2016: The year of the mobile banking app

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What has changed in mobile banking apps and m-payments in the UK since last year? We examine consumers’ understanding and attitude towards m-payment options, and the implications.

MOBILE BANKING

2016 may be the year of the mobile banking app. This is according to the TSYS UK m-payment and P2P payment consumer study, which found that 56% of consumers used their mobile to access banking services more than once a month. This is an increase of 12% on last year’s figures, which showed consumers either used m-banking a lot or not at all.

The underlying data dispels the popular belief that m-banking apps are the exclusive domain of millennials. In fact, 71% of respondents aged 35-44 reported using m-banking apps. And only those aged 55 and older showed a usage below 50%.

The most popular m-banking activities undertaken are verifying balances (82%), transferring money between accounts (72%) and verifying transactions (69%). This shows that UK consumers are confident in conducting financial transactions via mobile, which is a strong foundation for further innovation in the area.

UK mobile banking apps

MOBILE PAYMENTS

Three-quarters of respondents are aware of in-app payments, and almost two-in-five had made one in the last six months. The most common type of purchases made in-app were for clothes at 53%, a five percent increase on last year, paying utility bills (48%) and buying transportation tickets online (46%). This is attributable to the growing trend of m-banking apps, e-wallets and transport apps, which offer a seamless payment experience for customers.

Consumers showed equal levels of awareness of both in-store m-payments and P2P payments (81%). However, only 25% of consumers had made an in-store m-payment in the last six months, compared with 34% who had made a P2P payment.

Location-based services could boost the uptake of in-store m-payments. 52% of consumers said they would be likely to use a location-based service to receive offers or discounts on their smartphone from a restaurant, merchant or coffee shop when nearby.

When it comes to P2P payments, features that could accelerate uptake of such payments included guaranteed security and fraud protection (61 percent) followed by guaranteed reliability (58%) and presence of an established consumer protection regulation (55%).

RECOMMENDATIONS

The most used m-banking feature is transferring money between accounts, allowing consumers to control their finances. Payment providers should look for new ways to add control features to their offering. This could include alerts as well as helping consumers to manage their spending within their own limits.

As in-app payment grows, payment providers who present themselves poorly in the the payment experience face missing out on a key customer touch point. As the payment itself is pushed to the background, payment providers must leverage their relative position of trust to re-engage cardholders through increased loyalty initiatives, the study suggests. Providers are also recommended to embrace P2P payments to remain relevant.

Increasing real-time capability and contextual services are key for both communication and payments. Location-based services are poised to play an increasingly critical role with cardholder engagement, especially when coupled with the value of transactional data.

Permissioned geo-targeted offers can deliver the right offer at the right time to the right person. While merchants and service providers can deploy beacon alert technology, the payment provider’s ability to leverage purchase data and consumer location is a powerful proposition that makes contextual marketing complete.

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