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Written by: Robb Gaynor, CPO, Malauzai Software
Monkey Memo is an extension of Monkey Insights, an expanded format with a focus on more in-depth discussions of a specific topic. Just like Monkey Insights, Monkey Memo is based on “Little-Data” factoids pulled from a vast array of actual digital-channel usage data, over 10 million monthly logins covering 500,000+ active users and 400 banks and credit unions. Monkey Memo will explore the data in a qualitative and expressive way, forming opinions and providing useful information on relevant topics in the digital banking space.

We go in every year and individually count how many mobile banking apps are in the app store. We have done this for the past 5 years. Our method is NOT rocket science. We look at all financial institutions between $100 million and $15 billion in assets. There are approximately 8,004 on our current list. We go in to the App Store and Google Play store, and we type in the name of each bank and credit union. We go to their web sites. If another bank charters themselves as National Bank, (there are countless banks that have this moniker in their title) our employees who conduct this research will quit. This is primary research at its best. We look for consumer apps, business apps, stand-alone check capture apps, and this year we counted who had P2P in their consumer mobile banking app as well. When we started in 2010 there were 100 banks and credit unions live with mobile banking apps, true native apps. Here are the highlights from this year’s study.

For a great visual representation, check out the infographic.

Total Apps. 5,697 banks and credit unions have an app in the app store, that equates to 71% of the market.

CUs Are Ahead. 81% of credit unions have a mobile banking app. Banks are at 65%. Banks are behind.

Business Mobile. There are 275 stand-alone business mobile banking apps.

Remote Check Capture. There are 89 stand-alone check capture apps.

IPad. 97% of the banks with a mobile app have an iPad app.

P2P Payments. 386 banks and credit unions offered person-to-person payments in their mobile banking app.

Apple Watch Apps. There were 107 Apple SmartWatch Apps.

Vendor Churn, In 2016, 15% of the banks and credit unions changed the vendor that provides the mobile banking app.

Top App Producer. The top vendor in terms of market share when looking at the consumer mobile banking market has 1172 apps in the app store.

Mobile App Vendors. There were 71 different vendors who helped banks and credit unions publish their mobile banking app.

Let’s take a closer look at each data point from above list…

Total Apps. 5,697 banks and credit unions have an app in the app store so that’s 71% of the market. That number ONLY grew by 5% from 2015, and itwas the slowest growth rate since we have been doing this research, in 2015, we added about 18% more mobile apps. We are reaching market saturation for those more than $100 million. This is important. Everyone rushed to the market over the past 4 years with an app, many of them very generic. The high vendor churn rate discussed below is a sign that the first generation offerings of many vendors are NOT cool enough and now these banks and credit unions are seeking differentiation.

Credit Unions Are Ahead. 81% of credit unions have a mobile banking app. Banks are at 65%. Banks are behind. This has been true since we started counting. Credit unions are more aggressive. They are being pushed harder by their members to get cool mobile apps in the store. And as a byproduct, credit unions have much better conversion rates as well; a higher percentage of their members are using their mobile channel than their bank counterparts. It is considerably higher. So, a $1 billion CU could have up to 35% more active end-users than a bank of similar size. Part of this might be that the CU has more account holders with lower balances; but regardless, they are better at getting their members to use the channel.

Business Mobile. There are 275 stand-alone business mobile banking apps. That number is about double from 2015, so we have seen a 100% growth rate. We are talking about distinct, stand-alone apps for businesses, not those in which the business is encouraged to use the retail consumer app. And only 5 of those are from a credit union, as expected. Still lots and lots of room for growth. And business banking is growing MUCH slower than consumer. Consumer banking went from 100 in year one to over 600 year two and 1500 in year three. We DO NOT expect that kind of exponential growth in business mobile. One side note – for businesses, iPads are used more than mobile phones, which is also an indication that large format is what the businesses are seeking.

Remote Check Capture. There are 89 stand-alone check capture apps. That is down from 120 in 2015. A drop??? Why? Because the mobile banking vendors FINALLY caught up and added check capture. The only reason these deals existed was because the mobile banking vendor COULD NOT get capture integrated quickly enough, forcing some banks and credit unions to launch a second app just for capture. Once the primary mobile vendors add capture, which they now have done, there is no need for stand-alone apps. This is, by the way, a good indicator of who will win in the war between stand-alone apps and integrated mobile banking apps. Some believe that a bank or CU should have more than one app and NOT load up too many features in one app. FALSE. The menu in mobile banking ain’t (isn’t?) that busy yet, so that is a weak argument, AND, the falling numbers in remote check capture stand-alone might be an indicator of the real truth.

