The App-ocalypse: When Banking Apps Go Rogue (and Users Revolt)

If you are a consumer in Australia and New Zealand and your banking app – to use a local expression — totally sucks, then there is a very good chance that you’ll be strongly motivated to change banks.

That is one of the takeouts from a recent report by Experian and Moneythor, which found that user experience expectations and demand for proactive tools are rising, and a failure to deliver could be enough to sever the relationship.

The research found that nearly three-quarters — or 74% — of Australians and New Zealanders rate the performance of their banking app as a key factor in staying loyal to their bank or switching providers.

This key finding is from Experian and Moneythor’s latest report, “Byte-Sized Banking: The App Experience 2024,” which surveyed 1,300 digital banking customers across Australia and New Zealand.

The report also revealed how more than half (57%) of Australians and New Zealanders use their banking apps between three and 10 times a week, with over a quarter (28%) logging in more than ten times to check budgets, review savings goals, transfer money, or track spending.

Millennials are the most active users of banking apps, with 65% of 25 to 34-year-olds using them more than six times a week. This demographic (68%) is also the most vocal about the need for additional tools and resources within the apps.

Overall satisfaction with banking apps currently stands at 82%, with ease of use (81%), accuracy of transaction information (78%) and digital features such as transaction search (77%) cited as the main reasons behind this level of satisfaction.

The Australian and New Zealand markets are not the same, which must be an issue for the main Australian banking providers, which also have major operations across the Tasman.

Regarding spending insights, budgeting and expense categorization, Australian banks are stronger than New Zealand. However, New Zealand banks score higher in financial education tips and subscription management.

‘Bells and whistles’

Australasian banks have invested millions over the last decade in designing and upgrading their apps, adding budgeting tools and personalized ‘bells and whistles’ such as bill alerts, stock trading, and the ability to split restaurant bills with friends.

Then, there is seamless authorization, accessibility, and an amount — but not too much — of financial education. The banks must also keep the apps updated with innovations without becoming unrecognizable each time, so some modularity can be helpful without alienating users.

The list goes on because this has become a significant battleground for the banks who understand that the app is the pointy end of customer experience and that new customers are likely to leave in the first 90 days after onboarding if they are unhappy.

“Banks can seize the opportunity to transform their apps into comprehensive financial hubs.”

Comparison website Mozo recently ranked the Australian banking apps. It ranked Westpac as the best, saying it “was among a select group that offered the richest set of features, giving customers superior visibility and control over their banking.”

“Westpac edged out the competition by offering better account management features and more detailed transaction information,” the Mozo judges said.

Six other bank apps offer functionalities “that go above and beyond the rest of the market.” These were from Westpac subsidiaries Bank of Melbourne and St George, Australia’s largest bank CBA, ANZ Plus and Up, a neobank founded by software company Ferocia and regional bank Bendigo & Adelaide.

There have been some disasters. As recently as early July 2024, Melbourne’s ME Bank had a 24-hour outage that locked customers out of their online accounts and the bank’s app.

Even the CBA was not immune and was forced to apologize to customers in March this year when its app went down for several hours.

Great expectations

Outages are instances where apps fail to meet customer expectations, but the Experian and Moneythor research also showed what customers increasingly expect.

The report found that 86% of customers expect their bank to track their spending. While most bank app users (60%) expect their bank only to alert them when there’s an unusual transaction or fraud risk, there’s also the expectation that a bank will go further to share insights to help them budget and manage their finances (49%).

The report shows that banking apps have been around for a decade or more, but they are still evolving, and there is still an opportunity for competitive differentiation.

“Banks can seize the opportunity to transform their apps into comprehensive financial hubs that offer personalized advice, enriched transaction data and sophisticated financial management tools,” said Jordan Harris, head of innovation at Experian ANZ. ”By doing so, they can not only meet the rising expectations of their customers but also strengthen customer loyalty in an increasingly competitive market.”

“As cost-of-living pressures intensify, the reliance on banking apps for effective budgeting and financial management has never been greater,” he added.

Image credit: iStockphoto/AntonioGuillem