June 14, 2018
MarketplaceConnect Video Series – Workana – Identifying and Dominating a Niche Market
Still think customers are nervous about putting their financial lives on a mobile device? It might be time to reconsider.
According to mobile payments app Venmo, Over $1 billion was transferred in January of this year using the app. Compared to the app’s numbers in January of 2015, those numbers represent an increase of 250 percent, and 1,000 percent from January 2014. If those numbers are any indication, the app’s growth isn’t about to slow in 2016.
And it’s not just upstarts like Venmo that are seeing growth. Sixty-nine percent of mobile users currently do some form of banking on the their phones. While the largest activity remains basic (28% check balances), an increasing number perform more sophisticated actions like transfers between accounts (18%), sending money(16%), and applying for a loan (9%).
Mobile has become a viable differentiator. According to AlixPartners, all the way back in 2014, 65 percent of the people who switched accounts said that mobile played a role in their decision to switch. According to Chase, mobile app users have increased by 20 percent in the past year, mobile QuickDeposit by 25 percent, mobile QuickPay by 80 percent and mobile bill pay by 30 percent.
But is the financial industry ready for these mobile customers?
Forrester Research found that many banks lag behind when it comes to functionality available on tablets and smartphones, including marketing, merchandising, and product research tools. At the same time, the Forrester analysts predict that twice as many customers researched financial products on their smartphones and tablets in 2015 as in 2014.
This gap between customer expectation and what the market is currently delivering is a classic opportunity for disruptive companies to shake up the industry, and they are.
While the financial industry is too large and entrenched to see major paradigm shifts happen any time soon, smaller niche players are still threatening the profit margins of established players by chipping away at the edges of their user base. While that won’t grab substantial market share from traditional banks, it does threaten banks’ daily connection with consumers and businesses, which in turn impacts the data and customer insights banks are able to collect.
Apps like LevelMoney have stolen a large user base, mostly millennials, from larger banks by providing a well-designed, simplified view of personal finances, that is not just mobile-first, but mobile-only. The app provides an easy to understand budget that is created automatically based on a consumers activity.
“These new forms of interaction will be especially important to the digital-first, Gen Y consumers, who value advocacy, not advertising and conversation, not clichés and who are shaping financial brands and defining their success now and into the future, says Gina Bleedorn, executive director at Adrenaline.
To negate the impact of disruption, traditional banks need to become disruptors themselves. But there is still an opportunity for small and large companies alike to capture the new financial customer.
Whether you are an established company looking to match the mobile-first mentality of your customers or a new player looking to disrupt the industry, there are a few areas you can focus on to achieve success:
The capability to send or transfer money plays an increasingly important role among Millennials and Gen Xers alike. Remember that Venmo saw $1 Billion in transfers in January alone? Providing this service effectively and securely is a disruptive opportunity as 73% of millennials, according to the Millennial Disruption Index, would be more excited about a new financial services offering from Google, Amazon, Apple, Square or PayPal than their own financial institution.
Mobile is no longer a “nice-to-have” feature for financial companies. It’s a make or break feature. Skeptical? Google announced last year that mobile-friendliness will be used as a determining factor in site ranking results. As mobile Internet access grows, and the mobile banking competition intensifies, no financial company can afford to drop out of search rankings by ignoring mobile.
According to The Economist, omnichannel is a strategy that allows consumers to “shop with smartphones, tablets, laptops and even in stores as if waited upon by a single salesman with an unfailing memory and uncanny intuition about their preferences.” This is not a prediction, it’s a reality. Kahuna data found that 38% of consumers use a combination of channels to complete their shopping. With accelerating mobile adoption, the report says this segment will likely see strong growth.
According to a Federal Reserve report, consumers who use mobile banking are also becoming more comfortable with remote deposit capture, or the process of electronically depositing a check to a banking account using a mobile phone camera. Using smartphone features like a camera for remote deposits is a unique differentiator for many companies. Tools like Touch ID, Apple’s biometric verification tool, are also on that list. According to a Deloitte report, 72% of consumers would appreciate the use of biometric identification as a means of device authentication during financial services transactions.
While the financial industry is clearly being disrupted, there is opportunity for small and large players alike to carve out market share by delivering on the expectations of the new mobile customer. More innovation will continue to drive progress for the industry and a better experience for the financial customer. In finance, they’d call that a “win-win scenario.”
Want to see how mobile finance users stack up to other industries? Download the latest edition of the Mobile Marketing Index.