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The recent announcement by Bank of America that it plans to triple its invest in digital banking this year to enhance its online and mobile portals shows how important those areas have become to financial institutions worldwide.

As today’s connected consumers demand mobile access to their favorite brands, banks are in a position to respond with apps that are rich with features and provide some services that used to require a branch visit, such as account opening.

For the most part, financial institutions are meeting the needs of their mobile-savvy customers. But the question now becomes how banks and credit unions can differentiate their mobile banking apps to keep their customers and members engaged and provide them with an experience similar to using apps from Amazon, Starbucks and Uber, just to name a few.

“We’re at a relative point of saturation [with mobile banking apps],” Robb Gaynor, a co-founder of mobile and online banking software developer Malauzai Software, said in a recent interview with ATM Marketplace sister publication Mobile Payments Today. “Everyone has an app and they’re all kind of the same.

“The days of mobile ‘me too’ are over and now people are looking for differentiation [with their mobile banking apps].”

Gaynor believes banks today need to keep two things in mind when it comes to the mobile experience: app design and features.

If banks want a blueprint for how best to meet Gaynor’s parameters for mobile banking success, USAA might have the just what they’re looking for, due to its unique position in the market.

Mobile everything

USAA is forced to think differently about its mobile banking experience because of types of members it serves — some 12 million U.S. military members, veterans and their families. While the San Antonio-based FI has what it calls financial centers in 10 states and Washington, D.C., most of its members are scattered worldwide on military bases and active war zone outposts.

If a soldier in Afghanistan needs to open a new line of credit for whatever reason, they can do it from USAA’s mobile app.

“By the very nature of our members’ jobs and their mobile lifestyles, providing exceptional experiences through mobile devices — and now wearables — is key to meeting our members’ needs,” Melissa Ehresman, assistant vice president of digital experience delivery for USAA Bank, told Mobile Payments Today in an email. “It allows them to continue to interact in their channel of choice with a great experience.”

USAA can claim a lot of “firsts” when it comes to mobile banking.

In 2009, it became the first major FI to allow check deposits via a smartphone as the iPhone surged in popularity with consumers. Last year it became the first U.S. financial institution to offer facial and voice recognition on a mobile banking app as added protection against fraud and identity theft.

In addition to these features, USAA has incorporated conveniences such as Touch ID recognition for iOS device users; a budgeting tool within the mobile app; and account opening capability.

“In its infancy, the mobile channel was often a replica of capabilities in other channels,” Ehresman said. “We’ve focused on finding ways to add more value to our members’ mobile app with new functionality such as our Deposit@Mobile upgrade that enables members to deposit up to 10 checks in the same session to different USAA accounts using video capture on the USAA app for iPad, iPhone and Android.”

In a market where new features and app design are key, banks and software developers can borrow ideas from others such as USAA and add their own spin.

That’s what Malauzai has done, mimicking USAA’s mobile app PIN login for some of its customers.

“These are small things, but they’re a big deal,” Gaynor said. “It’s a new feature, it’s different, but it makes it easier for everyone to bank. USAA has probably done the best job of finding features that allow them to differentiate [from others].”

Malauzai takes this approach with community banks and credit unions in order to “out-innovate the big banks in the mobile space,” according to Gaynor.

The company helped several client banks launch an Apple Watch app on the first day the device was available for purchase. Many major financial institutions couldn’t make the same claim.

Just this week, Bank of America announced the addition of a lock/unlock feature in the event a customer loses a debit card; 150 of Maluazai’s partners already have that capability.

Gaynor’s mantra for mobile banking app features and design is simple: “Let’s do something that someone else isn’t doing.”

Which that brings us to the question of how payment capability can further the evolution of mobile banking app.

The payments question

One of the biggest challenges facing banks today is how to approach mobile payments, and it’s a topic that’s top-of-mind with executives.

During a panel at the Consumer Electronics Show this month, Rich Clow, Citi’s head of head of global payments said the FI needs to define its role in mobile payments outside of relationships with the major third-party wallet providers.

“If mobile payments and digital payments are going to scale, it’s really more about what’s required to accelerate and we need to figure out what our role is in that acceleration,” he said during a CES panel about mobile payments.

And at least one card network agrees.

“They absolutely need to have the option of putting their cards into the Pays, but we absolutely believe they need their own offering because they have incredibly valuable assets [to provide and protect],” James Anderson, group executive for platforms in MasterCard’s emerging payments division, said during the same panel.

So, what’s stopping them?

One issue is that host card emulation, which is available on Android devices running operating system version 4.4 or higher, is still a relatively new technology for banks. Banks initially hesitated to explore HCE based on security concerns. But this is no longer the case as financial institutions such as Capital One, RBC and others worldwide have integrated payments into their Android mobile banking apps using HCE.

Whether Apple will ever open the NFC chip on its devices to third parties remains to be seen, but at least one industry observer believes that banks can drive mobile payments in the long run.

“FIs already have an existing digital relationship with their customer that’s growing,” Michael Carter, cofounder and chief marketing officer of Prairie Cloudware Inc., told Mobile Payments Today in an interview. “The question which we debate around here, is will the banks deploy their own branded mobile wallet, or [add payment capability] to their mobile banking app.”

The answer might be both.

Chase left many industry folks scratching their heads when it announced Chase Pay at the annual Money 20/20 conference in October. The real kicker was this: The much-maligned Merchant Customer Exchange is Chase Pay’s premier partner.

But Chase’s decision to enter the mobile payments market with a product outside of its affiliation with the ‘Pays’ gives us a glimpse into how banks view their role in today’s current environment.

“I think [Chase Pay] is an indication that if you’re going to play in this game, you can’t do it through a third party and you have to get out in front,” Carter said. “What I tell banks is that you’re not late to the party, but you could get late really quick. You want to control this. I think the consumers are waiting for you to step up.”

Malauzai’s Gaynor believes that another way banks can get involved with mobile payments is to help small businesses develop, publish and sponsor apps that incorporate payment capability similar to Dunkin’ Donuts or Starbucks.

“The banks can play in that wallet and that’s what we see happening,” Gaynor said. He expects to see regional banks and merchants come together on this in 2016.

Going forward

As for what to expect from mobile banking apps in the future, it’ll vary from institution to institution.

USAA recently released a new version of its app that focuses on personalizing the member experience by using menus with cards tailored to what is most relevant to the member, according to Ehresman.

“We see personalization as an important element going forward,” she said.

USAA also has big plans for its virtual mobile assistant.

“Members can use voice commands to navigate and complete common banking transactions on the USAA mobile app for iPhone,” Ehresman said. “With approximately 200 commands, the new capability will make it faster and simpler to manage basic banking transactions such as viewing bank transaction history, filing an auto claim or transferring funds between accounts.”

Carter and Gaynor both believe that mobile account opening will be a vital feature as more banks streamline physical branches, or eliminate them altogether.

Whatever banks decide to do in the future, it’s almost certain that mobile banking apps will play a leading role in their overall strategy to retain existing customers and attract new ones.


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