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The App Store could become a potential graveyard for the new breed of mobile-only banks that get their offer wrong.[/caption]
Mondo. Atom. Bud, Abacus. Tandem. Starling. What do those names have in common?
Online retailers, perhaps? New Tour de France cycling teams?
In fact, they're all banks. Well, to be more accurate, they're all banking apps. In some cases, they don't yet have banking licences, so we can't really call them banks.
They're among the new breed of banking services providers that exist only on your smartphone via an app. No all-singing, all-dancing website, and certainly no high street branches. Many are being developed by techie wizards in their 20s, rather than financial services veterans.
A combination of deregulation and technological advancements have allowed these young upstarts to come into the financial services market and offer a range of products and services to people who are completely comfortable transacting from their mobile devices.
Non-traditional they may be, but these banking start-ups are certainly making waves
in a market that is currently dominated by the behemoths: HSBC, RBS, NatWest, Santander and the like.
When First Direct launched some 27 years ago, it revolutionised financial services. It was great service over the phone at a time when everyone was queuing in a branch to speak through a plastic partition to a dour clerk with a suit and a name badge. The roll-out of broadband allowed online banking to be added. Suddenly customers didn't have to wait a month to read their statement, or be forced to send a payment request through the post.
But banking has to keep pace with consumers' needs. It's no longer just about the convenience of online. Smartphones have changed the way people live their lives - including how they manage their day-to-day finances.
As an increasingly "mobile first"? society, we've gone way beyond using our phones to check our bank balances. Seventy per cent of us now use mobile banking services
, and two thirds of us use our phones to make regular transactions.
It's estimated that 40 per cent of UK consumers have at least one banking app, and last year there were almost 900 million logins to those apps. By contrast, we made 427 million branch visits.
Even NatWest - hardly known for being at the cutting edge of tech - now has more than four million people signed up to its mobile app, and is recording upwards of one million logins a day
When it comes to communicating their offers, what all these providers - from the big high street names to the tech-based new arrivals - need to focus on is the customer experience.
So far, many of the app providers have focused on differentiating themselves based on technology, but consumers regard their phones as access devices. It's not the technology that matters to them, it's convenience and the quality of the customer journey.
And on mobile, quality means brevity. The customer journey needs to be short and simple. It needs to be personalised, but more than anything it needs to be engaging and transparent.
The secret of success is knowing your audience and focusing on providing them with a customer journey - and product features - that will keep them using the app when the novelty factor has worn off.
The app providers have to understand that their target audience is more mobile savvy than financially expert.
They're not looking for an app to manage their pensions or ISA investments. And with interest rates so low, a savings account paying an extra 0.5 per cent is hardly going to be a deal-breaker. For most, they want an easy, convenient way to manage day-to-day spending. An app and a debit card will suit them nicely.
Atom has had the advantage of being the UK's first mobile-only bank
, but I think it's positioning is bang on. It focuses on the customer benefits, not the technology that sits behind it. It provides personalisation and an engaging platform that's based on gaming not banking. Yet behind the scenes there's lots of heavyweight financial services experience, which adds all-important credibility.
What they've understood is that if you want to create an app that people will use regularly for a prolonged period you need to create a great brand and an exceptional user experience. When the novelty factor has worn of, that's what will determine who succeeds and who fails in this market - not the technology.
And yes, there will be failures. That's no different to any other emerging market: rapid growth followed by a period of consolidation as the leaders start to emerge.
There are big opportunities in financial services for those who get it right, but get your product - or your marketing - wrong and you will quickly fall by the wayside and die a slow death in the App Store.
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