Enhancing digital financial services

Meeting customer needs with digital financial services

In a post-COVID-19 world or what will become the ‘new normal’, financial institutions will be keen to get back on track and continue to provide their services to as many customers as possible. It’s uncertain how quickly consumer spend will increase once the lockdown is fully lifted, but there will be a substantial number of people waiting to buy a property, take out loans and open new savings accounts. Potentially, many business owners will also be looking for credit and loan accounts to help retain their undertakings.

While large banks may not suffer as much as others, smaller or more traditional financial institutions (FIs) will need to adapt to customer demand. They’ll need to provide more flexibility if they want to compete with any larger FIs. This means shifting to a digital landscape and making it as simple as possible for customers to access their services, starting from account applications to managing finances online. After all, the lockdown has demonstrated the need for being able to operate remotely and provide business continuity digitally.

Competing with emerging FIs

So what do financial institutions need to consider for their products? They need to have a fully functioning mobile banking app, as well as a slick online banking system. More banking is now done from a mobile phone due to the ease of use and the fact that the majority of people carry their phones with them nearly all the time.

Banks like Monzo and Revolut don’t even have physical branches, yet they’ve been acquiring new customers year on year. This is thanks to their effort in creating a great banking app full of useful features and a great design that adds a fun element to such a traditional service.

The more established banks are yet to catch up with the emerging digital banks. It’s clear that due to legacy systems and a multi-tier stakeholder hierarchy, it’s not easy to adapt products to new trends.

But smaller banks should be able to be more flexible and open to new features to attract more customers and offer something new. Now couldn’t be a better time to start improving products and optimising them to be ready when the lockdown is relaxed and customers will start looking for financial services again.

Customers want to track their finances

To find out about the consumer financial preferences, we conducted a survey in April 2020 with participants across the UK, which produced some very interesting results.

The survey showed that 29.6% of the respondents don’t use mobile banking. This is quite a high number considering how many people have smartphones and how convenient mobile banking can be. But this can also be a reflection of the quality of apps the participants’ banks offer.

But mobile banking apps aren’t just important for daily finance management - they can also be used to build a relationship and trust with the customer. 37.6% of the respondents said they would not take out a mortgage or a savings account without a mobile banking app. However, 28.3% of them could be swayed if the offer was good enough.

This shows that customers are more aware of how useful mobile banking is and how crucial it is to have an app to be able to manage important services, such as mortgages or savings. Even though this might not be something they’d look at every day, being able to easily track and manage such significant amounts of money is very important.

What makes a great mobile banking app?

We also wanted to find out what customers expect from a full service mobile banking app. It makes sense that they prioritise the ability to access their current and savings accounts, with quick money transfers being quite an important feature too. However, managing money pots, stocks/bonds, insurance or splitting bills isn’t such a high requirement. Monzo is probably one of the few banks that has these features included as part of their standard app package.

Customers want their apps to be simple from a usability perspective and offer mainly practical features that they would use every day. However, this doesn’t mean that any extras can’t be added in - there are smart ways of offering them without being too complicated or intrusive.

What services are important to be able to access from a single banking app?

What services are important to be able to access from a single banking app?

When it comes to judging an app by its UX design, 13.3% of the respondents said a good UX design was extremely important, 27% deemed it very important and 26.1% said it was important. It’s nice to see that only 10.2% of the participants said they didn’t feel it was important at all, and we’re glad the majority of the respondents appreciate the necessity for a good UX design.

Generally, customers want their app to have a good design and UX to be able to access banking services on a daily basis. As digital banks are becoming more popular thanks to their app design and intuitive features, it’s clear that customers also appreciate it more and would want their banks to update their products accordingly.

Banks need to think ahead

While FIs cater to a broad range of customers, they must also be thinking ahead. They need to adapt to the preferences and trends of the younger generations. While financial services may not change year on year, consumer preferences do. The consumers that are more used to apps and mobile transactions will be looking for services that can be done digitally. If a bank isn’t able to offer its services through a slick mobile app, customers may choose to bank with an FI that does.

Open-banking payments provider VibePay have already come across this and have noticed how different the Gen Z shopping patterns are. This also means that their banking preferences will be different to those of the previous generations. VibePay believe that the Gen Z spending habits are very different compared to millennials or Gen X. Gen Z tends to use subscription services (e.g. Spotify or Birchbox), shop predominantly online (e.g. Asos or Depop) and want easy ways of managing money, such as sending requests to each other or when shopping online. By offering simple payments, reducing any friction and offering easy integration between banks and retailers, VibePay help connect the new generation of consumers with retailers through their payments app.

“Gen Z are shopping and spending in a way that’s completely different to what most brands are used to. Through our product, we can tell our partners what their customers are interested in. This way, retailers can stay one step ahead by partnering with Vibe. Our USP is our understanding of our audience. We’re built for Generation Z, by Generation Z, and we know that many brands struggle to target that customer effectively. Our ecosystem uses Open Banking to facilitate frictionless payments between banks without the fees you’d expect from competitors or traditional payment methods.”

Kieran Bamber, Head of Commercial Partnerships at VibePay

Open Banking could become a popular way of integrating multiple bank accounts and products into one app/account. Open Banking allows transparency between banks, sharing customer financial data in a secure way. It can also help create better mobile apps and provide useful functionalities even if some services are from different banks. However, there’s still a long way to go for customers to understand how this works.

With Open Banking becoming a common feature across many financial products, only 25.2% of the respondents said their current (main) banking app is linked to their other bank accounts, and a staggering 38.9% of the respondents were unsure if they have this option at all. This suggests there’s still a lot of education and promotion to be done around the benefits of Open Banking. It could be that banks don’t showcase this enough or explain exactly what it means to their customers. It can also mean that even if this feature is available from their products, it’s not highlighted enough for customers to start using it.


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