Background
The finance app market has surged in the past couple years as mobile financial tools and services are increasingly useful. Beside smartphones and tablets, these apps can be downloaded to your home computer as well. Forecasts for the finance app market expect upward of $1.5 billion in revenue this year, a 20 percent increase compared to the previous year, with an expectation for total revenue to reach $2.4 billion by 2027.The finance app market across banking and payments is growing like gangbusters. There is tremendous interest—and investments being made—in the mobile financial apps marketplace. We should also point out that crypto apps are growing fastest, and that DeFi (decentralized finance) is gaining in popularity as it relates to Blockchain, Bitcoin, Ethereum, and smart contracts, but we won’t address that segment in this article.
Two out of three Americans want artificial intelligence (AI) in financial services, according to a recent report from Fintech Effect. Who among us isn’t thrilled to deposit a check into their bank account simply by using their mobile app? I can send money as gifts or donations quickly and easily via Zelle. Zelle is a digital payment network used to transfer money securely from your bank account to someone else’s bank account. As a peer-to-peer money transfer app, it typically takes only a few minutes, and anyone using the platform can send and receive money without the imposition of fees.
The report is based on a broad consumer survey that had been conducted by The Harris Poll. It was intended to better understand how consumers use fintech, as well as how these behaviors are changing. Fintech was a nascent technology as recently as four years ago, but adoption increased rapidly beginning about the time of the pandemic. Today, nine out of 10 people have access to some type of fintech app, and many have several on their mobile devices.
Uses
Digital bank payments are increasingly used to pay for goods and services out of their bank accounts. These services include bill paying, account transferring, pay-ins and pay-outs, and several other e-commerce uses and applications. Two-thirds of consumers are now paying-by-bank, besides using credit and debit cards. The advantages are in the convenience, the security, and the lower (if any) fees.AI
Artificial intelligence is creating personalized mass customization and automation. Still somewhat wary of the AI role, Americans want to review AI “decisions” rather than allow them to run automatically. More than half of those surveyed believe AI will radically change financial services across the next five years.The biggest areas where change is expected are:
- Lowering bills
- Providing budgeting advice
- Offering financial education
- Streamlining tax filings
- Solving customer-service issues
- Managing subscriptions
Privacy and Security
While these apps are helpful, concerns about data privacy and security remain an obstacle to ubiquitous carefree adoption. It is important to carefully choose apps that utilize strong encryption and that reflect and imbed cautious and thorough privacy policies. Conducting business on public WiFi networks is today no longer the concern it once was. Most of the big companies now use encryption for your protection. Privacy and security risks remain—but experts can identify and even pinpoint them so that you are protected.Peer-to-Peer Payment Apps
- Apple Cash is a digital card—much like a debit card—within the digital wallet Apple Pay. Like the payment platforms Venmo and Zelle, Apple Cash allows you to send and receive money to friends and family and to execute contactless payments with merchants. To send money, you first open the Messages app. Then punch in an existing or a new conversation with the person who also must have a compatible Apple device and Apple ID.
- Cash App has added more services beyond money transfers, including investing in stocks, free taxes, and a savings feature. To use Cash App, you need a bank account, debit card, credit card, or prepaid card. There are no fees on the basic services, but you will be charged 3 percent if you use a credit card to send money.
- PayPal is a financial technology company that provides an online payment platform facilitating payments and allowing online purchases, money transfers, with links to your bank account, debit card, or credit card. PayPal maintains robust security measures to protect your transactions and your personal information.
- Venmo, a PayPal company, offers some rather unique features and services. You can make purchases with a Venmo Mastercard debit card (in the United States). In-store QR codes can be used to make purchases. Also, you can authorize your paycheck to be directly deposited straight into your Venmo account. There are however fees for certain transactions, including using your credit card to send money, the check cashing feature, and transferring money.
- Zelle was discussed earlier in this article. This is one of my personal favorites.
Summary of Mobile Banking Trends
- Cardless ATM withdrawal—Consumers love it fast and convenient when it comes to getting access to their cash. This is now enabled through QR codes or phone taps via the ATM’s “near-field-communication” sensors.
- AI-powered chatbots can be accessed through mobile banking apps. They answer questions, handle requests, and direct users to access additional help as needed. Some will even make financial recommendations!
- According to a Juniper Research study, chatbots can save banks more than $7 billion worldwide. Bank of America has a chatbot called Erica, launched six years ago. Erica has handled 1.5 billion interactions with the bank’s customers.
- Biometric authentication assures users that even if somebody else gets hold of their phone, PIN, or password, they won’t be able to log on to a protected account. Fingerprints or the user’s face scanned and validated are the security wall between the user and the bad guys that want to steal from us. Biometric authentication works by scanning the user’s fingerprint or using the phone’s camera to scan the user’s face. The app will only grant the user access to their bank account if it can verify their identity as the account holder. More than 80 percent of smartphones have this biometric technology feature available.
- Voice banking and voice recognition technology have become much more sophisticated. Banking apps use voice recognition to verify the user’s identity as they log in. Some third-party apps now synchronize with the banks to allow users to make payments using only the voice command. Barclays Bank customers using Siri to authorize payments can do so simply by speaking. Amazon’s Alexa does the same via Amazon Pay.
- Banking apps now give users personalized updates and recommendations about their finances. From simple notifications regarding real-time transactions to summarized savings and spending reports. Banks are enabling customers to customize their banking service through their app. Digital bank Revolut allows customers to set periodic spending limits. Chase Bank’s app allows users to automatically move some of their income into a separate savings account.
