The intrinsic worth of payments cards is typically defined by consumer perceptions around convenience, speed, security and rewards. Those factors still rank highly, but technological advances centering on smartphones have fundamentally changed the game.
Now, it’s all about the mobile banking app. Three words of warning there: Make it good.
“Many card apps offer standard features, such as being able to set transaction notifications and alerts, but far fewer offer innovations that could provide genuine value to cardholders,” according to PYMNTS’ Building A Better App Playbook done in collaboration with Ondot.
Operationalizing “genuine value” is a big hurdle to clear for many issuers, however.
“Card apps can enable payment plans for large purchases, aggregate merchant offers and help consumers track how they spend money to promote sound financial choices, for example. This does not mean that banks should overload their apps with features, but it does suggest that they should prioritize those that consumers find most compelling as well as provide unique and powerful offerings that are appealing to the most digitally oriented users,” the Playbook states.
Surveying over 3,000 U.S. consumers, The Mobile Card App Features edition dives into what a better app does, how it looks and behaves, and most importantly, how financial institutions are innovating mobile banking experiences that make a meaningful impact on consumers’ lives.
Feature Gaps In Banking Apps
Primary card app features are fairly uniform one to another. PYMNTS research finds that 89 percent of cards apps offer transaction notifications, and 86 percent can report cards lost or stolen, along with the ability to dispute incorrect or fraudulent charges (about 75 percent of apps) and the ability to apply to use a card in minutes (71.6 percent). Spend management features (65.2 percent), purchase information (63.7 percent) and pushing card credentials to mobile wallets (63.6 percent) were also present but less common, based on app users’ reports.
“Those who are most inclined to download better mobile card apps or switch to financial institutions (FIs) that provide access to them are interested in a much broader range of features than cardholders are as a whole,” according to The Mobile Card App Features edition.
“Majorities of these two groups are interested in every possible feature offered by a hypothetical ‘better app.’ These include gaining spending insights (of interest to 74.5 percent of those likely to download a better app and 77.2 percent of those likely to switch FIs), getting information about purchases (77.1 percent and 77.5 percent, respectively) and virtual cards (65.5 percent and 68.8 percent, respectively).”
Another uncommon feature highly prized by respondents is a payment plan. “Cardholders who regularly or frequently use their banks’ card apps are disproportionately interested in payment plans for large credit purchases and virtual cards,” the Playbook states.
“Our research shows that 54.8 percent of regular card app users — those who use them roughly half the time for their card management activities — are interested in payment plans, translating into an availability gap of 13.4 percentage points. Among frequent users — those who use them most or all of the time for card management — 53.9 percent are interested in payment plans, which results in an availability gap of 12.6 percentage points. Virtual cards have availability gaps of 11.6 percentage points and 9.2 percentage points among regular and frequent users, respectively.”
Unmet Demand Equals New Opportunity
The upshot is that better mobile banking apps give consumers more choice, more flexibility, and above all, more control. That’s what the people want, and the winners will provide it.
“Mobile card apps have the potential to be force multipliers for credit and debit cards, allowing users to more effectively control and manage their spending and to optimize the many incentives that come with cards,” according to The Mobile Card App Features edition.
“PYMNTS’ research suggests that existing card apps are not well-aligned with consumers’ demands and expectations, however, and that there is substantial unmet demand for certain key app features.” For now, that unmet demand can be fulfilled by issuers that focus where their competitors are not: “These include payment plans for large credit purchases, virtual cards, location controls, merchant offers based on preferences and receiving insights about spending and purchases,” the Playbook states.
“FIs that deliver such capabilities stand to improve their relationships with customers and enhance their customers’ financial lives. Such features can also enable them to gain new customers eager for better digital money management tools.”