How Mobile Banking Apps Save Big Institutions Money

One of the big benefits that FinTech companies tout is that they are able to keep their costs down by operating exclusively online and not maintaining any brick and mortar branches. Interestingly their point is very well proven by data supplied by their big bank competitors. As Fox Business reports institutions such as Bank of America and Chase are apparently saving tons of cash as their users transition more and more to their mobile banking apps.

Estimates indicated that Bank of America currently has around 47 million customers. Of that customer base about 34 million use online banking services and 21 million — which is about 45% — regularly use the bank’s mobile application. Furthermore the number of active app users rose by 15.9% in the third quarter of 2016 and over two-thirds of the bank’s deposits are now conducted via mobile or ATM.

Considering that the bank has revealed mobile deposits cost them one-tenth of what the teller-assisted in-store deposits do, you can see the savings are starting to add up. In fact the company reports that their cost per $100 in deposits has fallen more than one-third in the past six years. Incidentally another major banking institution,  JPMorgan Chase, has offered a more specific breakdown of deposit costs. By their estimates a deposit that runs through a teller costs the bank an average of $.65 when all is said and done. Meanwhile an ATM deposit costs them around $.08 — a vast improvement until you realize that mobile deposits cost them even less at just $.03.

Of course, while the popularity of such apps is good news for customers and great news for banks, these conveniences and savings come at the expense of jobs. Since 2010 B of A has slimmed from around 6,000 branches to about 4,600 today. It also employs less than three-quarters the number they did in 2011, falling from 288,000 to 209,000 in that time.

It seems that there may be more motivation for big banks to pursue new technologies beyond trying to stave off FinTech firms. Perhaps that’s part of the reason for the noted improvement in banking applications as of late. That said these major institutions will never be able to reduce their costs as much as many startups can. This reality coupled with the creativity and out-of-the-box thinking that FinTechs are known for still gives them a fighting chance in this classic David and Goliath tale. Regardless of who ultimately controls the market in time, it looks like finance is another sector where digital is set to reign.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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