In 2015, 15 leading global banks invested nearly $80 million on 606 mobile banking apps. HSBC alone had 11 iOS, 6 Android, and 1 Blackberry app in operation. Barclays had an added 30 iOS and 27 Android apps. This figure reflects spending at all stages of app development, testing, deployment, advertising, consumer education, and so on.

Meeting customer expectations

The market is tough for competing banks and customer retention is everything. The public expect to have a ‘bank in their pocket’ these days and be able to make payments, check balances, and more from their phones. In the USA, 62% of users primarily interact with their accounts through digital banking.

Benefits of mobile banking

The benefits of mobile banking are where banks need to invest their time and money. The more customers experience the following, the more likely they are to stick to their bank:

• Money management, customers are finding it easy to stay on top of their accounts through mobile banking and therefore avoid debt and charges;
• Security, it’s easier for customers to spot suspicious activity in their accounts if they are checking them more often. Also, the inherent riskiness of mobile transactions has forced banks to add extra layers of security for fraud prevention and compliance;
• Convenience, paying bills, opening accounts, and transferring money are all made easier with mobile banking. Some apps even allow customers to make ATM withdrawals using a code supplied by their mobile app – a handy feature if someone has left their cards at home.

A wider perspective

Shifts in the banking world are reflective of changes throughout the financial world. As we can see with growing fintech companies like iwoca, ClearBank and Algomi, investment in the future is the way forward. These companies are tackling the changes head on. Algomi investment software confronts illiquidity problems in the market. ClearBank saves costs using the cloud. What will major banks do to meet the mobile challenges and hang on to their customers? Will they be able to meet the challenges in the same way as Algomi? Investment has changed and banking will need to evolve to keep up.

The financial industry is experiencing a shake-up on a permanent basis these days. New fintechs and financial institutions are challenging the status quo and giving established companies a run for their money. Some are information-based, such as Algomi investment software offerings, and others are more finance-based, such as ApplePay. Some say that the real power to change the system though, lies in banking.

In February 2017, the 12 clearing banks in the UK were joined by a 13^th – ClearBank. This is the first new, purpose-built clearing bank to be created in 250 years. Nick Ogden is the brains behind the venture. He has spent 3 years putting together this multimillion pound project, which includes all the UK payment systems – Faster Payments, BACS, and CHAPS.

Other team members on the board at ClearBank include CEO Charles McManus, CFO Mark Jenkins, chief risk officer Steve Barry, CTO Andrew Smith, and chief governance officer Philip House. This brings a wealth of experience to the table and drives their credibility. They are some of the main investors in the banks success. ClearBank also secured £25 million from PPF Group and CFFI Ventures.

What makes ClearBank different?

ClearBank will cater to financial institutions, fintechs, and banks. They will not service the public. They employ purpose built technology that uses the Microsoft Azure Cloud system.

This is indicative of a general change in the market that is likely to see significant investment. Algomi CEO said this of cloud technology:

“But using trading tools that are inherently flexible by virtue of their cloud credentials also has significant business continuity benefits. Ultimately, it greatly minimises the risk of system outages and disruption when upgrade work takes place; an advantage that reduces IT risk.”

Algomi investment software innovator, Usman Khan

Ogden claims that “With the improved efficiency delivered by ClearBank’s built-for-purpose technology, between £2 billion and £3 billion could be saved from the annual costs that are paid for transactional banking in the UK”. Given this estimation, ClearBank could be the first truly competitive bank to enter the market in a long while, ClearBank could be unlucky for some of the existing behemoths like RBS, HBOS, and Lloyds.