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Nearly two billion people will use their mobile to bank by 2019 as the number of users doubles in the next four years, according to figures from UBS Evidence Lab.
The KPMG-sponsored research said the mobile banking channel is the biggest today in terms of transaction volumes, but take-up is now entering an “exceptionally rapid phase”.
Traditional retail banks have to invest in mobile technologies if they are to retain market share as new banks emerge offering mobile-first experiences.
The KPMG report said banks should by now have clear mobile strategies if they are to remain competitive. “Banks that do not have clear mobile banking strategies will lose customers and cross-sell opportunities in the short-term, as well as risk jeopardising competitive advantage,” it said.
The report also highlighted the importance that consumers place on the mobile banking capabilities that banks offer: “In the short-term, the availability of mobile banking services is a key indicator when consumers choose to switch banks, and the report highlights a clear link between a strong mobile proposition, customer satisfaction and advocacy.”
It said banks that want to take advantage of the increase in mobile banking and fight off new competition need to expand the services available on the phone, collaborate with other banks and developers on mobile technology, and acquire startups, as well as investing heavily in security.
David Hodgkinson, KPMG’s UK digital and mobile banking lead and the report’s author, said: “Banks must adapt or die. Mobile banking is clearly supplanting all other channels as the main portal between the bank and the consumer.
"Many banks have already risen to the challenge and invested in new infrastructure and pioneering initiatives, but others must follow suit and commit to building both immediate propositions and on-going capability to keep up with the pace of change," he added.
“This new, exciting phase of mobile banking innovation, spearheaded by new market entrants as well as pioneering banks, will be a rollercoaster. Banks must overcome substantial infrastructural challenges, and reconcile consumers’ appetite for ease of use with greater security. Boldness will be required to overcome these challenges, and the only sure-fire winner will be the consumer.”
One example of a new bank with mobile services at its core is Starling Bank. The bank is currently going through the licence application process with industry regulator the Prudential Regulation Authority and expects to get its licence in 2015 before launching in 2016. The bank only offers a current account, used via smartphones, and is employing the latest mobile and data technologies to support digital lifestyles.
Read more about mobile banking
- The number of people in Europe doing their banking on tablets will grow at twice the rate of those banking on mobile phones, with less security concerns a major driver
- European banks are racing to catch up with the mobile services available in the US but remain twitchy about over-extending budgets