Better business banking? There's not an app for that
While mobile banking for consumers has become common, businesses are now demanding mobile banking services as well. Despite this demand, business banking continues to lag behind other digital solutions in terms of mobile usage and adoption, representing a significant opportunity for credit unions. While the majority of business banking activity currently takes place on a desktop, momentum is shifting to more mobile usage. Credit unions that offer business banking apps with features and capabilities that provide value — such as receiving faster payments and operating more efficiently regardless of location — are able to deepen and expand relationships with members. In today’s digital environment, this gives credit unions a competitive advantage against other institutions and third-party providers.
To date, financial institutions have largely failed to deliver purpose-built apps for businesses. There are few business mobile stand-alone apps in the App Store and Google Play. According to Malauzai’s own research, approximately 400 institutions have launched a business-specific mobile app, compared to over 6,000 consumer mobile banking apps. When credit unions do offer them, Malauzai’s Monkey Insights shows that only 15% of business members are choosing to access via a mobile device. This, again, is far short of the consumer numbers, where 40% of usage comes via mobile devices.
In contrast, when we look at digital banking in a more general sense, we know businesses use the digital channel frequently, but the data tells us that the business user stays on the desktop. Business members access four times a week and stay online almost 7 minutes per session—300% longer than a retail consumer.
Why are we surprised that less than 10% of business employees accessing the digital channel use a mobile device? And how can the industry begin to change this?
The days of servicing business clients with retail technology are gone. It begins with advanced entitlements. Businesses with multiple users should be able to allow certain users to perform transactions while others can only view balances. In fact, many of the best business mobile solutions inherit these entitlements from the Internet business banking solutions. This dramatically reduces setup time for business mobile and ensures that the mobile and web channels stay in sync.
Features which have little applicability for consumers – such as approving an ACH payment or wire while on the go – should be provided in business mobile apps. The required approval process is a perfect example of where mobile banking adds huge value to the business. In the past, approvals of wires and ACH were only available on the desktop through the web. Now, a business user who is responsible for approving large payments can be on the go when they receive a notification that a payment is pending and complete the transaction, all while out of the office.
Other features, such as seeing positive pay items and releasing them for processing, can add tremendous value to how a credit union services a corporate member. Viewing e-statements or paying bills with business bill pay are additional examples of conveniences needed by businesses. All of this must be secured with advanced features that are already in place on the desktop, such as the use of tokens for login or out-of-band authentication for high risk and high-value transactions. In fact, security for business mobile is paramount, as the risk of fraud is potentially higher than in the consumer channel.
The data doesn’t lie: Mobile business banking has failed. Very few credit unions have launched purpose-built stand-alone apps for business members and those that have seen very low usage. Is that because there is no usefulness and demand? Or is it that the apps have failed to excite businesses and credit unions in terms of features and functions? Will businesses ever flock to mobile? Can we overcome certain perceptions such as the idea that business owners don’t want business employees to have the banking app on their personal phones? And possibly, as business owners shift towards the younger generations, might mobile banking be more important? Do current business owners, generally tending towards the older generations, care enough to embrace mobile?
What we do know is businesses are slow to embrace mobile in a very general sense. Less than 10% of businesses with websites have a native app in the App Store, according to Malauzai’s own research. Maybe their lack of use of mobile banking is influenced by the fact that the typical business just doesn’t care about mobile. Or maybe they do! The most successful mobile payments app comes from a business – Starbucks, a retailer publishing is own app and profoundly changing how they take payments (over 30% of payments come through the app). And more shops are following suit. WalmartPay has experienced serious growth in the past few quarters, and others such as CVS and Target are jumping in with their own payment-oriented apps. Clearly a value exists. It is possible that payments can be a driver for business mobile.
While today’s businesses are not using the mobile channel, it is not so much a failure of businesses or of marketing, but an inability to address the problems businesses may have with the mobile channel. Business mobile and business digital, in general, have the potential to succeed. The value proposition is there, just not fully materialized. Maybe adding payments can help. Whatever the driver, the initial failure of mobile for businesses will lead to innovation, and in the end businesses will benefit.