This revolution has been taking shape for some time now. The digital transformation of the banking sector is still ongoing with the proliferation of mobile banking, which is not only changing the ways we access our bank accounts, but also – and more profoundly – the relationship we have with our finances.
Mobile banking is not all the same. First of all, there are many online banks that are backed by the well-established major networks, such as Hello bank! (BNP Paribas), Boursorama Banque (Société Générale), BforBank (Crédit Agricole) and even ING Direct. These virtual establishments have effortlessly made the switch to mobile banking by adapting themselves to new technology as it develops.
There are also banks that are genuinely mobile first, whose products are primarily designed to be used on a smartphone. Such is the case with Revolut, a British bank that even lets you open an account instantly on your mobile, and Number26, a German service that works in a similar way. Revolut and Number 26 are user-friendly applications that emphasize their extremely streamlined nature. Transfers take place instantaneously, users have a free credit card and there are practically no fees. Here, there are none of the numerous administrative hurdles you have with conventional banks.
However, this simplicity comes at a price. In both cases, minimal services are available at the moment: you cannot deposit cash and there are no authorized overdrafts or credit. Both banks, which each claimed to have more than 100,000 customers in their first year, are expected to expand their services in order to continue growing in the future.
Revolut intends “to blow” conventional banking models
Another indication of the increasing influence of mobile first banks is the acquisition by Orange of a 65% stake in Groupama Banque, with the aim to launch its own bank in 2017. But this intention is not at all a first foray for the Group, which is at the forefront of mobile payments in Africa and already provides banking services in Poland.
For now, we can still find few actors on the mobile baking sector. According to an Audirep/Simon-Kucher study published in December 2015, in France less than one person out of ten (8.3%) has an account with an online bank. Nevertheless, there is little doubt that this figure is expected to soar in the coming years with the rise of generations Y and Z.
Those currently aged 18-34 are much more digitally aware and itinerant than their elders. Above all, they are more demanding. According to a worldwide survey conducted by Bank of America Merrill Lynch, an estimated one third of 18-34 year-olds think that they can do without banks at all.
Mobile banking is part of the “FinTech” revolution. Digital businesses are everywhere and are taking over traditional banks to offer financial products. Amongst them are services as diverse as peer-to-peer lending (Lending Club, Prêt d’Union), card payment solutions (Square, Lydia), money collection solutions (Leetchi, Le Pot Commun) or money transfer solutions (Flooz, Pumpkin). So many platforms that are often primarily designed for mobile phones…
The services on offer are very varied and limited, as the sector is, for the moment, fragmented. Nevertheless, the FinTech landscape is expected to change rapidly, by way of buy-outs and regrouping.
In the long term, there are expected to be three dominant categories of stakeholders: the traditional financial establishments that have been able to adapt (Leetchi and Le Pot Commun already belong to Crédit Mutuel and BPCE), telecoms operators and, above all, the digital giants. Google and Apple are pushing their mobile payment platforms, while PayPal is experiencing a new lease of life with Venmo, its money transfer application.
The next stage for mobile banking will be to become even more user centric. How? By seamlessly integrating into other applications, particularly instant messaging. Already used by hundreds of millions of people each day, instant messaging is increasingly focused on services, and on financial services in particular.
In some countries, for example, Snapchat or Facebook Messenger already allows you to transfer money to your friends. Similarly, Chinese Wechat users can even obtain loans without having to quit the application. There is no doubt that the mobile banking revolution is still in its infancy!
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“For now, we can still find few actors on the mobile baking sector, but they are expected to soar with the rise of generations Y and Z, who are much more digitally aware and itinerant than their elders.”