IDC Europe

The gap in usage and satisfaction between the mobile, online and branch channels of European retail banks is stark, according to our recently completed 2017 European Consumer Survey. Of the 1934 consumers surveyed across France, Germany and the United Kingdom, only about two thirds said they use mobile banking, compared to more than 90% for each of branch and online.

And satisfaction level of those who used mobile banking is lagging branch and online as well. A smaller proportion of people rate mobile banking as “excellent” than branch or online: a smaller proportion also rate it “very good”. And a larger number rate it “fair” or “poor”, the lowest two categories.

Despite these discouraging numbers, banking, along with so much of the rest of our lives, is moving towards the smartphone as the dominant channel, and the reasons for this have been repeated many times. Smartphones are ubiquitous, convenient and increasingly functional compared to the alternatives.

There are a few possible reasons why people are less satisfied with the mobile banking channels than others. One is that mobile banking is a young channel compared to the branch and even online. A second is that people may have higher standards for mobile than other channels, as they become so used to communication, gaming and media consumption on the mobile. But there is strong evidence that people are simply nervous about managing their money on their phone.

We asked the respondents why they might not be happy with the mobile banking channel as it currently is, and almost half answered that they are concerned about the security of the channel.

IDC Recommendations to Financial Institutions:

• Changing the conversation on security

Not least because a strong argument can be made that mobile banking is more secure than online or branch channels, working out how to move the 40% odd of customers who don’t currently use mobile banking onto their apps is therefore perplexing banks. This is, of course, against the backdrop of PSD2 which is expected to cause a major shake-up in customer experience when starts to take effect from next year. Hugging customers as tightly as possible should be an absolute priority before the new account aggregation and payment initiation providers appear.

But it remains the case that banks on the whole have not talked up the security benefits of mobile to the extent that they might, and this could be the key to push mobile penetration up past 70, 80, 90% of the customer base. The mobile can be presented as a weapon that the customer can wield to protect their own money in a few ways. These could include:

• Real-time updates that can alert the customer to every transaction, allowing them to look out for and report anything they don’t recognize
• Paperless communication lessening the chance of old-fashioned identity theft
• Strong customer authentication through biometric technologies which are becoming the norm for smartphones
• The ability of customers to block their cards the second they notice them missing, through the app.

Considering the efforts banks expended to convince customers, generally successfully, that online banking is safe – for example by advertising campaigns promising to reimburse victims of online fraud, or tie-ups with anti-virus companies – it is surprising that we have not seen something similar for mobile banking.

• Upgrading the technology

But it’s also the case that many banks lack the technical capability to offer all this mobile functionality at present. For these banks, overhauling their mobile channel should be a top priority, and it was with these banks in mind that IDC recently conducted a European Mobile Banking Software Solutions vendor analysis.

There are lots of ways of going about overhauling mobile banking functionality. Banks are split between taking omni-channel solutions which cover mobile, online, call center and other channels as a single package, and deploying best of breed mobile offerings. And they are equally split between building mobile or omnichannel functionality themselves, relying on their back-office vendors to either provide the solutions or source them from partners, or going to specialist front office vendors separate from their existing core suppliers.

More insights are revealed in an IDC MarketScape: IDC MarketScape: European Mobile Banking Software Solutions 2017 Vendor Assessment, which offers guidance on what functionality is prized and what is likely to become mainstream in terms of customer experience in the next few years, as well as to get a picture of the state of vendor competition in the market in Europe. You can read the press release here.