first direct app smashes initial targets
By Duygu Tavan
23 February 2011
HSBC’s UK-based direct
banking arm, first direct, has launched a payment-enabled m-banking
application for the iPhone, attracting 100,000 downloads within a
month of launch. Justine Haworth, head of digital solutions at
first direct, tells Duygu Tavan the app is just the first stage of
the bank’s m-banking programme.
At RBI’s mobile banking
round table last September, Nick Staib, senior manager digital
solutions at HSBC, said that a mobile banking app was "on its way
and it will be bigger and better" than anything then on offer from
its rivals. (see RBI 643).
At that stage, Royal Bank of
Scotland’s England-based subsidiary NatWest had already been
offering a mobile banking app for almost a year.
NatWest’s service launched
offering transfers between accounts, balance alerts and transaction
history - and threatened to undermine first direct’s
reputation as a leader in direct channel banking.
Staib conceded that HSBC had
"lost a bit of a lead we think [first direct] enjoyed in terms of
innovation", as a result of RBS being the first major UK bank to
bring an iPhone app to market.
But fast-forward four months
and first direct has introduced its Banking on the Go app for
iPhones.
Justine Haworth, head of
digital solutions at first direct, told RBI that the
UK-based direct banking arm took time to analyse customer appetite
and reflect on the bank’s innovation strategy.
The iPhone service is also
just the first stage in the bank’s m-banking roll out. An app for
the smart phones on the rival Android platform and a mobile banking
app for HSBC customers are next on the agenda.
"Once we started our in-depth
research and development, we quickly recognised that customers
wanted more than just a service to view information, such as
balances and transactions," Haworth said.
"Customers really did have an
appetite to make payments on the go. Essentially, that is the
element of service that differentiates us from our competitors at
this point.
"So, while competitors such
as RBS and NatWest were able to launch a view-only type of service,
we made the decision to introduce payment functionality within our
app. The development of that type of functionality is more
complicated – we needed to make sure that it would work well on an
iPhone, so that it was easy and intuitive."
And the wait has paid
off: the app, which is compatible with Apple’s iPhone, iPod touch
and iPad, was downloaded 100,000 times within the first month of
its release on 13 January, which was "way beyond our initial
expectations – we thought we’d have about 30,000 downloads in the
first month," Haworth said.
The bank decided to tap into
the iPhone mobile banking market because the majority of its
smartphone customers used the Apple device.
On the app store, 607
customers gave the app a four-out-of-five stars rating.
One reviewer wrote: "Nice to
see this finally hit the app store. A fantastic app giving me all I
need for my day-to-day banking. Well done first direct."
Another said: "As with
anything first direct, easy to use, straightforward and it works!
Thanks from a happy customer!"
Other comments included:
"Does what you would expect and keeps it simple to use."
Haworth added: "The feedback
we’ve had since the app launch has been phenomenally positive –
between 80 and 85% rated four-out-of five stars on the app
store."
The development phase took
first direct around six to nine months from the start of the
project to the launch.
The bank spent the first two
to three months creating the design, followed by two to three
months of building the service, with the latter part of the
development process dedicated to testing.
"Testing is something we take
seriously because it is important to us that we release
functionality and services to customers that are really exceptional
in terms of quality."
She added that first direct
was actually ready to launch the Banking on the Go app in November
last year, but due to Apple’s validation process and the Christmas
period, the bank had to re-schedule the launch into the New
Year.
But first direct
underestimated the adoption rate and success of the Banking on the
Go app because it had made assumptions on the number of internet
banking customers who had iPhones, Haworth said.
"We knew how many customers
were using an iPhone to access internet banking or to access the
website, so we knew that between 3 to 4% of visitors to the first
direct website were using the iPhone.
"But clearly there was a
percentage of customers who weren’t using their iPhone to access
the website, but who have downloaded the app."
Haworth added that the work
is continuing to improve the range of services the app will
offer.
"We are looking at feedback
that customers have provided to us so far and there are a few
pieces of feedback that we can incorporate into subsequent releases
of the first direct app – the timeline for that would be around the
third quarter this year.
"Some customers are asking
for more transactions [to be able to view more than 20], when
checking their available balance.
"Customers have also asked
for improvements to the log-on process. One of them is to see
whether we can save the user name so that [customers] don’t need to
type it every time.
