6 Must-Have Features of a Successful Mobile Banking App in 2023

To compete in today’s fast-evolving fintech landscape, banks must adapt by combining their long-established capabilities with newer, digitally enabled features that customers now expect as must-haves.

It’s not a given that existing customers will stick with their banks just because they already have a mobile app. One in three consumers say that they’ll consider changing their primary bank if the alternative could offer better online and mobile technology.

Banks and traditional financial institutions must recognize that well-designed features are critical in getting consumers to adopt their mobile solutions. Customers have become more sophisticated and are now more sensitive to user experience. As they may already be used to their bank’s web app, the mobile experience has to set itself apart.

To meet this challenge, more and more mobile banking apps are beginning to offer these types of capabilities:

• User access and authorization in a way that’s both effortless and secure
• Personalization that responds to the user’s behavior and personal financial goals
• Dashboards and displays that can show transactions, spending, and insights at a glance
• Seamless payments that can be done within a few taps or swipes
• Availability of as much information as possible on every transaction
• Access to investment products whether offered by the bank, a marketplace, or third-party institutions
• Interoperability with external apps and services, particularly payment gateways, eCommerce platforms, digital wallets, and many other types of financial and digital services

Keeping up with these trends may require difficult changes that go beyond technology interventions. These entail work in a range of areas that include internal business processes, commercial partnerships, regulation, and talent, among many others.

However, there are a few features that customers already expect as must-haves for their mobile banking apps today. By beginning with these specific capabilities, banks can set a solid foundation when exploring additional bells and whistles for their apps later on.

1. Robust security

Consumers recognize cybersecurity as one of the leading considerations when it comes to their online habits and the digital products and services they choose. From the perspective of bank customers, app security is simply about not getting their money taken away by malicious actors.

When it comes to mobile apps, banks have the most control on threats against the server layer and the transit layer (i.e. communication between the server and the mobile device). This makes the user and device layer most vulnerable because attacks on mobile banking apps exploit user behavior.

Here are some of the most common types of these threats:

• Phishing apps or fake banking apps: One analysis found that around 2% of the top 1,000 highest earning apps are scams, which has stolen over $US 48 million. These fake apps are usually copies of legitimate banking apps made to appear as if they’re the official mobile platform.
• Trojans and malware: This threat comes in the form of malicious code that steals data when customers interact with their banking apps. These attacks can steal one-time passwords (OTPs) from SMS.
• Man-in-the-middle attack: In this attack, the malicious actor intercepts a conversation or data transfer between two parties either to eavesdrop or impersonate one of them to create the impression as if a normal flow of information is taking place. For example, the attacker might set up a “free” wifi connection to be able to hijack the data or log-in credentials of users in using any app.

This isn’t to say that it’s the users who are predominantly responsible when these attacks occur. In fact, banks carry the burden of minimizing these threats through security features and intuitive design that influence and shape user behavior.

Successful mobile banking apps do this through a combination of security features such as:

• End-to-end encryption
• Password dictionaries
• Multi-factor or third-party authentication
• AI-powered behavior analysis
• Continuous authentication
• Real-time alerts via SMS, email, and/or push notification
• Customer education and reminders

There’s always a lively debate about the trade-offs between user experience (UX) and security. We at Netguru believe that they’re not mutually exclusive. Banks and financial institutions can design UX and security in complementary ways.

While there’s no such thing as a 100% secure mobile app (and there never will be), there are industry standards and best practices that can properly address security risks while providing customers with an outstanding user experience.

2. Digital core banking

Bankers already know that core banking is the back-end system that processes all banking transactions and generates updates to accounts and other financial records. Traditional core banking systems include customer onboarding, deposit management, account-to-account fund transfers, loan processing, cash management, ledger systems, reporting tools, analytics, and security management, to name a few.

To meet customer expectations today, core banking providers have evolved these capabilities into a new iteration of digital core banking tools that emphasize the customer experience in digital channels.

For example, digital core banking systems enable banks to onboard new customers directly through web and mobile apps instead of having them fill-out seemingly endless and redundant paperwork.

Digital onboarding also streamlines verifications and the know-your-customer (KYC) process. Authentication processes and digital identity management reduces friction for online transactions and also protects user data and privacy.

Traditional core banking systems focused on digitization and integration that helped bank employees become more efficient and have better visibility over their data. The more recent digital core banking tools extend to the end-user experience wherein the customer’s interaction with the bank’s web and mobile channels are seamless and secure.

