I must say that when I say online banking I mean desktop banking via a web browser. Its so 90’s but still our Banks force us into an online desktop experience that they think we like. Most of us only do it because we have to, not because we want to. But is online banking dead? or at the very least dying? And what is this ‘digital’ word that keeps on popping up in numerous business related texts, and are the two topics related?

What does ‘digital’ mean?

To answer this I think we need to look at what is happening in the demand for online services across a spectrum of users, and what those users in general are doing. But first:

Forbes – IDC: 87% Of Connected Devices Sales By 2017 Will Be Tablets And Smartphones

Gartner – Gartner Says Worldwide Traditional PC, Tablet, Ultramobile and Mobile Phone Shipments to Grow 4.2 Percent in 2014

Just a few articles that you bring up when searching “Smartphones vs PC sales” on Google.

Smartphone shipments started to exceed PC shipments in 2011/2012. Since that time PC’s have experienced a small resurgence but nowhere near the volume of smartphones (including pads). You can see this in practice by just looking at what people use to connect these days – on the train/bus, in cafes, walking around – people are using their smart phones. Even office workers, whilst using their employer connected PC, have their Smartphone or Pad device not very far away – and for a number of reasons from ‘keeping their private life their own’ through to corporate IT policies that ban internet browsing, social media or the like so that individuals need their own device to do whatever it is they want on the internet (including Banking).

Most of us then, for a majority of our activities, use a smartphone or pad (lets call this ‘Mobile’ from now on). We use PC’s also, but the ‘first’ device we use is a mobile device (or for some of us we even use a wearable). We sometimes then move to a PC when we need to write or examine in detail certain types of content. Apple pretty much acknowledged this when they created their Handoff feature, and Microsoft are introducing a similar feature in their upcoming Windows 10. I must admit I love using Handoff – I can start something on the Mobile and then just move to the Mac (or vice versa) without losing any productivity.

A colleague recently told me that their interpretation was that:

Digital = Mobile First

And based on the above I would have to agree. I tested myself though first before completely conceding. Here are a few examples:

1. I went to pay for something that I purchased for the family on an online auction site. When I went to pick it up the seller wanted ‘bank transfer’ for the funds. Guess what I used – the banking app on my mobile.
2. What do I read the news on every day? – yup – my mobile
3. Where do I read my email first? – you guessed it – my mobile
4. Banking/Share Trading – What do I use first? – the app on my mobile
5. Where do I get my online alerts? – my wearable/mobile.

So for me at least the statement is true – and I’d say this is the case with most connected individuals these days. Don’t get me wrong – I love my new Macbook Retina – but its not the first digital device I use each day. Jumping from meeting to meeting with a busy lifestyle means that I depend on my mobile for most things – business and personal.

Having said all of this – lets now try and tie back to the ‘online banking’ thing (remember – Online banking = desktop banking. Mobile banking = smartphone/pad banking).

If we are all using our mobiles first – how could online be thriving? Lets look at a few different customer segments to come up with an overall picture then.

Institutional clients – they are moving from the ‘interactive’ space to a non interactive space. Corporates and Multi Nationals wish to use the investments that they have made in their own systems rather than in the systems provided by the Bank. MNC’s would much rather incorporate a set of banking API’s into their investments in Treasury Management Systems or ERP systems such as Peoplesoft, SAP or Oracle. I haven’t seen a Corporate Treasurer yet that has told me that they love the proliferation of RSA SecurIDs or One Time Password (OTP) devices that they need in order to be on top of their multi bank relationships. Usually these things are hidden in a drawer or given to an assistant. In fact most people responsible for banking in MNCs or Corporates would much rather just use the application that their employer has provided and leave the banking part to sit underneath. SWIFT even developed the SCORE innovation in order to integrate direct into the back end banking systems instead of the front end on line systems. Banks then have evolved to provide corporate mobile apps for the busy executive so that they can use their mobile to authorise payroll or creditors transfers and the like instead of having to log onto the desktop service.

Business clients – similarly these clients are wanting integration with their accounting software suppliers such as MYOB, Quicken, XERO and the like. This market segment hasn’t got time to compare their journals to their bank account and do reconciliations – they want an integrated experience. This is where these suppliers are now looking to the bank to provide the back end integration traditionally used for the Institutional segments. This segment also increasingly uses Mobile devices for invoicing, merchant acceptance and payments and most banks therefore have provided mobile apps to satisfy customer demand.

Retail Clients – want the most convenient way to do their banking. With most consumers having a mobile device – and if they are like me then they use mobile first – most banking then is either using the mobile to check balances and do transfers, and using ATMS to get cash. You can even use your mobile now to get cash from an ATM without the card. Otherwise we all use credit/debit cards to pay for stuff. Retail customers are forced by their banks into online banking for things like ‘making a transfer above a certain amount’ or when wanting to ‘download statement data’ or the like – otherwise you use the mobile app or even most recently the wearable app. Online banking isn’t first, its nearly always second or third in the list. An argument could be made in fact that online banking is less secure than mobile banking (especially with the rise of biometrics versus simple username/password; banks building security right into the app instead of worrying about the risks of a “hijacked” Internet browser – ironically most banks using One Time Passwords (OTP) send them via SMS to your mobile anyway) – at the very least mobile is more convenient.

Putting all of this together then an argument can be formed that if “Digital equals Mobile First”, with PC sales exceeded by Mobile (meaning that most people have a mobile), with the institutional and business sectors moving to a non interactive version of banking for payments and reconciliation (but using mobile for authorisation), and retail using mobile and wearable first purely for convenience  – that online banking – whilst perhaps not dead – is heading to the back seat.

I think so.