In your strategic planning, one decision that needs to come up as you grow towards $1B in total assets is if your bank will have one mobile banking app or multiple apps. If your bank has not proactively decided, then chances are you are either not looking far enough in the future or not being active enough in guiding your bank’s technology architecture. Unfortunately, most banks default to their core provider for much of their technology and so then take on the strategy of that core provider. If this is your bank, we point out that if you let your core provider make that decision, they are likely doing what is best for their company and opposed to yours. In this article, we look at the pros and cons of the decision and present a data-driven framework for making the decision.
The debate is nothing new is tech circles or regional banks as it has been going on for the past ten years. Some banks utilize a single app strategy where their app is a Swiss Army Knife of banking and does many things. Alternatively, some banks pursue what is often called a “toolbox strategy,” where they have multiple apps, or tools, for specific tasks.
While single apps used to be wildly popular, several years ago, many banks switched to a multiple app strategy. However, it has just in the past year that bankers have placed more emphasis on the “rebundling” of financial services and have since placed more emphasis on the creation of a single app.
Below is the hypothetical “A Bank,” which represents what a typical multiple app strategy looks like:
To understand this issue, start with the assumption that if you do have multiple apps, you have all the apps on a single sign-on (SSO) with a “federated” identity (FID). That means that not only does the customer just need one sign-on that stays in sync (making it easier for the customer), but that the sign-on is controlled by a central application that the bank controls (FID). In this manner, in case your bank does use a third-party for card controls or payroll, you have the ease of use for a single sign-on, but you don’t need to pass your customer’s credentials across the internet to a third-party but merely validate their identity.
With that understanding out of the way, a single app allows bank more control of the customer experience is often less expensive in the long-run (since you can leverage various app components more efficiently) and adoption is usually greater since you can market a single app.
On the other side of the coin, a multiple app strategy allows your bank to leverage third-parties more on a white label basis and getting to market quicker with the functionality. It also allows you to simplify your app to a specific customer type without all the overhead of functionality that they will never use.
Here is our summary of pros and cons for both app strategies:
Bank of America, considered one of the best mobile app suites in banking, uses the multiple app strategy and has the various apps: authentication, retail, treasury management, health savings account (HSA), merchant services, prepaid cards, private banking, events, and research.
In a similar vein, Google and Facebook, two of the most popular and highly-rated app suites worldwide, use the multiple app strategy.
How To Choose
There are several key decision points that compose our framework on how to choose:
Technology: The reality is that your bank may not have a choice depending on your mobile app provider and/or your technology architecture. You may have to white label third-party apps in order to satisfy your customers.
Customer Experience: This is where it gets tricky. As a focus group if they want one app or ten apps and almost everyone will tell you one app. No doubt it is a better experience on the surface with one app, but the reality is that once an app gets too bloated, or you can offer the depth of functionality needed on your current platform compared to a standalone app, and you might find that your customer experience, in reality, is better across multiple apps. Consider that about 22% of bank customers already find their banking apps too confusing.
Target Market: This is the key – If the functionality is related and your target market is the same, then you will get better overall performance combining the apps into one. However, if your target market is different such as merchant services and retail, then it is likely better to have two different apps.
Cost and Engagement: Because of their simplicity, multiple apps are about 30% cheaper to bring to market particularly given the fact that you can leverage third-parties. However, over time, multiple apps are about 30% more expensive to maintain and market. Know that when you have multiple apps, you need to overcome the additional friction of having your customer base install another app and the confusion that comes with it. Further, you have to be prepared to allocate resources to each out, thereby creating some strategic friction as well.
Putting This Into Action and The Hybrid Model
There is no right answer here. In fact, most banks, while they lean towards the multiple app model, attempt to bring their apps together and consolidate over time. For example, you can introduce card controls as a separate app now, yet plan on bringing the functionality into your retail app over time since they target the same customer segment.
Strive for a single app if possible with the same experience so long as it is going after the same customer base with the same intent. When you can no longer support that, break the functionality out to a separate app in order to simplify the experience, but then continue to reassess to see in the future if it makes sense to consolidate some or all of the functionality.
Submitted by Chris Nichols on December 16, 2019