THE RISE OF AND RISE OF MONEY APPS

More Open Banking opportunities for digital marketing for finance businesses

We recently wrote about the impact of Open Banking on UX. That article explained the new ways in which Open Banking will empower consumers and the need for large banks to compete differently in future.

One immediately visible aspect of this is that a number of banks are planning to launch apps designed to help customers manage their money.

An immediate reaction to this news may well be “so what”. Surely there have been banking apps around for some considerable time now. How will these new apps be different?

The difference is that these new apps will allow customers to manage their money by using data from a number of different bank accounts, including those of rival lenders. These cutting edge apps will be available both on mobile devices and home computers.

The growth of these banking apps is one of the ways that established banks are stepping up to compete with the so-called challenger banks. Challenger banks are new banks, usually startups, that are able to do things differently. Our October article How Challenger Banks are Leading the Revolution explained how the digital disruption of these new banks has for some time being making waves in the rest of the banking industry.

Challenger banks include digital only banks such as Monzo, Starling and Tandem. These banks are already offering their target market the kind of app that is now being created by the larger banks. During 2017, the user base for Monzo’s app grew by 300%, to 450,000. This is indicative of the huge demand for such apps from tech-savvy consumers, and particularly millennials.

So little wonder that new apps are being created by all the banks. In fact they are nothing less than an essential tool in the brave new world of Open Banking. According to Jeremy Light of Accenture: “You will have to have them, because if you don’t you’re out of the game.”

The big banks understand these new rules of engagement. HSBC are about to launch an app that contains similar features to the Monzo app. Further downstream they plan to make it available to customers of other banks too. This is an interesting and significant landmark in the development of Open Banking.

However, creating a winning app is only the starting point. Once every bank has an app, they are then on a level playing field. Yes the big banks are playing catch up with the challenger banks in terms of the user base of their apps. But in their favour they have stronger brands and perhaps are seen as more trustworthy than some of the challenger banks, simply because these newer banks are an unknown quantity.

So longer term success will really hinge on all the other services that banks then start offering. Bigger banks are at an advantage here. They have huge amounts of data from which to identify unmet customer needs. They also have the scale and resources to create innovative solutions that meet those needs.

What may happen is increasing collaboration between different banks. In fact in the World FinTech Report 2018 over 75% of fintech executives indicated that they now want to collaborate with established institutions, not compete with them.

This slightly mixed messaging presents a challenge for all those involved in digital marketing for finance businesses. On the one hand Open Banking is opening up the field for fierce competition. But on the other it would appear that many institutions would like to collaborate and find ways to seamlessly integrate collaborated services.

Whichever way things go, it is essential that UX always remains at the top of the agenda. The article we mentioned earlier – The Impact of Open Banking on UX – contains some useful pointers to ensure that this happens.

Whatever stage your app is at, whatever new products and services you are rolling out, whatever new partnerships and collaborations are in the pipeline, keep things seamless in the eye of the consumer. Otherwise you risk losing out on the world of opportunity that Open Banking offers.