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WHERE TO BEGIN WHEN CREATING A SUCCESSFUL BANKING APP IN 2021

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By Isabel Ferreira, Director of Sales, UK & Ireland at Adjust

 

The future of fintech 

Along with the drastic change in app usage patterns and habits in 2020 came unprecedented installs and sessions growth across all verticals. One vertical that saw the biggest increases was fintech – and that growth has shown no signs of slowing down in 2021.

Banking app revenue reached £2.59 billion in 2021, by mid-2020, 25% of all banking app downloads were digital banks, up from 1% in 2017, and the average user now has 2.5 finance apps installed.  Global payments reached £1 billion in 2020 and the e global mobile payment market size is expected to grow to £6.42 trillion by 2027 – with a compound annual growth rate of 29% forecast.

So how do apps in this booming fintech space proceed, and how does the traditional finance sector work to compete with digital-first businesses?

 

What  banking apps have to offer

Credit cards and e-wallets are expected to surpass cash at all points of sales by 2021, which can be accredited to the benefits digital banking can offer. When developing a banking app, it’s important to consider how you can optimise the user experience by facilitating their needs. For example, a single mobile banking app can allow users to send and receive transactions, apply for loans, see their status for multiple accounts, and contact customer services. The ability to independently complete these tasks from any location is unrivalled by physical stores.

Isabel Ferreira

Another considerable benefit to developing a banking app is that they can be used at any time – enabling your company to offer a 24/7 service to your customers. This creates a win-win scenario –automated tasks save users’ time, and you benefit from a cost effective business model.

 

Where to begin when creating a successful banking app

  1. Get to know your audience

Understanding the banking app market is the first critical objective. You will need to conduct extensive market research in order to learn the many functions your target audience needs from a banking app

. The banking vertical caters to a wide age range and a variety of user types, so it’s important to identify the most critical aspects of mobile banking in accordance with your customers.

Moreover, if you already have services via desktop and mobile web, you should offer the same functions in your mobile app. Extensive testing is the best way to identify what works best and ensure your banking app is generating optimal results. You should also seek out user feedback from every demographic you are targeting.

As you gain a greater understanding of what customers want from your app, you should formulate a clear outline of your various target audience groups, why they will be interested and how you can compete against apps targeting the same audience. Answering these questions will give you the insights needed to plan your launch date and other critical components of your marketing strategy.

  1. Ask yourself ‘What customer support will your mobile app offer?’

There will be scenarios when your users need additional support so it is critical that they can contact a support team. This is a fail-safe way to ensure that users trust your company and know that their money is in safe, capable hands. However, there are ways to ensure users are speaking with a support member only when necessary: Chatbots and comprehensive FAQ pages can help you offer immediate answers to your customer’s most frequent questions in a more cost-effective manner.

  1. Enable your banking app for finance management

Another important feature for banking apps is the ability to view translation history and statements. This enables users to organise their finances in-app without having to use multiple channels. Depending on the nature of your app, you can also offer budgeting tools and additional insights to offer a superior user experience to your competitors.

  1. Ensure a safe and secure experience

None of the features above will convince users to install your app if they do not have trust in your app’s security measures. The importance of high-grade security for mobile banking apps cannot be overstated: this is a major concern for users that can make-or-break an app’s success. Ensure that your banking app has air-tight security before launch so that you are not susceptible to mobile bank fraud. Let’s dig deeper into this critical topic.

 

Banking app security

When looking for ways to make your banking app as secure as possible, it’s important to know how it will impact the user experience and efficiency of your app’s features. With that in mind, here are four features that can contribute to robust app security.

Only allow sophisticated passwords: This is a relatively simple way to make your authentication process more secure. Moreover, users will also already be familiar with having specific requirements for their passwords. In addition to disabling passwords that are easier to hack, you can also require users to change their password after a set period of time.

Don’t store unnecessary information: The best way to ensure user information isn’t compromised is to avoid storing it. Instead, utilize tokenization to ensure sensitive data cannot be stolen during a security breach. Tokenization is the process of replacing data with non-sensitive placeholder symbols called tokens. This is a buzzword within the fintech industry and has become more widely known due to the success of cryptocurrencies and blockchain technology.

Use two-factor authentication: This is a smart way to optimize your banking app’s security during login and before transactions are complete. For example, if a user wants to make a payment you can use two-factor authentication by sending them an email or contacting them via SMS. Your users can be sent a code to enter in-app, enabling them to complete their desired task.

Implement payment blocking: You can also combat fraud by developing a feature that automatically blocks payments that are suspicious. While this can frustrate users who are wrongfully flagged as suspicious, the additional security measure is worth it because user security takes priority. You can also use your two-factor authentication system to unblock these transactions.

