What Banks and Credit Unions Need to Focus on Next: Tablet Apps

There is no denying the fact that the tablet market is currently exploding. Since Apple led the way in 2010 with the introduction of its first iPad, tablet sales (of all kinds) will likely surpass 40M units in the US alone in 2012 and is projected to double that (i.e., to 80M+) by 2016.  As a consumer, it’s clear why the tablet is so compelling.  It is lightweight, turns on in an instant, has a revolutionary intuitive touchscreen interface, and is powerful enough to do nearly all that a desktop or laptop can do, as well as a number of things that a desktop or laptop cannot do. Anyone who has flipped through a magazine on an iPad can appreciate how the tablet redefines the digital media experience:  enhanced pictures, videos and content offer a uniquely enriched way to consume information that simply cannot be found in a paper-based counterpart.

How are people using tablets? Statistics have shown that a lot of tablet owners – in addition to checking email, surfing the internet, reading digital media, and performing some level of social networking – are engaging in personal financial management (PFM).  Nearly 50% of tablet owners have performed some level of banking on their tablets, with close to 40% of tablet owners having engaged in mobile banking on a consistent monthly basis. This translates into 20M consumers in the US market alone that are engaging in mobile banking and 16M are doing it every month.

So how is the financial services industry currently catering to its tablet-wielding personal financial management (PFM) customers?  To start, let’s look at the top 25 US retail banks. Market movement with ‘newer’ technologies in the retail financial banking space usually begins with the top 25 US retail banks, as these are institutions that have the customer base, assets under management, and capital to be able to invest in progressive or ‘ahead of market’ technology. And here is where we find a gap between what customers want and what the financial services industry is currently offering:  while approximately 90% of top 25 banks have served up both an iPhone app and an Android smart phone app, only 20% of the same top 25 banks have developed a native iPad app. And of that same top 25, only 4% have developed an Android tablet app.

How is the tablet consumer population responding to this? In short, not favorably. Often regarded as engendering a ‘lean back’ orientation by its users, tablets engage people in a more enhanced way by taking advantage of both superior computing power and touchscreen real estate vs. the ‘on the go’ orientation of a modern day smart phone. And bank customers now expect to have their bank information delivered to their tablet in a more enhanced way than what they can get from their smart phone app.

We work with several different financial institutions across the US on their mobile banking programs, and as part of this we study ‘app store’ reviews that our clients’ customers provide. More and more, our clients’ customers are not only providing feedback and ratings for the smart phone app they are currently using, but they are expressing the desire to have a native tablet app.  In certain cases, the lack of a native tablet app equivalent to the customer’s specific smart phone actually brings down the financial institution’s smart phone app rating.  Thus we are observing a growing sentiment in the general consumer population in which it feels financial institutions should be providing access to their personal financials in the form of native tablet apps.

What level of functionality are consumers expecting in a PFM tablet app? Beyond the utility of banking functions there is demand ranging from enhanced data visualization to better financial education tools to more engaging presentment of financial products to loan/credit application processing to enhanced product comparison tools. While the final mix of tablet app functionality will be determined by the specific financial institution, a few guiding principles would be appropriate to follow:

1) Don’t think that a smart phone app running on its tablet equivalent counts. This has been observed in both consumer app store feedback as well as industry forums: while portability of a smart phone app to a tablet app offers some utility to the end user, an app built for a smart phone is not optimized for its tablet counterpart and thus doesn’t offer more capability to a user.

2) Take advantage of the ‘lean back’ orientation that a tablet provides. As the ‘lean back’ orientation essentially means a user will generally be sitting and in a more relaxed state of mind when using a tablet (vs. ‘on the go’ with a smart phone), rethink what content you may want to present to them. For example, users in the ‘lean back’ orientation would likely have a higher propensity to be in exploratory mood (e.g., “I do need a new credit card, what does my bank offer?” “I wonder what home equity line products my credit union actually offers?”). Thus consider taking advantage of this and presenting specific financial product content in addition to offering standard banking functionality.

3) Expand what’s possible. As the digital magazine on a tablet has proven, the tablet offers an enriched, never-seen-before digital experience superior in many ways over both a smart phone and laptop. So think outside of the box in terms of what you’d like to be able to do, as the chances are it may very well be feasible on these powerful new devices we call tablets.

-Ken Hans (khans@bstonetech.com)