Upward Mobility

Statistics tend to change daily, but it is safe to say that more than 50 million Americans are now using mobile banking on their smartphones; another 40 million people are using tablets to access their banking accounts; young, affluent Americans are the prime movers behind mobile banking; and mobile banking users choose financial institutions based on their mobile offerings.

Speaking at the Mobile Banking & Commerce Summit last month in San Francisco, Jeanne Hogarth, manager of consumer research at the Federal Reserve Board, told attendees that 43.5 percent of the 18–29 age group are using mobile banking and that 40.8 percent of mobile banking users make more than $75,000 a year. Mobile banking users are a coveted consumer group, but one bypassing smaller banks because of limited mobile services.

Michael McEvoy, managing director of ath Power Consulting, agreed with Hogarth, pointing out that 70 percent of mobile banking customers place high importance on mobile services when choosing a bank. This trend is reflected in a recent study that found 37 percent of customers at large banks are using mobile banking, compared to 21 percent at regional and community banks and just 15 percent at credit unions.

Garnering a great deal of discussion at the summit was mobile remote deposit capture, or mRDC: the ability to scan and deposit a check from a smartphone or tablet. Although most banks still do not offer mRDC, a recent Javelin Strategy & Research study found that 58 percent of financial institutions surveyed plan to introduce it within the next 12 months. In her session, Mary Monahan, Javelin’s executive vice president and research director, told the audience, “Mobile deposit has a ‘wow’ factor that helps consumers understand the value of mobile banking, boosting acquisition and retention.”

Here are a few other takeaways from the summit:

• The smartphone market is growing 20 percent each quarter, with some 100 million Americans expected to use mobile banking by 2016.
• Mobile banking is more than checking account balances and transferring funds; financial institutions should consider offering more diverse and integrated services, such as mRDC, person-to-person payments, click-able customer service phone numbers, branch location finder, and even multilingual and multicurrency capabilities.
• Mobile banking households use more channels than non-mobile households, including more branch visits, ATM usage and online banking sessions.
• Sixteen percent of mobile banking users are willing to pay a monthly fee for services.
• Mobile payments are still emerging, but they promise new revenue opportunities for those FIs able to integrate payments into their mobile banking platforms.
• Tablets are increasing rapidly, led by the iPad and Amazon’s Android-based Kindle Fire, and FIs have to decide whether to include the tablet within the mobile (smartphone) channel or create a new channel that lends itself to the tablet format and functions.
• The mobile wallet has arrived, and FIs need to understand their roles in the wallet’s banking and e-commerce functionality, such as coupons and loyalty programs.

Finally, despite all the statistics and excitement, most consumers say the No. 1 reason for not using mobile banking is security. A study by the Federal Reserve, for example, found that 48 percent of those surveyed are not using mobile banking because of concerns about security; and 34 percent did not even know whether their FI’s mobile banking was safe or unsafe. If FIs want to reap all the rewards of mobile banking, they should not only implement internal security safeguards, but also improve the level of their communication with customers about these safeguards.

Michael Scheibach is executive editor of BankNews.

Copyright (c) July 2012 by BankNews Media