Mobile banking - it's time to believe

Mobile banking is something that many in the UK banking sector have been resolutely sticking their heads in the sand about. Latest figures from industry analysts show that the UK lags well behind North America, Europe and Asia in the m-banking stakes. Heeding early reports that decried mobile as a fad, UK banks seemed to have stood pin striped shoulder to pin striped shoulder in their failure to think about mobile and how it could map on to their businesses and start delivering the bank of tomorrow. But by doing this, they could be in serious danger of losing market share.

Brett King, the CEO of Moven and ardent digital disruptor, thinks the banking industry has seriously underestimated the impact mobile will have on banking (https://www.finextra.com/blogs/fullblog.aspx?blogid=7921). Of course, given his role of a start-up financial services company focused on mobile banking, he would say that - but it doesn’t mean that he’s wrong.

The problem is the banks are finding it incredibly hard to integrate mobile technology onto their existing infrastructure. And therein lays the rub. According to King, banks should be coming at mobile from the other direction. Mobile has had a massive impact on the way we live our lives – its evolution means that we now have all the information in the world at our finger tips. If we are in an unknown city and we want the nearest Michelin star restaurant, we can find it. If we’re out and about and realise that we need to rebook our grocery delivery slot, we can do it. But if we are on holiday and we want to transfer cash or want to pay a bill? Not so easy…

Mobile has crept into all our lives and it is changing the pace. It needs to do the same with banking, but the nature of the industry is stopping it.

Not so, however, for the new entrants. Competition in the UK banking sector has been pretty much sewn up amongst the high street behemoths for decades. We have seen the likes of Metrobank enter the fray, but they have been few and far between. Put off by the regulatory burden, capital ratio requirements and the physical branch presence of the big boys, lots of financial wannabes have drawn a line under banking ambition. But the landscape is changing and mobile is the big disruptor.

As King says, branches will be nothing more than a twee support system for a mobile service. They’ll probably be more than that – perhaps more akin to drop in surgeries, where customers can discuss their financial ailments. But it leaves the notion that mobile could be the primary platform and if that’s the case, what is to stop new entrants coming in and starting from mobile down?

Simple, the American digital banking platform, has done it to great effect in the last year, bringing on 40,000 new customers and processing more than $1 billion in transactions. Customers, seeing the innovative services providers like Simple can bring, are prepared to jump ship if their banks aren’t delivering the mobile goods.

And given the limited innovation of mobile banking applications in Britain, UK customers could be amongst the first on the gang plank. Account switching initiatives launched this summer will make it ridiculously easy for customers to move their banking affairs elsewhere. So what will stop them when they are faced with a viable alternative?

Quite frankly, not much. The banks have their existing relationships. They are becoming increasingly “customer centric”, or so they say. They need to capitalise on this if they are going to appease their customers’ demand for mobile banking services. The sand in the egg timer is running out and banks need to get on the m-banking front foot quickly, or risk losing significant customer numbers to the new mobile banking kids on the block.