Private banks and mobile apps: is it time to jump on the digitalisation bandwagon?

Amongst the vast arrays of themes beyond “digitalisation in banking” the one that comes first to mind, especially from clients’ perspective, is mobile banking.

While all retail banks offer a mobile app solution to their clients, numerous private banks have still not yet developed a mobile app in 2019.

Our study aims at understanding the development of mobile apps by private banks in Luxembourg. For this purpose, we studied in June 2019 a sample of 38 private banks with offices in Luxembourg; 22 of which are pure players in private banking, and 16 of which are universal banks, i.e. banks offering both retail and private banking services.

We addressed the following questions in our study:

Second, private banks have only started developing mobile apps relatively recently. The first one was released in 2012, but 14 of the 18 mobile apps in the panel studied were launched between 2015 and 2018.

We also analysed how many updates private banks had made to their app since its launch. We found that apps were updated on average 4,5 times per year, which is quite low. In comparison the 5 major retail banks in France updated their apps on average 11 times in 2018. Nonetheless, this demonstrates the necessity for private banks to develop competent and agile mobile development teams internally in order to maintain a well-functioning app with up-to-date functionalities and design.

Third, among the functionalities available in the apps studied, the most developed feature available in all apps is the possibility for the client to have an overview of the value of his portfolio and its evolution over time. The other two most developed features are the possibility to interact with the private banker via secured messaging in the app (78%) and to make bank transfers (66%). Of the apps researched, 44% can send push notifications in case of specific news or significant variations of the assets in the client’s portfolio, another 44% include an “Internal research” and/or  a “News” section, and 28% allow clients to execute trade orders directly in the app.

Finally, we looked at the mobile app ratings on the Google Play Store and Apple Store to assess client satisfaction. The average rating of the 18 apps was 4 out of 5, which indicates that private banking clients are generally satisfied with their banking app. Poor ratings, equal or below 3 out of 5, were observed for 4 of the 18 apps. Such poor ratings should ring alarm bells at those banks to improve their app and meet the standards expected from a private bank.

The more relational and premium nature of the private banking service compared to retail banking and the older clientele explain the defiance of digitalisation in general from the private banking side and why it is much less mature than on the retail banking side.

Private banks need to consider each digitalisation opportunity with care and ensure that it will be perceived positively by the client and not merely as a means to reduce costs by delegating tasks to the client and/or deteriorating the relationship with the private banker. For example, while private banks should think twice before implementing some digital solutions like a B2C robot-advisor, implementing a mobile app has obvious positive impacts on client experience: improved transparency, accessibility and communication between the private banker and the client.

We were, therefore, surprised to find that less than half of the private banks in Luxembourg have decided to develop an app for their clients.

Amongst private banks, those which are remaining in their comfort zone and are being too apathetic towards digitalisation are already missing today many benefits of it and are at a disadvantage towards their competitors. Digitalisation projects are often a powerful way for private banks to kill two birds with one stone: improving client experience while keeping costs under control.