Push notifications: the future of bank communication
As the world transitions from desktop computers to mobile devices, banks and credit card issuers are turning to a powerful new tool to communicate and interact with their customers: push notifications.
Push notifications are the messages that pop up on your smartphone after you've downloaded an app, even if the app is closed. You may already get them from social media sites, games, your calendar or other apps. Unlike text messages or emails, push notifications are sent through your phone's operating system and typically show up in a banner at the top, on your lock screen or in your "notification tray."
Even though banks have only recently started using push notifications, experts predict they will soon become one of the top ways your financial institution will communicate with you.
"We're very bullish on push notifications because they give banks a quick and easy way to engage and interact with their customers," said Ian Benton, a research specialist at Javelin Strategy & Research. "The big banks are leading the charge on this, but it's growing very quickly. It's just a matter of time before all the banks will be offering them."
A Javelin report in April 2015 found that 9 of the top 20 financial institutions in the U.S. were already using push notifications, along with many smaller ones. The report predicted that in five years, all 20 top banks would be sending notifications, and that notifications would surpass text messages as the No. 2 form of financial alert by 2019. (Email is No. 1.)
However, the Javelin study found that only 14 percent of consumers are currently getting push notifications from a financial institution, even though 45 percent said they would be useful. That's partly because banks have been slow to adopt the technology, Benton said, but it's also because banks aren't doing enough to make it easy for users to sign up.
"A lot of people are getting notifications from social media but they don't even don't even know banks are doing this," Benton said. (See "How to sign up for bank alerts on your cellphone.")
Companies like notifications because they engage customers. Those who receive push notifications from an app use the app about four times more often than those who don't, according to a May 2015 study by Urban Airship, a company that provides services to app developers.
But push notifications also offer advantages for customers, especially if they're from your bank. The same Urban Airship study found that push notifications from finance apps drew some of the highest response and engagement rates from customers, when compared to notifications from other types of industries.
6 reasons to use push notifications
Here are six reasons experts expect notification use to rise, along with the benefits they offer for both you and for your bank:
1. They're immediate.
There are certain times you may want to be notified about right away: when there is a questionable transaction, your balance is low or you're reaching your credit limit. But many people don't want to authorize any company -- even a bank -- to send them text messages because it feels too personal. And they may only check email a few times a day.
Push notifications are the happy medium, because you see them quickly, but it's easy to ignore them or swipe them away. "They feel less intrusive than a phone call or a text, but they're actually just as immediate," said Vikas Bansal, vice president and credit product leader at Fiserv, a financial services company. "You might check your email a few times a day, but you pick up your phone and a notification is right there. That immediacy is important."2. They give you information you want without you having to ask for it.
While you can always log in to your credit card's website or mobile app to get account information, "the beauty of push notifications is that you don't have to go looking for the information you want," Bansal said. "They do all the work for you."
You can customize them so you get a notification for transactions over $100, for foreign transactions, when a payment is due or when you're close to your credit limit. A few apps even allow you to use push notifications as a personal finance tool, Benton said. You may get an alert when you're over budget in a particular category or simply if you're spending more than normal in a particular time frame. Benton expects to see more banks rolling out that type of customization down the road.
3. They're cheap.
While text messages can run up your bill if you don't have an unlimited texting plan on your phone, push notifications are always free. For financial institutions, they also cost less to send than a text or an email, Bansal said.
4. They can show up across platforms.
Thirty-five percent of consumers now bank with a mobile app, according to Javelin, and a growing number are using apps across a variety of devices. Push notifications aren't tied to a specific device, so the bank can reach you whether you're on your tablet, your laptop, your phone or your smart watch.
5. They can be interactive.
Instead of a Web link, push notifications send you straight into the app onto the page where you can take the appropriate action with just a click or two. For example, if you sign up to get an alert when a credit card payment is due, clicking on the notification will send you to the page in the app where you can easily pay the bill from your phone.
To make it even easier, some financial institutions have started sending two-way push notifications that allow you take action simply by clicking inside the notification, without even opening the app. So if a transaction looks suspicious, your credit card issuer can send you a push notification asking "Is this a legitimate transaction?" and you can click "yes" or "no" right there. Or if your checking account is close to an overdraft, you may be able to click within the notification to transfer the amount needed to cover the shortfall.
6. They can send targeted information based on your location.
American Express is one of the first financial institutions to use this emerging technology, which gives apps the ability to send you location-based information, said Matthew Eschmann, an analyst who studies financial alerts at Corporate Insight, a marketing and consulting firm.
The "AmEx Offers" program allows cardholders to sign up for discounts at specific retailers and restaurants -- for example, to receive 10 percent cash back at Chipotle or a $25 statement credit on $100 at J. Crew. The app then uses geolocation tracking to send you a push notification when you're near a store location.
"They only send you a notification when you're near a deal you've already selected," said Eschmann. "That helps them toe the line and not seem too pushy. Banks have to recognize that a lot of people have concerns about privacy and spam."
Push notifications' future
Some technology observers predict that push notifications will one day be the main way we interact with our apps, so that we will rarely have to click on an app to use it.
Push notifications aren't perfect, however. If financial institutions aren't judicious about which information they choose to send, customers may start to consider them spam and opt out. It can also be tricky to go back and find push notifications later, and alerts can get lost among all the notifications from other apps. That could be a problem if your bank sends a fraud alert via a push.
"Consumers are telling us they don't necessarily want to completely get rid of text messages," Benton said. "That may be where you want to get fraud alerts because you know you'll pay attention. But if you simply want to be notified every time someone uses your card at a gas station or for transactions above a specific amount, that's perfect for a push notification."
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