 

Seizing the fintech opportunity

As the world emerges from the pandemic, the focus of the financial services industry will be to create more meaningful digital experiences that improve the financial health and wellbeing of their customers. The fintechs that continuously innovate and offer better user experiences will see the most success.

 

Banking

Resilient technology is the most important factor for successful online banking services

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By James McCarthy, Director of Solutions Engineering, NS1

 

More than 90 percent of people in the UK use online banking, according to Statista and of these, over a quarter have opened an account with a digital-only bank. It makes sense. Digital services, along with security, are critical features that consumers now expect from their banks as a way to support their busy on-the-go lifestyles.

The frequency of cash transactions is dropping as contactless and card payments rise and the key to this is convenience. It is faster and easier for customers to use digitally-enabled services than traditional over-the-counter facilities, cheques, and cash. The Covid pandemic, which encouraged people to abandon cash, only accelerated a trend that was already picking up speed in the UK.

But as bank branches close—4865 by April of 2022 and a further 226 scheduled to close by the end of the year, Which research found—banks are under pressure to ensure their online and mobile services are always available. Not only does this keep customers satisfied and loyal, but it is also vital for compliance and regulatory purposes.

James McCarthy

Unfortunately, their ability to keep services online is often compromised. In June and July of this year alone, major banks including Barclays, Halifax, Lloyds, TSB, Nationwide, Santander, Nationwide, and Monzo, at various times, locked customers out of their accounts due to outages, leaving them unable to access their mobile banking apps, transfer funds, or view their balances. According to The Mirror, Downdetector,  a website which tracks outages, showed over 1500 service failures were reported in one day as a result of problems at NatWest.

These incidents do not go unnoticed. Customers are quick to amplify their criticism on social media, drawing negative attention for the bank involved, and eroding not just consumer trust, but the trust of other stakeholders in the business. Trading banks leave themselves open to significant losses in transactions if their systems go down due to an outage, even for a few seconds.

There are a multitude of reasons for banking services to fail. The majority of internet-based banking outages occur because the bank’s own internal systems fail. This can be as a result of transferring customer data from legacy platforms which might involve switching off parts of the network. It can also be because they rely on cloud providers to deliver their services and the provider experiences an outage. The Bank of England has said that a quarter of major banks and a third of payment activity is hosted on the public cloud.

There are, however, steps that banks and other financial institutions can take to prevent outages and ensure as close to 100% uptime as possible for banking services.

Building resiliency strategies

If we assume that outages are inevitable, which all banks should, the best solution to managing risk is to embrace infrastructure resiliency strategies. One method is to adopt a multi-cloud and multi-CDN (content delivery platform) approach, which means utilising services from a variety of providers. This will ensure that if one fails, another one can be deployed, eliminating the single point-of-failure that renders systems and services out of action. If the financial institution uses a secondary provider—such as when international banking services are being provided across multiple locations—the agreement must include an assurance that the bank’s applications will operate if the primary provider goes down.

This process of building resiliency in layers, is further strengthened if banks have observability of application delivery performance, and it is beneficial for them to invest in tools that allow them to quickly transfer from one cloud service provider or CDN if it fails to perform against expectations.

Automating against human error

Banks that are further down the digital transformation route should consider the impact of human error on outage incidents and opt for network automation. This will enable systems to communicate seamlessly, giving banks operational agility and stability across the entire IT environment. They can start with a single network source of truth, which allows automation tools to gather all the data they need to optimise resource usage and puts banks in full control of their networks. In addition it will signal to regulators that the bank is taking its provisioning of infrastructure very seriously.

Dynamic steering 

Despite evidence to the contrary, downtime in banking should never be acceptable, and IT teams can make use of specialist tools that allow them to dynamically steer their online traffic more easily. It is not unusual for a DNS failure (domain name system) to be the root cause of an outage, given its importance in the tech stack, so putting in place a secondary DNS network, or multiple DNS systems with separate infrastructures will allow for rerouting of traffic. Teams will then have the power to establish steering policies and change capacity thresholds, so that an influx of activity, or a resource failure, will not affect the smooth-running of their online services. If they utilise monitoring and observability features, they will have the data they need to make decisions based on the real time experiences of end users and identify repeated issues that can be rectified.

Banks are some way into their transformation journeys, and building reputations based on the digital services that they offer. It is essential that they deploy resilient technology that allows them to scale and deliver, regardless of whether the cloud providers they use experience outages, or an internal human error is made, or the online demands of customers suddenly and simultaneously peak. Modern technology will not only speed up the services they provide, but it will also arm them with the resilience they need to compare favourably in the competition stakes.

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Banking

Digital Banking – a hedge against uncertainty?

