Banks reap app rewards but face threat from new mobile challengers

Banks reap app rewards but face threat from new mobile challengers

While mobile apps have proved a boon for Europe's retail banks, new research suggests that they could also prove a threat, with new specialist players picking off customers in key areas and disrupting the traditional full-service model.

In the UK and France there were more than two times as many sessions in the top 10 retail banking apps by monthly active users (MAU) in the first half of this year than in the same period in 2014, according to data from App Annie.

Meanwhile, weekly sessions per user in apps has stabilised in the UK but continues to grow fast in France and Germany, where the channel is less mature.

Retail banking app usage is highest among 25 to 44 year olds, with over 45s in the UK using their phone for finances 85% less than their younger compatriots.

However, while apps have proven beneficial to banks, helping to reduce reliance on expensive branch networks, they could also pose a threat, says App Annie, which highlights the growing popularity of rivals such as PayPal, Nutmeg and TransferWise.

In the first half of 2016 in the UK, the total number of sessions in the top five 'fintech' retail banking apps by MAU was 2.9 times higher than in 2014. Over the same period, sessions per user increased by nearly 90% - significantly faster than for retail banking apps overall.

Nearly two thirds of global banking customers use fintech products and services and this is likely to increase, particularly in the UK, where the recent 'Open Banking' legislation and PSD2 means banks will soon be required to share data with third parties.

App Annie says that this means banks will need to work hard to innovate and see off the challenge, working to improve areas as customer services, rewards and budgeting.

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