Banking apps all look the same, but consumers are asking for new features

When Covid-19 moved the bulk of banking interactions online, incumbent U.S. banks and credit unions redoubled their efforts to improve their digital offerings.

They are still working on it. In 2022, Incumbent technology spending grew 10.6% year-over-year, according to Insider Intelligence – the strongest rise in five years, despite continued economic uncertainty. About two-thirds of this amount was spent on improving the customer experience and service delivery.

But has this investment helped them stand out in an increasingly competitive market where more nimble, digital-focused challengers are gaining more and more traction?

Or the money, time, and effort spent on digital features that seemed groundbreaking, but weren’t actually innovative at all? We used our digital banking research platform, Fintech Insights, to see how digital offerings from traditional institutions stacked up and to analyze their position in the market.

Below, we present what the numbers told us.

Take stock of the digital offers of incumbent operators

Fintech Insights assesses real bank accounts, and the results present a picture of the state of the market as of the date of our analysis, which was conducted in August 2022.

The analysis covered mobile banking apps from Ally, Axos Bank, Bank of America, Capital One, Charles Schwab, Citibank, Citizens Bank, Discover Bank, Huntington, JP Morgan Chase, Key Bank, M&T Bank, M1 Bank, Peoples Bank, PNC, TD Bank, TIIA, Truist Financial, Union Bank, Wells Fargo, plus apps from two major credit unions, Alliant and Pen Fed.

The first thing we discovered in the mobile apps of these 25 banks and credit unions was the similarity. In fact, every organization on our list has at least some functionality in four key categories: money transfer, cards, payments, accounts, and support.

‘Lightweight’ innovation:

Many of the mobile banking apps reviewed only offer what customers consider to be table stakes.

Although some banks are more feature-rich than others in certain categories — JPMorgan Chase’s app has 56 money transfer capabilities — the distribution is pretty evenly matched overall.

How banks compare by feature count for key mobile app functions

Source: Scientia/Fintech Perspectives

Since weak online and mobile banking capabilities are the third and fourth most common reasons customers switch banks – before value for money and even customer service – it’s no surprise that banks are focusing on the core tasks of their apps.

But every mobile app we’ve analyzed offers what customers see as table stakes, which seems to come at the expense of developing innovative features in other categories. And their lack of mobile banking functionality means traditional institutions are missing out on important opportunities.

Dig deeper: Mobile banking is now the main distribution channel: now what?


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Three Missed Mobile Banking Opportunities

Research suggests that consumer demand is increasing for e-wallet capabilities, wealth management or investment features, and junior accounts. But none of the 25 surveyed incumbents had e-wallet functionality (M1 and Penfed had no payment functionality), 11 banks – almost half of the banks analyzed – had no wealth management functionality or investment, and only two, JP Morgan Chase and Fidelity, have junior account features.

Meanwhile, American parents collectively give their children $41 billion a year in spending money, according to RoosterMoney. And the decline in the use of cash means most of them are doing it digitally.

Similarly, 75% of respondents in a survey by The Ascent said they had used an e-wallet at least once in the past month.

And Bain & Company expects the amount of globally investable assets — the bulk of them owned by younger, digitally savvy people — will grow by $90 trillion between 2021 and 2030.

To win:

Consumer demand is increasing for e-wallet capabilities, wealth management or investment features, and junior accounts.

There is a significant gap in the user-friendly mobile banking market in these categories. Incumbents who successfully launch new features — or refine their current offerings — to meet demand can enjoy a significant first-mover advantage.

Learn more: Digital banking goes beyond mobile taps & swipes

Little differentiation in the market

In addition to missing out on substantial opportunities, incumbents face another challenge: lack of differentiation. Of the 25 mobile banking apps we analyzed, 17 lacked unique features, making their products almost or exactly the same as those of their competitors. And the few unique apps that exist are rare: the most differentiated incumbent – Wells Fargo – has just 15 unique features.

Number of unique features on mobile banking apps

This is in stark contrast to competitors from US neobanks. An analysis we conducted in April 2022 found that across the 17 organizations we looked at, only seven out of 500 features were shared by all.

Of course, a large number of unique features is not necessarily the mark of a superior app. It also does not mean that a particular application meets customer needs better than others on the market.

In fact, many of the unique characteristics we have identified in neobanks all achieve similar goals. This suggests that these neobanks were spending a lot of time, money and effort trying to solve problems that others had already solved rather than innovating, probably because they lacked visibility in the market.

Misconceptions in general:

Digital banks are not still meet people’s unmet needs. Many neobanks, in fact, regurgitate innovative solutions that already exist in the banking sector.

The lack of mobile app differentiation from incumbents also suggests limited visibility.

Maybe the incumbents don’t know how to approach innovation. Or maybe launching truly innovative mobile apps is too expensive and time-consuming to be worth it. There is no doubt that incumbent banks have managed to get by with virtually indistinguishable mobile offerings.

If so, this strategy won’t last long.

Read more: 12 must-have mobile banking features consumers expect now

Customers demand bespoke products

For today’s customers, a user-friendly mobile banking experience is the bare minimum. They want highly personalized products tailored to their needs – and the market for niche features is here to take it, especially when it comes to e-wallets, junior accounts and wealth management.

But to position themselves as the obvious choice in any niche they carve out, incumbents need to study the market more thoroughly.

Knowing what’s currently available, identifying gaps, and learning how others have solved common problems could provide the spark that licensees need to differentiate themselves with truly unique products.