to boost digitalization in the banking services as financial institutions will need to pay extra attention to policies to ensure protection against frauds, data breaches, and human errors. These are the top priorities as data security is something customers consider as a default feature.

Conclusion 

While financial institutions have always been extremely cautious regarding innovations and radical changes, they realize the need to upgrade their products, strategies, and organization approach. One of the ideal enablers of new technological innovations is mobile banking that has already brought a huge impact on the whole society. Changing almost all aspects of managing finances might be overwhelming but has proven to justify itself. 

With the ability to learn about clients’ saving and spending habits, analyze their buying behavior, connect data from 3rd party applications, financial institutions can now create complete customer profiles, build powerful interfaces and provide a bespoke experience for every individual. Besides, an accessible and affordable way of managing finances and savings, settling bills, and investing through a single smartphone allows companies to expand to uncovered markets and educate more people on the advantages of mobile banking. With many perks already released, there is still a lot more to come that will change the banking industry in different parts of the world.