Why Do Banks Consistently Ignore Their Text Banking Apps?

  • JJ Hornblass
  • May 26, 2016
  • 2

canstockphoto10885658Many banks have them. Many banks spend money on them.

Nearly all of those banks ignore them.

The “them” is text banking apps, and the degree to which they have been marginalized baffles me.

Earlier this week, I asked a top innovation executive at one of this nation’s largest financial services companies how many of its customers use its text banking application.

“I have no idea,” he said.

Of course, he knows to the hour how many customers use his company’s online and mobile platforms.

He is by no means alone.

The text banking app is the Podunk of banking, the Siberia of apps, the Timbuktu of banking services, the … well, you get the picture. I would venture to guess that the spend on it, while admittedly small, is equally glossed over by chief digital officers.

And what surprises me about this is that text banking has the chance to be wildly meaningful to financial institutions — if only it didn’t suck.

Of course, messaging volumes are massive — so massive, in fact, that it is hard to get an accurate, current total number. Better to think of about it this way: count the number of text or WhatsApp or Facebook Messenger or pick-your-channel messages you’ve sent over the last 24 hours — and multiply it by the number of people on planet Earth. Yes, that many.

According to the Pew Research Center, 49% of smartphone owners ages 18 to 29 use messaging apps, as of last August. There are about 54 million 18-to-29-year-olds in America today.

Typical Text Banking Commands

Typical Text Banking Commands

Which is why I have a hard time understanding the complete disdain shown to the text banking service most banks already provide. The most reasonable explanation for this is, consumers don’t use it. But the reason they don’t use it is their functionality is poor, and not text-like at all. Texting “STMT” to 54439 is not exactly a normal message today. (When I signed up for text banking, I got the response, “Your mbl# is activated.” It took me a few moments to figure that out.)

Further, the apps don’t foster communication. They have functionality, in most cases, that has not improved since the 2000s.

So when that banker says, no, his bank is not interested in replacing its text banking, what he is really saying is: “Our text banking sucks so bad, we don’t even know where to begin.” What’s ironic about this is that messaging — largely via SWIFT — has been a fundamental part of banking for decades.

There are startups working on this problem, which I would define as making messaging a part of banking, not “a channel.” But these startups can do only so much. What is needed is a new mindset from banking, a recognition that messaging offers profound opportunities for customer engagement. That’s why the bot-focus at Facebook and Google’s recent announcements at its I/O conference have so much import. Messaging is becoming a primary means of communication for consumers, and banks had better get there.

Which is why I wrote this blog as a text on my iPhone.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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2 thoughts on “Why Do Banks Consistently Ignore Their Text Banking Apps?

  1. Text Banking apps are surprisingly simple and ease to use. Most of the requests are atomic transactions – single request, single response. With a well-designed strategy, a bank can build a portfolio of more than 100 SMS Banking services.

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