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Envisioning an App Store Inside Online Banking: Could Open Platforms and Third- Party Developers Unleash Profitable Innovation?
Javelin Strategy & Research, Feb 2011, Pages: 31
We live in the app era. Americans’ comfort with downloading mobile applications has set the stage for rethinking online banking by opening app stores on a financial institution’s website –a step that could invigorate online banking and introduce innovation at the speed of fashion. Online app stores promise to transform how consumers monitor and manage their money, shape how they perceive and relate to their primary financial institutions and boost their willingness to pay for online features and services. Three major business models have emerged and will vie for primacy as third-party development propels even more rapid rates of change and challenges existing business structures. Financial institutions must balance the need to remain competitive with the need to be cautious in dealing with identified obstacles. This report analyzes consumer attitudes about downloading apps; assesses the implications for consumers, financial institutions, vendors and software developers; and explores initiatives by Apple, Fiserv, Yodlee, PayPal, Intuit, Visa, MasterCard and Andera.
Primary Questions
- How could the app store concept be applied to
Online banking?
- How would consumers, financial institutions, vendors and software developers benefit from an app store strategy?
- What obstacles must financial institutions overcome if an online-banking app store is to succeed?
- How willing are consumers to download mobile applications, and what are the implications for online-banking app stores?
- What are the various models for developing an app store, and how do these approaches differ?
Methodology
This report is based mainly on data collected online from a random-sample Bank Benchmark panel of 5,494 households in November
2010. The survey targeted respondents based on proportions of gender, age and income representative of those of the overall U.S. online population. The margin of sampling error is ±1.32% at the 95% confidence level.
Longitudinal comparisons are based on data collected online from a random sample of 5,211 households in March 2010, with a margin of error of ±1.36%.
The majority of Javelin data for online banking and bill pay is based on “households” rather than on “individual consumers.” This is a typical way of presenting online-banking and bill-payment data because bills are normally paid on a per-household basis. In 2010, the U.S. population was approximately 310 million. That number includes 235 million adults, 112 million households and 88 million households that are online. On average, about 2.6 people make up a household. Javelin also collects online-banking data using a base of all consumers for comparison purposes.
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