With mobile banking fast becoming the norm for millennials, James Lawson speaks to Ben Green, head of innovation at Santander, to discuss its SmartBank and KiTTi apps, and just what the next evolutions will entail.
As smartphone penetration reaches saturation, mobile apps are increasingly becoming the daily face of UK retail banking. Customers downloaded 14.7 million mobile banking apps by the end of 2014 and branch visits are down by 30% in the past three years alone according to BBA. That means providing an excellent mobile experience is now vital to retaining existing customers and attracting new ones.
"There are around 20 million active mobile banking users in the UK," says Ben Green, head of innovation at Santander. "They are logging in 20 to 30 times a month, with many using it every day."
Santander itself has built a base of almost two million mobile users and, since the launch in 2012, its personal-banking app has been consistently well reviewed on iTunes and Google Play. The app does the basics well - checking balances, making payments and transfers, finding local branches - while providing other more sophisticated options like alerting and cashback offers.
But rather than choosing to add extra features to this successful core offering, Santander's strategy has instead been to broaden the range of apps it offers. Each one is tightly focused on certain products, services or customer types, and Green's innovation team members are the ones tasked with coming up with something original.
"We want an app to do one thing really well, with functionality tailored to the customer segment and application," says Green. "Otherwise you end up with ever-expanding menus, buttons and lists." So business customers have a separate app as do financial intermediaries, with the company also recently launching an app solely to handle ISAs. This lets customers open or upgrade a cash ISA on their mobile, with reminders about key tax-year dates to make sure they get their applications in on time to take full advantage of their ISA allowance.
"My part of the business is focused on forward-thinking technology that is slightly more experimental," says Green. "With so many existing digital users, we are loath to tinker around with it too much, but we do still want to push the boundaries and try other ways of making people's lives even easier."
An app for that
The SmartBank app Santander released last September is a good example of this, reinventing as it does the digital bank statement. With checking account balances the most common use for mobile banking (according to Deloitte), extensive research revealed that customers wanted a clearer picture of what they'd spent, and where, over a given time frame.
"People are logging into mobile banking more often, not to see their balance but the implications of that balance," says Green, "How much did I spend at Sainsbury's over the past week, month or quarter? Can I afford to get a bun with my cup of coffee this morning because I'm a bit flush?
"To answer what is a simple but pretty important question like that in a typical mobile banking app, you have to be an expert at mental arithmetic, and pretty dexterous with your fingers and thumbs to search your way through all the data."
The emphasis in SmartBank is on summarising recent outgoings and upcoming payments, with views of weekly and monthly spending patterns as well as how much is left in the account. Simple graphics and clear language - "£50 spent on travel this month" - make account information more digestible. In a business context, presenting easily understood content like this would be described as 'dashboard reporting'.
Though available to all customers, this app is aimed primarily at students. Representing the potentially profitable consumers of the future, it's a market that Santander has already had some success in penetrating with its 1-2-3 Student account that features interest-free overdrafts and complimentary railcards. Younger customers are also the ones most likely to use mobile banking apps, with 18-34-year-olds downloading more than twice as many apps as 35-49-year-olds, according to BBA.
"We have a number of strategic partnerships with universities up and down the country," explains Green. "SmartBank is another opportunity to do something for students that are taking control of their own finances, perhaps for the first time."
So far, it's been a great success, with around 70,000 active users acquired in one hit around 'Fresher's Week' at universities last September. According to Green, the plan is to grow that each year to build up "a base of a couple of hundred thousand loyal users".
Social-media feedback also indicates that SmartBank's fresh approach has touched a nerve with its target audience. Customers posted SmartBank screenshots on Twitter showing the retailer they visit most frequently. One student that had been to McDonalds seven times that week tweeted "I really need help!".
"That is the kind of reaction we were hoping to get with SmartBank," says Green. "By making it more open, informative and conversational, we're seeing a more emotional engagement with banking."
The financial times
As well as boosting engagement and market penetration, the financial information the app presents may also nudge customers towards lowering their own financial risk. Green compares SmartBank to the black boxes fitted to cars by insurers that help change young drivers' behaviour for the better, thus helping them access lower premiums.
"There are downstream advantages for people who take some interest in managing their own risk profile," he says. "Obviously, that's not how we present it to customers and we certainly aren't telling them what to do, but our long-term hope for SmartBank users would be that, if you looked at them six months later, you would see that they had improved their 'financial fitness'."
Despite the potential for greater app adoption to further reduce branch visits and calls to the contact centre, cutting cost-to-serve is not among the main looked-for benefits for any of Santander's mobile initiatives. It's more about the loyalty and higher margins that can be generated by near-daily contact with the brand and a great experience.
According to Green, the bank's digital users actually tend to make more use of branch and phone channels than other customers. That cost is more than outweighed by the fact that, like other highly engaged buyers in other industries from high-street retail to mail order, these 'omnichannel' customers tend to spend more often.
"Any retail banking customer that is digitally engaged tends to be towards the more profitable end of the spectrum," he says. "If people do more with us, they enjoy the relationship more and often end up giving us a little more of their business. That's absolutely been our experience and that of other retail banks as well."
The very latest app being trialled by Santander has an even greater emotional and social charge. The clue to its intended purpose lies in its name - KiTTi. Like a pint pot on the bar full of change or a box full of money to pay gas and electricity bills in a shared house, KiTTi is a social pool of funds that allows digital people-to-people payments, not just person to person.
"Online payments are still relatively old-fashioned in that it's very much one-to-one relationships," says Green. "It's me paying you or me paying a bill."
Take the example of a meal with friends. Paying can be awkward, with multiple cards on the table and a scramble to find change. If everyone has KiTTi on their phones, they can send their share of the bill to one person, who then uses his card to pay the full amount in the normal fashion.
Santander already supports schemes like Paym and, in a nod to the growing demand from consumers for mobile payments, Green says that being able to pay directly from the app is on the development road map for the next KiTTi version.
Once again, the aim is to offer something novel and engaging that makes life easier - and not just for Santander customers. Unlike conventional mobile apps where you have to be a customer of that bank to make payments, anyone can download KiTTi, sign up, link a card to it and start using it.
"Over time, that's a fantastic opportunity," says Green. "If people sign up and enjoy it, [then] it is a gateway into our broader product offering."
Although mobile offers endless opportunities to collect individual data from location to browsing habits, Green is emphatic that Santander, "will not use mobile as a data-gathering source". Any marketing propositions will be driven solely by transactional and other conventional customer data analytics - as employed very successfully to inform existing online and mobile initiatives like the company's My Offers programme.
"We're certainly very aware of the potential," he says, "but banking is different because there is that trust between the consumer and the brand. Their safety and security is our priority."
Santander's UK operation had a stellar 2014, growing profits by 26% to £1.4 billion and adding a third to its customer base that climbed to 3.6 million. The goal for 2015 is to add a further 700,000 to take it to four million.
To help meet that acquisition target, Santander's innovation team will continue to devise apps that target a specific kind of user in particular social situations and seek to tap into the positive emotions associated with them. With more than 50% of unsecured loans now provided online, there's at least one obvious candidate. The customer is standing beside the object of their desire - how much can they borrow to buy it right now?
"We are increasingly creatures of the moment, so how can we use technology to help customers to get the most out of those moments?" ponders Green. "We're still learning all the time about what we can and can't do, and how far we can take banking into the on-demand space."