For example, Solarisbank, a financial technology company with a German banking license, offers their Banking-as-a-Service platform to companies (not just banks) that want to engage in banking services such as digital banking, cards, consumer lending, and payments. Solarisbank focuses on the core technology and banking regulation so that their client institutions can turn their attention towards tailoring the end-user experience that their customers will appreciate.

Established banks typically view digital transformation as high-risk. One report suggested that it would take the global banking industry around 25 years to replace all of the legacy systems in place. Because of this, a lot of digital core custom banking solutions enable a “multi-core” approach where digital core banking systems can integrate with legacy core banking systems. This enables banks to build modern customer-facing platforms that can reduce the risk of replacing legacy systems.

3. QR code payments and confirmations

Banks should also consider incorporating QR (Quick Response) code payments into their mobile apps. Most consumers are likely to be familiar with how QR codes look: a two-dimensional pattern of black squares arranged in a square grid with a white background. Compared to barcodes, QR codes store more data and can be scanned from screens, not just paper. It’s also more secure than barcodes because its data can be encrypted.

The use of QR codes initially gained traction in Asia but has grown in popularity in a lot of markets. In 2020, 1.5 billion people used QR codes to make a payment, with usage skyrocketing during the COVID-19 pandemic. One study projects that up to 30% of smartphone users globally will be using QR codes to make payments worth US$ 3 trillion by 2025.

While digital wallets and other fintech apps already offer QR codes as a payment channel, it’s important that banks also allow their customers to be able to pay through QR from within their mobile apps. Compared to account-to-account transfers (and even credit card payments), QR code payments reduce the friction in the payment or fund transfer journey.

This makes QR code payments a preferable modality for instant and micro payment. Use cases include payments for street vendors, restaurants, micro businesses, toll booths, parking, fueling stations, charity donations, entry to events, and many others.

In addition to payments, QR codes in banking apps can also be extended to function as a form of confirmation or receipt. For example, some mobile banking apps can generate a QR code confirmation that can be shown when entering a venue, effectively serving as a ticket. This way, QR code features can enable banking apps to be more than just payment apps.

4. Peer-to-peer mobile payments

Peer-to-peer (P2P) payments is a way to transfer funds to another person's account using a mobile app in a way that’s more convenient and seamless than the web app account-to-account fund transfers. QR code payments is just one modality for this.

Aside from QR codes and bank account numbers, some fintech and bank apps allow P2P payments by sending money to the recipient’s mobile number, email address, or username. Users may not even need to know the recipient’s bank. You can just send money to a friend’s mobile number or username, and the system will take care of the transfer.

Because account-to-account transfers through web apps have been an established capability for banks, the UX for their P2P mobile transfers can sometimes be neglected thinking that it doesn’t really need to deviate from the web app experience. As we’ve now all seen, this was a key area that fintech companies innovated on.

In the US, 70% of adults reported having used at least one P2P service by the end of 2020 compared to 57% in 2017. The continuing adoption of P2P services are being driven by non-bank fintech players such as PayPal, Venmo, Zelle, and Cash App, among many others. This trend appears to be similar in other markets wherein digital wallet providers are leading the charge in P2P payments.

While small, casual, and instant payments are today’s leading use case for P2P payments, businesses are anticipated to take advantage of P2P networks as it grows. Small and medium enterprises (SMEs) are slowly using P2P channels to pay individuals (e.g. payroll) and other businesses (e.g. loans, payments to vendors).

One advantage is that it can help businesses settle their debts or payables faster than check payments, especially because of delays associated with clearing and verification.

5. Bill payments and personal financial assistant

Paying bills and setting aside money for savings and investments can be an unpleasant experience because it represents the financial obligations that people have to make on a regular basis. Mobile banking apps can and should make this experience a little less painful.

For instance, banking apps should allow automatic payments for recurring bills (e.g. electricity, water, broadband, insurance, loans, etc.) to help consumers pay on time and alleviate the mental load of thinking about these obligations. It should also facilitate one-time payments with ease through scan-and-pay features, especially through QR codes. This comes in handy in cases such as property taxes, payment of fines, and over-the-counter payments.

Further, recent innovations in mobile banking are now also making these apps sort of a personal financial assistant. In terms of the informational value that bank apps should provide, clients should be able to do more than just check their account balance and transaction history.

Some banking apps now are able to assist users track their spending, manage monthly budgets, and generate insights aimed at helping customers make better financial decisions. Today’s banking apps aren’t just about making payments, but also helping clients save for their next dream vacation.

