Consumers Want More Banking App Control — Will FIs Step Up?

Control is one of the hottest topics in the world of payments and financial services — and it seems poised to have a major impact on the world of banking going into the new year and decade.

PYMNTS research, in fact, finds that 89 percent of people who use banking apps want more control, especially over things like setting login requirements (93 percent) and adding transaction-specific authentication requirements (87 percent). But financial institutions (FIs) have been slow to respond to such trends. To better understand those trends, PYMNTS recently caught up with Christian Ali, senior vice president of product at Entersekt.

“We are seeing a change in the industry,” he said.

Banks and credit unions (CUs), at least in North America, have not usually been at the forefront of rich consumer experiences and engagement, but the rise of mobile payments and mobile banking services is starting to alter that reality, he noted. The drive toward frictionless but secure consumer experiences in other parts of the economy is also leading consumers to expect more from their financial institutions.

“Banks are starting to recognize that,” Ali said.

Even so, it will require long and hard work to build those better consumer experiences — and to provide tools and apps that enable bank and CU customers to exercise more control.

“Some challenger banks are focusing on that,” said Ali, “but longstanding institutions are still trying to wrap their heads around it.”

Specific Controls

The PYMNTS research, in collaboration with Entersekt, provides further data to illustrate what’s at stake for many banking and CU customers. It found that 70.2 percent of consumers want authentication controls for added security, and 39.9 percent of consumers use apps that offer transaction-specific authentication controls. Not only that, but 65.5 percent of consumers want to be able to authenticate account-to-account transfers.

The drive for control reflects a few factors. Whether via eCommerce shopping or retail loyalty programs, consumers are getting used to increasingly personalized experiences.

“We can see that with loyalty, where you can tailor the user experience and decide how you want rewards,” Ali told PYMNTS. “And subscribers to Netflix expect it to have some insightful recommendations.”

That’s not all.

Consumers today trust their own ability to detect account fraud more than they trust their banks’ ability. The research bears that out. It’s not a vote of confidence for financial institutions — but it also represents an opportunity to develop and deploy apps that offer consumers the control they seek and meet them on their own terms.

“Who better to know whether a transaction is legit or not than the consumer?” Ali asked.

Sure, he continued, artificial intelligence (AI) holds the promise of bringing much better fraud protections to financial services and banking accounts, but the technology is not exactly there yet.

“AI is great,” he said, “but it’s not perfect.”

The drive for more control in this particular area of payments is perhaps most noticeable in younger consumers. Among millennials, for instance, some 80 percent frequently use apps that offer full controls. And while Generation Z does not use banking services as much as older consumers, Ali said, they do use P2P payments and have come to expect similar or even greater controls for other financial services and payment apps.

Super Apps

With all this desire for control, what does that mean for the prospects of so-called “super apps?”

The term refers to mobile apps that are designed to improve and ease payment and retail flows for consumers. Super apps create differentiated financial ecosystems in the back end (and front end), incorporating capabilities like an aggregation of multiple service providers, digital account origination, embedded Know Your Customer (KYC) abilities and real-time payments, to name a few.

A recent PYMNTS study of 1,037 mobile-using consumers in the U.S. found that immediately after waking up each day, consumers access one of more than 44 apps across those different categories — from email and calendar to mobile banking, social media, shopping and messaging.

Ali is not bullish on the rise of super apps, at least not for 2020. That is in large part because existing apps are becoming more efficient, he said. But the drive toward more control will continue into the new decade.

“Consumers today are saying they want to be involved” with those mobile financial activities, he noted — and that bodes well for the opportunity at hand.