• Otávio Tranchesi, Finance Industry Lead at Appsflyer


• 21.06.2024 03:00 pm
#banking #ecommerce #innovation

It’s no longer the high street but the digital world that determines banking success, with the battle between traditional banks and neobanks driving the latest innovations in customer-focused finance. As the dust settles on pandemic disruption, what do banks need to know about the state of the UK mobile banking market and the opportunities that lie ahead?

The Awakening of Traditional Banks

When customers turned to mobile banking apps during the pandemic, neobanks — with their digital-first approach — were quick to capitalise on changing behaviours. Traditional banks lagged behind, taking about two years to catch up with robust app strategies of their own, allowing their digital competitors to race ahead and capture customer loyalty.

Neobanks such as Monzo, Revolut, Starling, and Wise saw app downloads grow by more than 50% from Q1 2020 to Q4 2023, peaking in Q3 2023 with a 73% increase compared to early 2022. Meanwhile, despite their larger client base, traditional banks saw stagnant growth in app downloads. Clearly, an urgent pivot was needed.

The Shift Towards Mobile Campaigns

Recognising the significance of banking apps, traditional banks intensified their mobile campaigns over the past two years in a strategic shift aimed at engaging customers digitally and driving app adoption. The success of such campaigns hinges on the ability to reach target audiences across a diverse array of platforms.

A diversified paid marketing strategy is essential for traditional banks to secure a larger market share. Marketers must consider user preferences, including mobile device systems. For example, iOS users are often considered more valuable than Android due to their higher average financial standing. Leveraging self-reporting networks (SRNs) like Meta, Google, and Apple Search Ads can optimise reach and engagement.

Learning from E-commerce: Re-engagement Best Practices

While user acquisition is crucial, traditional banks must not neglect existing users if they want sustained app usage. Inspiration can be sought from eCommerce, where remarketing-driven retention strategies have proven their ability to prompt re-engagement, such as the significant growth achieved by Amazon by focusing on repeat users.

E-commerce strategies like personalisation, time-sensitive push notifications, and gamification, can enhance banking apps. This convergence has led retailers like M&S to explore partnerships with banking giants such as HSBC, envisioning comprehensive financial services and loyalty “superapps”.

By adopting tactics like email-to-app, referral-to-app, and social-to-app, traditional banks can streamline customer journeys and boost conversion rates, replicating the seamless experiences offered by their e-commerce counterparts.

The Path Forward: Embracing Innovation

The current mobile banking landscape is rich in opportunity for traditional banks. While neobanks have made substantial strides, profitability remains a concern, giving traditional banks an advantage in their ability to invest in human and technical resources. By embracing innovation, refining marketing strategies, and prioritising user re-engagement, traditional banks can unlock the full potential of mobile banking apps.

Learning from both neobanks and advanced traditional banks around the world — and drawing inspiration from e-commerce marketing strategies — traditional banks can secure their position in the mobile banking landscape by combining the best of the old and the new.