Is a Mobile App a hygiene factor for Building Societies?
Hygiene factors are the basic set of features that customers expect a product to have. With a current account you would assume that it offers a debit card.
When a mobile banking App for current accounts was introduced around 10 years ago, it was seen as a differentiator. But now, there is no doubting that a Mobile App has become a hygiene factor. Indeed, some banks now only operate via an App e.g. Starling and Monzo.
In 2019, there were 25 million people using Mobile Banking Apps in the UK and the Covid crisis has led to a huge increase in the number of users this year across all demographic groups.
As can be seen from the graph, the rise of the App continues whilst Internet access continues to decline. A lot of App users are former Online users. But don’t be kidded into thinking that in order to have an App you have to offer Online first. It’s the equivalent of thinking you have to offer fax before you can offer email.
But what about Savings? 97% of UK adults hold a current account whereas only 57% have a savings product. Analysing the demographics gives us an even starker picture with only 49% of those classed as “Starting Out” having a savings product versus 83% of “Asset Rich Greys”.
Today, more than half of savings accounts are opened via websites and in-app (56%, up from 39% in 2014) and a further 6% of new savings accounts are generated through price comparison sites and other aggregators. This digital trend is set to grow, with more than three quarters of new savings accounts expected to come from online channels by 2024. This growth is not limited to younger generations. Older customers are becoming more comfortable with technology and the industry is continuing to make it easier for consumers to research and compare products. A large proportion of digital growth for these new products is the result of “second-wave adopters”.
What does this mean for Building Societies? “Asset Rich Greys” certainly make up the bulk of their savers but if they are to compete in the savings market, they need to offer better ways for new customers to manage their funds. Whereas someone in their 70’s may be happy to use a branch or online services, someone in their 20’s or 30’s is more likely to want to use their smart phone to manage their savings.
But even that won’t be enough for Generation Z savers who expect their financial institutions to do more for them. They want more innovative ways to help them to save. The hygiene factor is becoming not just a mobile app but easy ways to save such as rounding change or sweeping.
Rounding up your change so you save as you spend is already with us with Apps such as Moneybox. But Building Societies have a huge advantage over the start-ups. Would you trust your Open Banking login details with a newcomer or an institution that has been there for more than a hundred years?
And the Future involves even more changes. Voice assistants such as Siri and Alexa are becoming common place. We see Voice Assistant Bots as part of Apps that are able to transfer funds, inform you of any issues and recommend where to put your money.
What about Hygiene Factors for Banking Apps?
You expect your App to show balances, transfer funds etc. But surprisingly very few Apps in the UK allow
you to onboard as a new customer. And here they are:
Supporting Documents
An insightful and compelling exploration of ‘The Rise of the Banking App.’ Engagingly captures the transformative power of technology in reshaping modern banking experiences. Informative and thought-provoking!