"Also, at the moment, the
password character entry doesn’t tap from one field to the other as
it does on the internet banking service. We want to keep the log on
process as it is, but we want it to be as streamlined as we can.
So, there are some usability-improvements that we could
do."
So now that the mobile
banking service is up and running, what is next?
"Our focus for this year is
with Android," Haworth said.
But she added: "We are going
to launch a very similar iPhone app for HSBC personal financial
services customers. That is going to happen probably around the
third quarter. At the same time, we are looking to create a version
of the same banking service for Android, too."
Overall, she said, the
priority will be to extend the banking services for the other
brands within HSBC throughout 2011 and 2012, including an app for
HSBC business clients, which Haworth said will be launched "fairly
shortly".
"We’re not able to confirm
dates yet, as we’re in the analysis phase. Ideally, we’d be looking
at the third quarter for Android for first direct, and third
quarter for iPhone and Android for HSBC. That is the target plan at
the moment."
The announcement of Nokia’s
partnership with Microsoft in mid-February also provides first
direct with opportunities; but those will depend on how quickly the
firms replace Nokia’s existing Symbian system with Microsoft’s
Window system.
Haworth said that in parallel
to the banking service, first direct is undertaking research and
development to analyse other possibilities in the mobile space,
which includes a co-operation with consultants Sapient for the HSBC
banking apps.
"HSBC’s customer base is
slightly different. HSBC has a much younger average customer base,
but not as willing to adopt technology [as first direct customers].
So it presents different challenges for us. There is definitely
appetite for the iPhone app across the HSBC base, but the base
itself is quite polarised [unlike first direct’s customer base,
which is predominantly above 40 years old, professional and
technology savvy]. It can’t be one size fits all."
first direct expects its
research and development to produce results in the next two to
three months, although Haworth declined to speculate about the
exact nature of these developments.
Another possible product
launch would be a personal finance management (PFM) facility – such
as the Money Manager tool released by HSBC’s UK rival Lloyds TSB
(see page 14).
"We’re thinking about it,"
said Haworth. "Our priority has been to look at the banking service
first and foremost as a catch-up to get us onto a level playing
field in terms of a multi-channel offering for all of the
brands.
"We’re working with another
organisation to help us understand the opportunities for the
services and tools [for budget planning tools].
"We have to look very
carefully at what a budget planning tool actually is and what value
it offers to the organisation and the customers in the
long-term.
"There are a lot of companies
that can support the development of such [PFM] tools – but it
depends on the level of intelligence one wants associated with
them. You can build a mortgage calculator, but there is no
intelligence to it after you’ve used it."
She emphasised that one of
first direct’s philosophies was to create services that are
addictive and that add value to what the customers do.
"There are loads and loads of
opportunities in the mobile space to tap into this lean-back type
of customer behaviour. [Our goal is to] make something engaging and
compelling to drive somebody to do something, which is a
lean-forward activity."
Haworth added that the
infrastructure the bank developed for the iPhone Banking on the Go
app would be applicable for other innovations and tools, allowing
first direct to roll out new mobile banking related services
quickly.
"This [app] is the first step
of a very exciting change and agenda for smartphones for the rest
of the year.
"I don’t think at this point
in time, there is a competitor in the smart phone banking market.
People use NatWest and RBS as an example, but they aren’t a
competitor. The reason for that is that [their app] is one element
of an overall proposition."
"Nobody has all the
dimensions yet. We don’t either. Over 50% of our customer base
actively uses internet banking, which is around 700,000 people.
Over 300,000 customers use the text alert service. From a smart
phone banking service, we’re not there yet. But from a customer
satisfaction perspective, we are obviously doing something right.
But we would like to do more."
The view that first direct is
doing something right is one that is regularly shared by its
clients in customer satisfaction surveys.
In its annual Which? customer
satisfaction report, published last August, first direct came top
in three of the four categories – current accounts, savings and
mortgages – achieving an average score of 82%.
Although HSBC scored only
60%, the score was well in excess of its traditional high street
rivals Barclays (54%), NatWest and Lloyds TSB (both 53%) and
Santander (47%).
Last November, first direct
ranked first in JD Power’s Retail Banking Customer Satisfaction
Survey.
In January, first direct pulled off a treble, coming top
of the Best Current Account category of the annual Consumer
Moneyfacts Awards; a survey received by more than 1.4m customers,
one of the largest of its type.