Published on CB Insight on April 30, 2014

By Andrew Tilbury

Mobile banking has transformed the way consumers interact with their banks. Only five years ago, just having a mobile app was considered innovative. But, today, consumers are aware of the different features they can get from various mobile banking apps, and they are starting to make decisions about where they bank — and how they bank – based on the specific functionality that a mobile banking app offers. Community banks need to be aware of how consumers are differentiating one mobile banking app from the next and how important these various features are when making product decisions.

According to a recent survey conducted by CSC and Finextra, the following features are those that retail banks think are the most important to their customers: checking account balances (75% of respondents), making small payments (ex: peer-to-peer) (10%), managing personal finances (10%), making merchant payments (4%), and exploring retail banking products such as loans or mortgages (1%). However, a different survey conducted by Wakefield Research that asked consumers what they thought was important yielded a surprising disconnect between what bankers think their customers want, and what consumers actually want: being alerted of irregular account activity (54%), the ability to make a bill or loan payments (51%), automatic notifications of low balances (46%), transferring money to outside accounts (44%), mobile deposit (43%), and automated bill pay reminders (41%).

Banks are reporting on features that were important to consumers a few years ago, and now this is just considered basic functionality. Within the past year alone there has been an incredible evolution in mobile banking technology including the mainstream of mobile photo bill pay, remote deposit capture, mobile account opening, and other features. Mobile banking is a lifestyle for smartphone users, and as they get accustomed to the rich functionality other types of apps offer, they are starting to demand more from their mobile banking apps.

Consumers are turning to the mobile channel for specific reasons. No longer do they just want to be able to check how much money they have in an account before making a purchase from the checkout line and be able to transfer funds if needed. Today’s consumer wants to be able to conduct any and all banking transactions remotely without ever having to take the time and effort to visit a physical branch. We are seeing the emergence of “mobile-only” bankers who sign up for accounts remotely, avoid ever walking into a branch, but unwilling to sacrifice any of the service they would be able to get in the branch just because they want to use their smartphone.

Judging from the disconnect between consumer and banking executive perceptions, it would seem that consumer demand for the latest and greatest technology and features is outpacing institution ability to produce. A 2013 survey from AlixPartners echoes this sentiment and found that 60% of smartphone owners who switched primary banks reported mobile banking capabilities as either “important” or “extremely important” in their decision to switch primary financial institutions to get access to the mobile features they want.

Banks need to stay informed of rapidly evolving consumer preferences to keep their mobile banking apps competitive.