The rise of digital banking in the mobile era

The digital banking revolution is threatening the traditional banking industry. But is it the end of the high street bank?

Mobile banking transactions surged by almost 57% last year, as almost 20 million Britons banked on smartphone apps. This data highlights how technology has disrupted the traditional banking industry, slowly leading to its decline.

The report by the British Bankers’ Association (BBA) and accountancy giant EY has found that 38% of the UK population used a banking app in 2016 as the number of people turning to their smartphones climbed by 11% to more than 19.6 million.

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Indeed, the report found that the number of app transactions increased by 57%, or 932 million. This equates to 30 every second, according to the BBA and EY.

The popularity of the smartphone has led to the inevitable rise in digital banking via various smartphone apps. This has coincided the the closure of thousands of bank branches across the UK, as footfall levels continue to decline.

“Customers’ appetite for using technology to manage their money on the move is showing no signs of abating, with banking apps now the principal means by which we access our current accounts,” said Eric Leenders, the BBA’s retail and commercial banking managing director.

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“And this doesn’t appear to be a fad with more and more people moving beyond payments, increasingly using apps to access a broader range of banking services, such as savings, credit cards, mortgage and investment accounts.”

The smartphone and banking apps have transformed the personal banking landscape, and as a result lenders are being forced to innovate current business models.

Jerry Mulle, Director of Customers & Partners at Intelligent Environments, said, “As the British Banker’s Association (BBA)’s recent report on banking app usage in 2016 shows, digital banking is now truly king. We at Intelligent Environments see this as further proof of the need for banks to continue to monitor the landscape, listen to consumer demands, and innovate technologically – all while ensuring security isn’t compromised.”

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“That being said, we don’t see this trend as signifying the end of the high street branch. There is still a need for bank branches – our 2016 research found that in-branch banking is still popular amongst the older generation, with almost a third (31 per cent) of over 45 year olds stating it as their preferred method of money management. Certain services also require more face time than others, for example mortgage advice and loan applications. Branches still have a place and a role to play – as with everything, they will simply have to adapt, combining the human touch with technology to continually improve customer service and efficiency.”

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Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...

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