Lack of banking app functionality deters users more than security fears

More people are choosing not to use banking apps because of a lack of functionality than those deciding not to because of security fears, according to a survey of 400 people in the UK.

The study of banking app user experience, carried out by Adaptive Lab, found that 43% of people use banking apps, with 34% using them at least once a week. Apps from Barclays, HSBC, Lloyds, NatWest and Santander were analysed.

But a quarter (25%) of people that don’t use banking apps are deterred due to a lack of functionality being offered, compared to 18% that are put off by security fears. Adaptive Lab said that banks are just using the apps as extensions to online banking, with limited functionality.

In terms of additional functionality the report said 64% of consumers would like to be able to see pending/upcoming payments and 52% would like to add new payees via their banking app. 

Kat Matfield, service design and product manager, Adaptive Lab, said, “2014 was a turning point in consumer behaviour, with smartphones overtaking laptops and desktops as the UK’s preferred tool for going online. Many industries have been impacted by this shift and consumer banking has been no exception; people are increasingly using smartphones as a key or, sometimes, only banking touch point.

“Overall, the generation of mobile apps currently available from these five leading UK banks leaves considerable room for improvement. If consumers are going to be able to manage and monitor their finances entirely from their smartphones, banks will have to make more functionality available on their apps and focus on improving the user experience."

Matfield said banks often treat their apps as a supplement to online banking, and offer only a subset of the functionality offered by their website: "Although there are aspects of the apps that were reviewed that were visually attractive and user-friendly, most of these banking apps are to a certain extent limited in feature sets and in providing a positive user experience.” 

Traditional banks face threats from an increasing number of challengers to different parts of their businesses. UK regulators are encouraging more competition in the retail banking sector through changes to regulations around setting up banks. Many of these new banks are leading with technology as a differentiator including mobile functionality. Traditional banks risk losing customers unless they keep their mobile offering relevant amid changing consumer demand.

Recent research by Fujitsu found that online banking is the most used digital service in the UK, with 67% of people surveyed banking online. More research on the subject, this time from Bain & Company, found that mobile accounted for about a third of financial transactions in 13 out of the 22 countries surveyed.