IPad. 97% of the banks with a mobile app have an iPad app. A very high correlation between having an iOS app and having an iPad. It is important to add at this point that the actual usage of iPad and tablets is TERRIBLE…. About 2%-3% of active users register an iPad, and they all have a smartphone too, so the tablet is a second device. Login frequency for iPad users is 50% of the login rate for SmartPhone users. Also interesting is the deployment model – 75% of the iPad mobile banking apps out there (available?) are universal iPad apps vs stand-alone. Universal means a single app is in the app store servicing both iPhone and iPad. One app. Stand-alone iPad means that iPad has its own app in the app store. 25% of banks and credit unions deploy stand-alone.

P2P Payments. 386 banks and credit unions offered person-to-person payments in their mobile banking app. This represents significant growth from 2015, when only about 125 institutions offered it. P2P is becoming table stakes. But alas, usage is pretty bad! On average only 5% of active mobile banking users choose to make a P2P payment every month. This makes it one of the lesser used features. Interestingly, 65% of P2P payment notifications are sent to the receiving party using text, and 35% go via email. And, P2P volume is higher on mobile devices when compared to desktop or Internet usage, about 3.5 times the volume.

Apple Watch Apps. There were 107 Apple SmartWatch Apps. In this case, the core mobile banking app is enabled for an Apple SmartWatch. All Apple Watch apps are tethered to the core mobile banking app. In WatchOS 2, the Watch apps gain some autonomy but don’t entirely break away from this tethered mode. Watch banking Apps get light usage. About 1%-1.5% of registered users use the Watch App once in a 90-day period. Features are limited to balances, transactions and branch locations. More functionality is coming next year as the SmartWatches become more autonomous and functional.

Vendor Churn. In 2016, 15% of the banks and credit unions changed the vendor who provides their mobile banking app. This is a BIG story. Why are so many banks and credit unions changing their mobile banking vendor? 15% chose this path in 2015, and this was identical to 2014 when 15% changed vendors. That is a high churn rate. Everyone is replacing their first generation mobile offering, because initially, they launched whatever they could as quickly as possible. Many chose big vendors who had pretty good mobile offerings but not ones that allowed for differentiation. In one extreme case, about 300 smaller banks and credit unions all use a single mobile banking app generically-branded. When users signs in it recognizes which bank or CU they belong to. Wow, now that is a low standard. These folks do not even really have their own app, but that was the state-of-mind a few years ago – just get something out there to get the board off your back. Well, that strategy is not cutting it today. Those generic apps make the financial institutions all look the same and the feature sets are not that robust. These banks and CUs are now demanding differentiation. They are demanding cool designs and advanced mobile functionality like Picture Bill Pay, auto login and debit card management. Differentiation is the new theme…

Top App Producer. Yes, we know who publishes every mobile banking app. No, we won’t use names in this report to protect the innocent. But we know :-). The top vendor in terms of market share when looking at the consumer market has 1172 apps in the app store. That’s about 25% of the market. But talk about generic – go look at these apps from this vendor, and they all look very similar. I guess to get that many launched meant making them all the same. Good to gain market share BUT not good to sustain it. This same vendor gained NO market in 2015. It lost and won but it overall number stayed static. I think this proves that generic non-differentiated apps do not sustain their competitive advantage. Market grab yes, market satisfied, no…. All four top vendors in terms of market share treaded water last year. Only one vendor in the top 5 gained market share, yes that is little ol’ Malauzai. In fact, I’m proud to say we won the most deals or more correctly, we replaced the most other vendors, yay!!!

Mobile App Vendors. There were 71 different vendors who helped banks and credit unions publish their mobile banking apps. Yes, 71. That is a lot of fragmentation in the market. The top 10 on the list published 85% of the apps and the top 5 publish 70%. Those below the top 10 published less than 5 apps, most just 1 or 2. So, a fragmented vendor market? Yes, but concentrated like you would expect, and NOT consolidating yet. In 2015, there were approximately 70 vendors on the list so the number has stayed consistent.

This year’s research has proven that mobile banking is here to stay, and that vendors and financial institutions alike must continue to evolve their digital banking offerings in order to meet consumer expectations. Financial institutions can no longer offer just any mobile banking app – it must be equipped with the cool features today’s consumers want. Vendors who recognize this important shift and begin offering customized and differentiated apps are likely to have the most success moving forward.