Mobile banking has been prevalent among users for more than a decade. It is also known as m-banking or SMS banking and provides users with access to account transactions, balance inquiry, payments, mobile top-ups, and merchant payments, among others, via a smartphone. It is considered as an extended form of online banking owing to the evolution of smartphones. Moreover, the advent of new technologies is further revolutionizing the market. The integration of voice commands in mobile banking applications is anticipated to lift the market in the coming years. Attributed to an increase in the number of security concerns regarding mobile banking, companies are enabling voice recognition features for two-step authentication purposes. In addition to this, biometric authentication and facial recognition software are also intended to be incorporated into the applications in the years to come. Biometric security will subsequently replace password verifications, thereby adding more security to the applications.
Another key trend in the global mobile banking market is the introduction of smart bots and machine learning. The ability to deliver superior customer experience is becoming a vital factor for banking institutions, and hence they are adopting various technologies. Nowadays, financial companies, including Bank of America, and JP Morgan Chase, among others, are implementing smart bot solutions to the applications to improve customer experience and loyalty.
Smartphone penetration is the key reason that drives the global mobile banking market. The populace, including all generations, is becoming digitalized and desires ease of operation. Mobile banking eliminates the need to visit banks and the tiresome processes related to it, which further attracts users to the market. Customers prefer banking, irrespective of time and place, with a broad range of features. Banks are striving to provide efficient and user-friendly mobile tools for banking and thereby streamline the process. It is considered that superior quality mobile banking applications increase customer loyalty and strengthen the relationship between customer and banking institutions.
In the past years, safety concerns were key reasons that refrained customers from using banking applications. However, presently, by the integration of high-security technologies, banking organizations have eradicated such concerns. In addition to this, various initiatives, including media promotions and rising awareness among customers regarding the benefits of mobile banking, also aid market growth. Furthermore, the increase in the number of online shops and purchases also affected the mobile banking market in a positive manner.
Currently, banking organizations are shifting toward a mobile-first approach attributed to the wide acceptance of mobile banking by users. Companies are primarily developing new applications and services for mobile while considering other channels as secondary. In addition to this, unique services are also developed for the mobile banking segment. According to the research study by the University of Hamburg, Germany, it is revealed that approximately 69% of the banks are offering mobile banking services. This is primarily due to customer demand for these services, and it is expected that customers do not opt for banking companies that do not provide m-banking solutions or those that provide poor quality of services. Therefore, in the coming years, to improve customer loyalty and retain customers, banking organizations will adopt superior quality m-banking solutions, which subsequently lead to market progression.
The below figure shows the customer segmentation on the basis of smartphone and tablet usage.
Customers in this segment are digitally inclined but use mobile banking occasionally. For these groups, remote payments, balance checks, and transferring funds are the key operations. The users in this group are flexible with advanced technologies. In order to attract these customers, companies can provide awareness via direct marketing campaigns.
The users in this segment are significantly involved with mobile devices. These types of customers are the prominent users of advanced technologies in mobile banking, including mobile bill payments, and also expect professional guidance on various services.
Customers in the age group of 35-55 come under this segment. They are not considered as extensive users of mobile banking and accept services that are concerned with money management.
This group of users is considered as value seekers and are also delicate to mobile security issues. Hence, to penetrate into this type of customers, companies can incorporate advanced security features.
These types of users are highly concerned about security issues, and traditional banking services are able to meet their current requirements. By mitigating their security concerns and increasing awareness regarding the benefits of mobile banking, companies can promote the use of mobile banking in these groups.
The consumer to business segment holds the lion’s share of the market owing to the increasing adoption of cashless payments by retail companies. The online purchasing trend is increasing rapidly in various countries, and the populace prefers mobile banking options instead of payments made in cash. E-commerce proliferation, online food purchasing, and other related services fuelled the adoption of mobile banking among customers, thereby expanding the consumer to the business transaction segment.
In this segment, the android platform is the dominant shareholder owing to the wide adoption of android devices by emerging economies. Android has gained popularity among customers, and with time, this platform has improved itself in terms of its features. In addition to this, it is easily affordable for the populace, which further increases its adoption rate.
Banking Technology Developments Drive Europe’s Mobile Banking Market
It is anticipated that Europe leads in the market owing to the advanced banking infrastructure in the region. Digital banking helped the U.K. in attaining more profits during the year 2019. According to a research study by Accenture, it is projected that by the end of 2020, digital-only banks in the U.K. will reach a base of 35 million customers and is currently estimated to be at 12 million. Moreover, it is also revealed that digital-only banks increased their customer base by 5 million during the first half of last year.
The increasing competition among the European banking sector is enforcing the adoption of various innovative technologies to meet the increasing customer demands. For instance, Deutsche Bank, Germany, recently integrated security technologies such as Apple’s biometric system and TouchID in services to enhance security and thereby to attract more customers to the market. Moreover, it is estimated that mobile banking and e-identification will transform the face of banking services in Europe. Mobile banking is penetrating various countries of Europe, and the payments are primarily made through tablets and smartphones. For instance, according to the European Central Bank, it is estimated that the Swedish populace significantly utilizes mobile banking and non-cash payments for various purposes more than the populaces of other European countries. Hence, the circulation of money in the region is drastically decreasing. In addition to this, the European Banking Federation revealed that every four in ten of the European populace utilize mobile banking through tablets or smartphones in 2017 with the help of an application.
Asia-Pacific is considered the fastest-growing region in the global mobile banking market owing to the proliferation of the market in countries such as India and China. India has a large telecom market, and thereby, it possesses significant potential in expanding mobile banking services. Various government initiatives in the country, including Digital India, also aid the growth of the market. Moreover, increasing penetration of smartphones among the populace is also fuelling the growth of the market.
In October 2019, Bank of America launched its new mobile banking application to serve its 29 million clients. It is expected that the newly designed app will offer a consistent and simplified experience. The new version of the application contains an enhanced version of its AI-enabled virtual assistant known as Erica to help the clients and thereby to increase customer loyalty.
The prominent players in the global mobile banking market are Bank of America Corporation, American Express Company, BNP Paribas S.A., Crédit Agricole Group, Citigroup Inc., JPMorgan Chase & Co, HSBC Holdings plc, Mitsubishi UFJ Financial Group, Inc., Wells Fargo & Company, and Société Générale S.A.