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Ankit Shah, Head of Digital Banking, Apex Group

 

The story of the 2020’s thus far is one of crisis. First the world was plunged into a global pandemic which saw the locking down of people and economies across the world. Now we deal with the inevitable economic consequences as currencies devalue and inflation bites. This has been compounded by Russia’s invasion of Ukraine and subsequent energy politics.

And the outlook remains uncertain. Tensions continue to build between China and Taiwan and inflationary conditions are forecast to continue well into 2023. This uncertainty is impacting everyone, and every sector. And finance is no exception with effects being felt everywhere from commodity and FX markets to global supply chains.

But it’s not all doom and gloom. Rollercoaster markets and an ever-evolving geopolitical situation have made 2022 a tricky year far, but, despite the challenges, digital banking has proven resilient. In fact, the adoption of digital banking services has continued to grow over the last few years, and is predicted to continue.

So, what are the forces driving this resilience?

In an increasingly digital world and economy, digital banking comes with some advantages baked in, which have seen the sector continue to succeed despite the tumult in the wider world. In fact, the crises which have shaped the decade so far may even have been to the advantage of digital banking. Just as during the pandemic, technologies which could facilitate remote working saw a huge uptick in users, so to digital banking is well suited to a world where both people, and institutions demand the convenience that online banking services offer.

And while uptake of digital banking services is widespread amongst retail consumers, a trend likely to continue as digital first generations like Gen Z become an ever-greater proportion of the consumer market, uptake amongst corporate and institutional customers has been slower. This is largely down to a lack of fintech businesses serving the more complex needs of the institutional market, but, in a post-Covid world of hybrid working business, corporate clients are looking for the same ease of use and geographic freedom in their banking that is enjoyed by retail consumers.

This is not just a pipe dream – with the recent roll out of Apex Group’s Digital Banking services, institutions can enjoy the kind of multi-currency, cloud-based banking solutions, with 24/7 account access that many of us take for granted when it comes to our personal banking.

Staying compliant

One significant difference between retail and business accounts however, for banking service providers, is the relative levels of compliance which are needed. While compliance is crucial in the delivery of all financial services, running compliance on multi-million pound transactions between international businesses brings with it a level of complexity that an individual buying goods and services online doesn’t.

For digital banking services providers, this situation is further compounded by guidance earlier this year from HM Treasury – against the backdrop of the Russia-Ukraine conflict- requiring enhanced levels of compliance and due diligence when it comes to doing business with “a high-risk third country or in relation to any relevant transaction where either of the parties to the transaction is established in a high-risk third country or with a sanctioned individual.”

So, can digital banks meet these standards while also providing institutions with the kind of easily accessible, mobile service which retail customers enjoy?

The answer is yes and again, once initial hurdles are overcome, digital banking brings with it features which give it the edge over traditional banking services. Paperless processes, for example, mean greater transparency and allow for better and more efficient use of data. This means AI can be employed to search documents, as well as provide verification. It also means compliance processes, often notoriously complicated, become easier to track. Indeed, digitising time intensive manual process means the risk of human error in the compliance process is reduced.

Digital banking can also better integrate transaction monitoring tools, helping businesses identify fraud and irregularity more quickly. This can be hugely important, especially in the times of heightened risk we find ourselves in, where falling foul of a sanctions regime could have significant legal, financial and reputational consequences.

Cross-border business

Our world is increasingly globalised, and so is business. For corporate and institutional banking customers, being able to operate seamlessly across borders is key to the operation of their business.

This brings with it challenges, which are again compounded by difficult geopolitical and economic circumstances. In recent weeks for example, we’ve seen significant flux on FX markets which can have real consequences for businesses or institutional investors who are buying and selling assets in multiple currencies and jurisdictions. The ability to move quickly then, and transact in a currency of choice, is vital. Advanced digital banking platforms can help – offering automated money market fund sweeps in multiple core currencies to help their clients optimise their investment returns and effectively manage liquidity.

Control admin uncertainty

In times of uncertainty, digital banking can provide additional comfort via customisable multi-level payment approvals to enhance control of what is being paid out of business accounts, with custom limits available for different users or members of a team. Transparency and accountability are also essential, with corporate clients requiring fully integrated digital reporting and statements and instant visibility with transaction cost and  balances updated in real-time.

Outlook

For some, the perception remains that digital banking is the upstart industry trying to offer the services that the traditional banking industry has built itself upon. Increasingly however, the reality is that the pressure is on traditional banks to try and stake a claim to some of the territory being taken by digital first financial services.

With a whole range of features built in which make them well suited to business in a digital world, digital banking is on a growth trajectory. Until now, much of the focus has been upon the roll-out of services to retail consumers, but with features such as automated compliance, effortless international transactions and powerful AI coming as standard for many digital banks, the digital offering to the corporate world looks increasingly attractive.

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