It’s no secret that U.S. banks have seen faster uptake with smartphone- and tablet-based services than they did in the early days of basic online banking.
But banks here in the States are not the only ones doing a great job of reaching out through mobile devices to snatch up new customers and firm up relationships with existing ones. Indeed, some banks in many parts of Europe, as well as the Asia Pacific region, Australia and Africa, have been offering mobile banking services to their customers that match—or even surpass—what the largest financial institutions offer here.
Indeed, the efforts of these foreign banks are being met with strong results, which, in many cases, are better than U.S. banks are seeing. In March of this year, the U.S. Federal Reserve reported that an average 39 percent of mobile phone users with a bank account used mobile banking—that’s comparable with the share of Italians, British, and Europeans who also bank by mobile. But the U.S. share of mobile banking customers is still a smaller slice than Spanish (48 percent), Polish (48 percent), or Dutch (50 percent) who do mobile banking, according to a 2014 ING International Survey.
In some cases, banks in these regions have been able to leapfrog their U.S. counterparts because they are simply appeasing a customer base that is more at-ease using phone-based applications or mobile Internet for a wider range of uses than Americans. In some cases, they are appealing to a very young customer base that has been eager to embrace mobile, or a very geographically dispersed population, who is much further from a bank branch. According to a recent report from Forrester Inc., mobile banking adoption in Europe has risen four-fold in the past five years and will continue to grow at a 19 percent compound annual growth rate through 2018.
“Growth is absolutely not levelling off. It is rather accelerating on a steady pace,” says Xavier Gys, chief marketing and digital officer for AXA Bank Europe in Brussels, Belgium, which has total assets of 36 billion euros, or about USD$40 billion, at the end of 2013. While only a relatively tiny 11 percent of this Belgian bank’s total customer base uses mobile services—a market average in Belgium, which is generally behind the likes of banks in Turkey, Poland, and the Netherlands—they are an active group of users. Mobile was the platform for one-third (33 percent) of all of AXA Bank Europe’s money transfers, says Gys.
While AXA Bank Europe does not boast the size or deep pockets of other European financial powerhouses, Gys says, “we try to do things better” by offering novel but useful mobile functions like its e-invoicing. Customers of the bank can automatically generate and trace invoicing from their mobile banking application, which he says has strongly boosted the bank’s mobile numbers and interest among business customers. Also, he says, the bank goes out of its way to make the user interface and access to services “very, very simple.” As proof, he points out that AXA Bank Europe is not just winning over young customers, but “many customers in the elder-age segments.”
For its part, Australia’s Commonwealth Bank, with more than AU$791 billion in assets ($601 billion) at year end June, 2014, already is seeing the lion’s share of its customers embracing mobile access. As of mid-2014, Commonwealth Bank was seeing seven out of 10 of its customers coming to its online NetBank-branded online banking service through their mobile devices, according to Juniper Research. (Almost half of the Commonwealth’s retail transactions take place via the Internet.) Designed in collaboration with customers, the Commonwealth Bank mobile app picked up more than 3 million users in the first five months it was available.
Aside from the run-of-the-mill functions, the Aussie bank has quickly added convenience-oriented capabilities including the ability to use a smartphone in lieu of a bank card to get cash at one of the bank’s ATMs, and the capacity to “lock and limit” card spending, which means mobile users can lock out transactions if a card goes missing, block ATM cash advances, or set transaction limits online, overseas or in specific categories in a single swipe within the mobile banking application. In May, Commonwealth Bank announced it also would allow customers to use Ripple Labs’ digital payment protocol for payments transfers in real world or digital currency, such as Bitcoin. Commonwealth Bank CIO David Whiteing has described such emerging payments options as “the way of the future.”
Perhaps the place where mobile banking has gained its best foothold outside the States is Turkey. Surprisingly, the country known to most Americans primarily for its proximity to troubled Syria and its old-world architectural treasures like the Blue Mosque, Turkey has gotten a jump on many of its European and Pacific Rim rivals by leading the way with advanced services and its aggressive encouragement of mobile. And perhaps the best example of this is Garanti Bank, Turkey’s second biggest private bank with more than 12 million customers and more than $93 billion in assets as of 2014. Garanti executives made the rather controversial decision to pay for some customers to have mobile Internet. Cited as an up-and-coming “hotspot” for mobile banking by the ING Group in a recent study, Turkey also has a population where 50 percent of people are under the age of 29, and 25 million people are still unbanked, many of those living in remote areas of the country. Since mobile phones are much more common than PCs, Garanti Bank is working with regional mobile operators like Turkcell to bring banking and payment services to even remote regions of the country.
The Turkish bank has been publicizing its mobile banking through social media sites like Facebook. For almost two years, the bank has offered mobile users the ability to send and receive funds with Facebook friends, and withdraw cash from ATMs using just their phone (similar to Commonwealth Bank’s cardless ATM feature). Garanti’s mobile application also categorizes spending and automatically schedules payments to show customers how much money they have left until the end of the month.
Garanti Bank is not just responding to the overall demand for mobile banking but to a competitive banking market in Turkey where there are roughly 50 major banks. Even mobile users who are not customers of Garanti Bank are permitted to use the mobile service to pay bills or transfer money for a small fee (for example, 1.25 Turkish lira, or about $0.47 for a money transfer), says Deniz Guven, the bank’s head of digital channels. He hopes that this strategy will help the bank garner new customers who use mobile primarily.
“When you are choosing a bank where you want to take your credit for 20 or 30 years, and where you will use the bank account, of course this ease-of-use [with mobile banking] makes a huge difference for the customer,” says Gys of AXA Bank Europe. “Especially in the younger segment, this was a strong differentiator with our competitors.”