By Felicity Anderson

Apps used on smartphones will supersede online banking through computers by as early as next year, according to industry analyst CACI.

The prediction comes as a report released this week shows that UK customers logged into banking apps over 5.5 billion times last year, which is a 13% rise on 2016, according to the BBC.

Underlining the scale of digital disruption within the industry, the report called, ‘The Way We Bank Now,’ from UK Finance, reveals that millennials are most likely to reach for their smartphones to check their balance and make transfers.

Almost 59% of 16 to 24-year-olds and 69% of 25 to 34-year-olds are using their smartphones to log in to banking apps, while almost half (49%) of 65 years olds chose to bank online.

What does the rise of banking apps mean for traditional bank branches?

Raising questions about the lifespan of traditional branches, ‘The Way We Bank Now,’ also notes the rising popularity of web chat services, where customers can talk to their bank online at any time, outside of usual branch hours.

A simple way to deal with personal banking matters while at work or studying, this is seen as much more convenient than physically walking into a local branch, or even speaking to a bank employee over the telephone.

Major banks had over 5.5 million webchats with customers in 2017 – the equivalent of 622 per hour, according to UK Finance, which also claims we can soon expect to interface via video banking and voice activation as banks seek to respond even more effectively to customer needs 24/7.

Will mobile phone apps replace bank branches?

“A tipping point for the industry,”

Responding to the news, Ian Bradbury, CTO Financial Services at Fujitsu, praises the convenience brought to banking customers through technological transformation but also notes the enhanced security risks posed by banking through smartphones, he said:

 “This is a tipping point for the industry. Mobile is rapidly becoming the channel of choice, and it’s no surprise – it’s easy to use, with an emphasis on customer experience and convenience, and it’s with consumers wherever they go.

“However, the migration of banking onto mobile phones will certainly put more pressure on banks to up their security – more frequent mobile banking use, with devices which can be easily lost or stolen, means criminals can potentially do more damage to more people…”

When mobile banking goes wrong

While it’s clear that advances in online and mobile banking apps are proving popular with customers, many are still recovering from the high-profile technological problems recently experienced by TSB.

Last month the migration of data from former owner Lloyds’ IT system to a new one managed by current Spanish owner Sabadell went wrong, with many customers unable to access their accounts.

Adrian Buckle, head of research at UK Finance, said that the high level of upset resulting from TSB problems proves how much consumers now relied on digital services.

“It is up to the industry to ensure that these problems do not happen again,” he said. “It is not just TSB looking at that but all banks across the whole industry.”