Nokia's "app gap" ad misses one key point

At the beginning of the month, I passed along an article citing that Acer was not going to be rejoining the Windows Phone segment for the foreseeable future due to overall market share. What stuck out to me was a quote from Allen Burnes, VP of Europe, Middle East and Asia for Acer’s smartphone division.  Specifically he was talking about local banking apps, and so I focused on my own little app gap research.

Don’t get me wrong, I do not believe in the grand scheme, the app gap is as bad as some folks make it out to be, but that is really related to personal entertainment and social networking.  Let's be honest, the Windows Phone application catalog is not as robust as what can be found for iOS and Android, especially when it comes to banking, and that issue is a huge thorn in the side of Windows Phone.

The top ten banks in the US hold about 46% of the market share by depositors. Of the top ten, only three have dedicated apps for Windows Phone, Bank of America, Wells Fargo and Chase. The other seven on the list, Citibank, US Bank, PNC Bank, Capital One, TD Bank, BB&T, and SunTrust Bank all offer at least an iOS compatible app, many support Android and some even offer BlackBerry compatible apps.

That is a big deal, and frankly I am a bit amazed that Microsoft has not done everything, up to and including developing applications itself or creating a clearinghouse dedicated to bringing such applications to bear in cooperation with these institutions. When you consider the top five banks alone hold over $8 trillion in assets and $4.5 trillion in deposits, it represents a distinct market, pretty much everyone and how they manage, deposit and access their money. Money.

The trend of Windows Phone support, or lack thereof, continues down the list of major banks in the US. I didn’t look too much at Europe because I knew deep down it was probably the same. Deutsche Bank, the largest bank in Germany has an app for Windows Phone, but number two, Commerzbank does not. Lloyds Banking and HSBC in the UK? No such luck.

Customers for life

I won’t speak as a consumer in Europe, but in the United States, banks are like luggage. Once someone puts their money there, it tends to stay there. It is not unusual for someone to open their first savings account as a kid and keep that account their whole life.

Consider USAA.  This bank started serving, and continues to serve members of the military, their families and dependents. The customer base is fiercely loyal.  Exactly a year ago, USAA pulled its official Windows Phone app prompting a somewhat small, but vocal response of displeasure from its customers.  Last December, USAA took the wraps off a brand new app for Windows Phone.

Let’s pretend for a moment that USAA did not do that though. Over whatever time measurement you want, do you think the customers would have left USAA due to no Windows Phone app, or left Windows Phone to get mobile service on iOS or Android? It is a no-brainer of an answer and thank goodness USAA did not put that decision on its customers for the long term.

The same holds true for members of credit unions. For those that do not know what a credit union is, it is generally smaller, more localized, and not run for profit. Savings accounts are called “share accounts” because instead of “loaning” to the institution (the way an account works for a bank), you are basically buying ownership in the credit union. Because of their size, credit unions have even fewer mobile choices.

More than half of US depositors have spread their service demands across more than 300 separate banks, not including credit unions, and it makes up a deposit base that is bigger than the GDP of any other country.

Here is a wide gap

I randomly picked a “smaller” bank from a list of the top 300 banks in the US (with “only” $6 billion in deposits), #128 on the list is Old National Bank. Guess which mobile environments are supported. Then I went to #197, Centennial Bank based in Conway, Arkansas. Guess which mobile environments are supported. #220, Sandy Spring Bank in Olney, Maryland. Guess which mobile environments are supported. Finally, I picked #289, Old Second National Bank in Aurora, Illinois. Guess which mobile environments are supported.

It is not a stretch to say that most, if not all, of these banks did not hire a team of their own developers to build their own app. They contract with industry service companies that specialize in information processing for banks and other financial institutions, and that is what most of these iOS and Android apps for these smaller banks seem to be.  In the Windows Phone store, the banks that have an app for Windows Phone were all published by that bank.

Capital One's banking app incorporates pattern lock as a security feature

Apps are not just about apps

If Microsoft and Nokia are serious about really closing the app gap, getting the banks on board is a cornerstone that cannot be ignored. Yes, I know there are other “important” apps that are obscure to the mainstream, but important for that niche customer that can find their favorite basket weaving app. In fact, it can be argued that just about any app is utterly useless until it is needed and used by an individual. Then, the ability to add that app to a person’s smartphone expands the functionality of that device.  That makes the device more useful and becomes a hook into that customer keeping that device, or at least staying with that operating platform.

So, while Nokia’s “app gap” ad is reassuring, and correct to a point, the fact that a consumer can use Instagram on whatever phone they want, but cannot pay bills, make deposits or handle their personal finances, indeed, the decision process becomes simpler. While mobile web-pages work just fine, we know that model does not withstand marketing scrutiny or reality.

Follow the money

The market model supports the idea that customers who feel they have access to their money and financial positions feel more in control, more secure.  Nothing is more mainstream than money.  If you are going to capture and entice customers, you need to follow the money.  If you are going to follow the money, you got to look at banks.  Banks have money. 

references: The Finance Buff,  The Wall Street Journal and relbanks.com