Apr 24, 2012 3:08 AMMobile Banking Set To Explode, Here’s What MarketersNeed to KnowTwo research studies on mobile banking tell financial marketers they need to paymore attention to this critical channel.One study commissioned by the Federal Reserve System examines the increasing impact mobiletools have had on consumers’ banking, budgeting, shopping and payments behaviors. The reporttitled “Consumers and Mobile Financial Services” presents findings from an online survey withover 2,200 participants, conducted in December 2011 and January 2012. The report explores theuse of mobile technologies as a means to access financial services and make financial decisions.The study concludes that the ubiquity of mobile phones is clearly changing the way consumersaccess financial services. Today, 87% of the U.S. population has a mobile phone, and 44% ofthose are internet-enabled smartphones. 21% of mobile phone owners have used mobile bankingin the past 12 months. Compare that to the 68% of those consumers with regular internet accessand a bank account who have used online banking in the past 12 months. In simple terms, mobilebanking has exploded into a channel about one-third the size/significance of online banking …and it’s still growing strong.
Checking account balances or recent transactions is the most common mobile banking activityreported by mobile banking users (90%). Transferring money between accounts is the secondmost common use of mobile banking (42% of mobile banking users). 12% of mobile phoneowners have made a mobile payment in the past 12 months.Consumers report using mobile banking up to 60 times per month, however, the median numberof mobile banking transactions is four or five times in a typical month.11% of those not currently using mobile banking think that they will probably use it within thenext 12 months. An additional 17% of those who report that they are unlikely to adopt mobilebanking in the next year say they will “definitely” or “probably” adopt mobile banking at somepoint. Most of those who had not yet adopted mobile banking (58%) hadn’t done so because theyfelt their banking needs were already being met through other channels.
Two major impediments to consumers’ adoption of mobile banking and mobile paymenttechnologies are (1) concerns about security and (2) the possibility of hackers remotely accessingconsumers’ phones. Concerns about the security of the technology were the primary reason givenfor not using mobile payments (42%), and the second most common reason given for not usingmobile banking (48%) altogether.Needed: More Marketing, More Tutorials and How-TosIn another study, ath Power Consulting concluded that banks were not adequately promotingtheir mobile banking offerings.“It is alarming that only 10% of users were prompted to first use their bank’s mobile channel bytheir actual bank,” said Frank Aloi, President and CEO of ath Power Consulting. “This indicatesa clear lack of customer education, yet an obvious opportunity for banks to take initiative topromote their offerings.”“Many people weren’t aware of some of the things that were possible,” Michael McEvoy,managing director at ath Power Consulting, told American Banker. “They didn’t know, forinstance, if their bank offers remote deposit capture.”Customer support is another facet lacking in banks’ mobile services. 40% of all mobile bankersfailed to find links for technical support.“Users feel they’re not getting the kind of mobile banking help and guidance that they’d like tohave,” McEvoy points out. “Some complained about difficulty navigating the app. Some feltthere was a lack of support and guidance to help if you’re not sure what to do next.”McEvoy says easier navigation and chat tools would help banks improve uptake of mobilebanking tools. He also believes banks don’t do a good job of making people feel comfortable thatmobile and online channels are secure.On the upside, the study found that mobile customers are more loyal. Only about 1 in 8 mobilebanking customers say they’re thinking about changing banks some time in the next two yearscompared vs. 1 in 5 among the general customer base. For this reason alone, financial marketerswould be wise to fuel interest in- and adoption of mobile solutions.In the ath Power study, 70% of mobile banking users said that online banking was their primarychannel of choice. 16% said mobile banking, 9% said a branch, 3% said their phone and 2% saidan ATM.Opportunities Lurking Among Gen-Y, Minorities, the Unbanked andUnderbankedThe study commissioned by the Federal Reserve found that underbanked make comparativelyheavy use of both mobile banking and mobile payments, with 29% having used mobile bankingand 17% having used mobile payments in the last year. 10% of the completely unbanked reportusing mobile banking in the past 12 months, and 12% have made a mobile payment. 62% of theunderbanked who use mobile payments have used it to pay bills.Mobile phone penetration is high among younger generations, minorities, and those with lowincomes — groups that are commonly unbanked or underbanked. For instance, 89% of African
Americans and 86% of Hispanics own a mobile phone, and they are far more likely to have smartphones than Caucasians.