One relatively new capability in digital banking is an automated or smart savings feature. Savings accounts with this offering lets customers designate some of their direct deposits to different savings goals or accounts. Another variation of automated savings is that the bank system analyzes accounts and moves money around to designated accounts or categories if it deems that the customer doesn't need a portion of the savings for anything urgent.

6. Cardless ATM withdrawals

The Cardless ATM feature allows bank customers to withdraw from an ATM without having to use a physical card. Verification and authorization are done through the bank’s mobile app.

Upon withdrawal, the ATM will display a QR code on the screen, which the customer needs to scan with their smartphone. Alternatively, some cardless ATM withdrawals are powered by near-field communication (NFC) technology wherein the user taps their phone onto the ATM’s reader.

One obvious benefit of having this feature on mobile banking apps is that customers would no longer need to carry around their debit cards. More importantly, cardless ATM transactions are more secure than traditional card-based ATM withdrawals.

First, it eliminates the threat of card skimmers. Also, cardless withdrawals typically require two-step authentication. For instance, a thief who has your device needs to know your smartphone PIN, your account credentials for your bank app, and your specific PIN for authorizing card ATM withdrawals.

While this isn’t yet a widely popular option, the number of ATMs that feature cardless withdrawals rose by 26% in 2019. The COVID-19 pandemic is also expected to drive adoption of cardless ATM withdrawals with consumers wanting to avoid or lessen physical contact with public devices such as ATMs.

More mobile banking app features to consider

Because of a dynamic and exciting fintech landscape, there are many other features that consumer banking executives should consider for their mobile apps. Depending on customer expectations, some will consider them as desirable features, while others already deem them as must-haves.

Here are a few features that banks and non-bank financial institutions may need to think about.

• Chat support and chatbots: Consumers are now more open to being assisted on their inquiries and requests over chat instead of the conventional customer support over the phone. Depending on the complexity, they may either be talking with a chatbot or a real person acting as a virtual assistant.
• Cryptocurrency: If allowed by their domestic regulators, banks may also want to consider enabling their users to buy and hold cryptocurrencies (e.g. Bitcoin) as a feature within their mobile banking app. The crypto exchange or wallet function could either be a service by the bank itself or offered by third-party companies.
• Identity provider (IdP): Because banks already conduct a know-your-customer (KYC) process to each of their customers, mobile banking apps could also function as identity providers that customers can use for other transactions and services. For instance, when a third-party merchant requires proof of address, the banking app could provide or generate this as a digital handshake.
• Multi-currency wallets and currency exchange: While there may be regulatory challenges for banks, a few non-bank fintech companies (e.g. PayPal) already offer this feature. This may be attractive for customers who travel frequently or conduct business that make and receive payments in a foreign currency.
• ATM and branch locator: While this is a basic piece of information already available in most bank websites, it’s still worth including in a bank’s mobile app. This could come in handy for customers finding an ATM or a bank branch when traveling in an area they’re unfamiliar with.
• Coupons, vouchers, and discounts: It’s already common for merchants to partner with banks but redeeming the benefits of these partnerships can still be a hassle for customers. Hence, banks can make the process of claiming coupons, vouchers, and discounts more convenient and efficient when made available through their mobile apps.
• Gamification: Relatedly, banks should capitalize on the power of gamification to encourage use and quality engagement from their users in exchange for rewards. For example, if customers use the banking app for a certain number or amount of payment transactions within a period of time, then they get rewarded with points, coupons, or cashback.
• Mobile check deposit: Also called "remote deposit capture", this is becoming one of the most popular features in mobile banking in markets where check payments are still prevalent. In this feature, users can scan a physical check using the image capture function on the bank app. When the bank’s system verifies the digital image and its details, the value of the check is directly deposited into the recipient’s account.

Pressure to be super banking apps

More and more fintech apps are incorporating non-financial services into their offerings (e.g. shopping, booking tickets, marketplace for gaming tokens or credits).

Similarly, apps that initially began as specific niche services (e.g. messaging, ride-hailing, food delivery) are going into fintech as well. With the rise of these so-called ‘super apps’, banks are under pressure to integrate these types of services in order to retain and expand their customer base, especially the younger demographic.

Whether or not banks venture into digital services unfamiliar to them, it’s vital that banks do well on their core offerings and do them well on their mobile apps. By innovating on what’s familiar to customers, banks create an enabling environment should they take risks later in offering non-traditional financial and digital services.

Making this happen requires a partner experienced in product development, mobile banking, and financial technology. We’d like to learn more about your project to help us better understand how we can translate your company’s vision into a digital product that your customers will love.