What should banks do next to improve online banking?

Financial institutions forging ahead with slick enhancements to their mobile apps shouldn't let improvements to online banking fall by the wayside.

While mobile app usage is on the rise, online banking is still marginally more popular with consumers than mobile banking. In its  2024 Retail Banking Satisfaction study, J.D. Power found that 76% of respondents used their mobile app in the preceding three months. In 2023, 74% said they had been using their mobile banking app; in 2022, 67% said this. Meanwhile, in all three years, 77% of respondents said they had logged into their bank's website in the preceding three months. 

Without continued investment in online banking, customers will notice a mismatch between the mobile app and website. The design may look dated, and features that work seamlessly in the app, such as chat functionality and push notifications, may appear clunky or be unavailable online.

"The challenge for banks is that investment is being placed, for the most part, on the mobile app," said Jennifer White, senior director of banking and payments intelligence at J.D. Power.

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When refining online banking, however, financial institutions need to focus on intuitive and logical design as much as, if not more, than flashy features — so users can locate the personal finance management tools, payment options and more that the institution paid money to acquire in the first place.

"Online banking is too often a junk drawer of hamburger menus, where if you just know to click on your initials in the corner you'd realize it was a whole other settings menu," said Mark Schwanhausser, director of digital banking at Javelin Strategy & Research. "That model has to die."

He encourages banks to cluster key features together into "centers" on the homepage, as if the bank were a library hanging signs for different genres of books. The top three priorities are a security center, a customer service center and a place to locate and obtain the bank's products, in his view.

"A lot of financial institutions force customers to shop for new products on the public website," said Schwanhausser. "This erodes their ability to personalize the shopping experience and use customer data to hone product recommendations. It also slows the application process."

A search bar, or a chatbot or virtual assistant that can perform a similar function, is also vital. According to Javelin's 2023 online banking scorecard, which reviews the 20 largest banks in the U.S. by asset size, only two out of three offer a bot, virtual assistant or chat feature.

"Intuitive organization isn't always enough. Sometimes library patrons must seek help from a librarian or search the digital card catalog to find what they need," said Schwanhausser.

The look and feel of the site should be consistent across pages, even if content was developed by different teams. 

"When you move from one page to another within the website you can see text size changing or layout of the screen is changing, partially because of how or when different elements of the site have been designed," said White. "That lack of consistency can be confusing to customers. [Banks] usually do a fair job of that within the mobile app because they have a smaller environment."

Jordan Sternlieb, a senior partner at West Monroe, agrees.

The digital experience "is pretty disjointed today," he said. "As you add new services and products, having that be a seamless, easy, consistent look and feel for the customer" is important.

Sometimes an upgrade means ensuring a feature exists on both the app and website. Peer-to-peer payment networks such as Zelle is one example. Javelin found that 16 of the top 20 banks offer Zelle to online customers, but of those, four do not show the name of the receiver or sender in the checking ledger, "illustrating the gaps in bolt-on P2P integration at many financial institutions," said Schwanhausser.

"Peer-to-peer payments is rightfully a mobile-first feature, but failing to offer it to online customers creates a channel mismatch that forces an online customer to log out and use the app," said Schwanhausser.

There are also several existing features that banks could simplify or enhance.

One is streamlining the checking account ledger, or the place where people review their transactions in their checking account.

"These ledgers are cluttered, too hard to skim, with ACH garble in capital letters and numbers and other gobbledygook," said Schwanhausser. "We are encouraging different techniques to reduce what you are showing in there," such as the ability to click on a transaction and open up a tile with the location and date of purchase.

He also feels that "financial fitness" features should help people look ahead rather than focusing on the present moment. For instance, there is space for banks to explore how they present a customer's balance, such as offering up what the balance would be after a scheduled bill payment, rather than forcing customers to do the math themselves.

Investing in sophisticated account aggregation, which includes accounts both outside and inside the bank, is an important piece of personal finance management.

"It allows customers the ability to consolidate a view of their spending across financial institutions, to track progress across a budget they set across multiple institutions, and lets them take a look at their full financial status including — which doesn't exist in many places — a full view of all of their debts," said White. In its 2023 Financial Health and Advice Satisfaction Study, J.D. Power found that "help[s] me understand my finances by displaying data from all my bank accounts, credit cards, loans, etc. in one place" was the most frequent answer out of ten other options to respond to the statement, "Bank offering that would be most helpful to you."

Another element of financial fitness to consider is giving deposit account customers a free peek at their credit scores, rather than gatekeeping this feature for credit card customers. Javelin has found that three of the top 20 banks in the U.S. show credit scores to their checking account customers on the homepage, while an additional seven reveal credit scores on a personal finance management section or tab.

"We see credit scores as an important form of proactive insight that invites customers to think of the bank as the place they prefer to monitor their score," said Schwanhausser, rather than pushing customers to a free site like Credit Karma.

Banks should also be looking even further ahead for improvements.

"Generative AI could be a game changer for online banking," said Sternlieb. "The technology and the data are available. It's a matter of digital banking providers being able to offer this or the banks building it themselves."

He foresees generative AI as being useful for specific searches and questions, such as, "How much have I spent going out to eat in the last six months?" rather than returning answers through a regular chatbot that requires multiple tries and gets only some of what the customer wants.

Sternlieb is working with a bank to develop internal functionality so employees can mine transaction history and other data to better service customers.

"A future phase could be to open that up to the customer base," he said.

What if features, such as a more sophisticated bill pay experience, don't exist yet to a bank's satisfaction?

"Keep the heat on vendors," said Schwanhausser.