Innovation unfolding by way of mobile application usage in the financial sector is not totally unexpected: an increasing number of customers are walking around with smart phones, transacting in virtual worlds, accessing information 24X7, changing market dynamics and providing unlimited opportunities. Time has literally begun to translate into money. ComScore (NASDAQ: SCOR)[i] reported earlier this year that in Q2 2011, 16% of the total US mobile audience reported using mobile devices to access financial information or to carry out their financial transactions. Banking app usage has risen 74% from a year ago, said its study comScore 2011 State of Online and Mobile Banking (see Figure 1). The coming numbers are even more daunting. Of the 6 billion mobile subscriptions[ii] worldwide by the end of 2011, 968.2 million (16%) were smartphones. This share is expected to approach 40% by the end of2015[iii]. If you are not building those innovative mobile apps for your financial services business, your customers are soon going to dial out. And if you are not outsourcing that app development, you are going to fall behind.
Before we examine the urgency of outsourcing mobile app development, it may help to take a look at two innovative apps meant for bank customers. The first was introduced in the US market by Citi in 2010 called Citi Shopper. The second is a widely-discussed idea for the SMB sector that has been implemented in different forms by various banks. The two examples help understand why mobile app development must be outsourced.
Innovative Mobile Applications in the Financial Services Sector
Citi Shopper let Citi customers use WAP, Android, iOS or BlackBerry devices to get information on shopping when they want it, where they want it. It offered information on electronics, apparel, food, white goods, etc., displaying comparative pricing and dealer locations with a click-to-call button. Some months ago, Citi shut down Citi Shopper (which was in beta) and handed over the service to the technology provider, GP Shopper/Slifter. Citi took the step in order to scale up innovation, address new markets and ensure app availability on a growing number of mobile platforms. The bank clearly did not want its own lack of expertise in mobile app development/management to affect its users. In other words, it did not want to fall behind the app usage curve.
The second application aimed at the SMB sector that run small businesses and don’t have the time to visit physical bank offices, presents a major opportunity. This innovation delivers the capability for SMBs to access core banking services (view account balance, transaction history, funds transfer, pay bills, receive alerts) on their mobile device. In addition, it can provide services that small businesses are willing to pay for but cannot support on their own because of expensive real estate prices, lack of IT infrastructure and the inability to retain talent. For instance, the mobile app can provide a Point of Sale, payroll management, employee reimbursement management, time and expense trackers, and other accounting records that help the SMBs with better financial management. The SMB sector is very lucrative for financial service providers and offers opportunities galore for innovative application outsourcing.
According to AT Kearney[v], SMBs in G7 countries contribute 53% of the GDP. There’s a lot of money out there in the 53% that needs to be managed! Expectedly, the focus on developing innovative financial apps aimed at SMBs on a variety of mobile platforms (Android, BlackBerry, Symbian, iOS, BREW, Java ME, Windows Mobile, etc.) is going to be fierce in the coming months.
Outsourcing mobile app development in the financial sector is critical as mobile technology is changing rapidly. Some of the key trends we are seeing are:
- New devices are finding their way into the market
- New platforms and operating systems are being introduced
- Form factors of the devices differ
- There are regulatory and security challenges that need to be overcome especially for financial businesses
- Mobile applications themselves use a vast variety of technologies such as video, GPS for Location Based Services, gesture recognition and operate on a bewildering variety of networks ranging from Bluetooth to wi-fi, GPRS, CDMA, HSPA, 2G, 3G and Long Term Evolution (LTE), each with their own unique performance characteristics.
As if that were not enough, developers need to make choices in terms of developing native apps versus browsers-based apps (in the still emerging HTML5) versus hybrid apps.
If the BFSI sector is to continue to leverage the propensity of its customers to use mobile devices for financial services, the only way to keep pace is through innovative application development outsourcing to the experts.