• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Clearing the Runway for Mobile Banking Adoption
 

Clearing the Runway for Mobile Banking Adoption

on

  • 1,167 views

Better technologies for mobile devices, proliferation of banking apps and increased consumer appetite for staying connected are converging to propel mobile banking penetration. On the technology ...

Better technologies for mobile devices, proliferation of banking apps and increased consumer appetite for staying connected are converging to propel mobile banking penetration. On the technology device front, recent double-digit growth in smartphone adoption has enabled consumers to expand the activities they can perform via mobile phone connections — including banking online. One-half of smartphone owners have banked online with their mobile phones within the past 30 days vs. only 13 percent of those with conventional mobile phones with Internet access.

Statistics

Views

Total Views
1,167
Views on SlideShare
1,166
Embed Views
1

Actions

Likes
1
Downloads
40
Comments
0

1 Embed 1

http://www.linkedin.com 1

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Clearing the Runway for Mobile Banking Adoption Clearing the Runway for Mobile Banking Adoption Document Transcript

    • Clearing the Runway for Mobile Banking AdoptionConsumer Insight BriefMay 2011Paul McAdam, SVP of Research and Thought Leadership, FISMandy Putnam, Director of Research and Thought Leadership, FISwww.fisglobal.com
    • Clearing the Runway for Mobile Banking AdoptionConvergence Drives Penetration Large Banks Lead the Way with AppsBetter technologies for mobile devices, proliferation Downloading a banking app is the number oneof banking apps and increased consumer appetite predictor of whether someone engages in mobilefor staying connected are converging to propel banking. Seventy-one percent of mobile bankingmobile banking penetration. On the technology users have downloaded a banking app. Beating outdevice front, recent double-digit growth in sports, photography and shopping apps, bankingsmartphone adoption has enabled consumers to apps are among the most popular types of appsexpand the activities they can perform via mobile (Figure 2).phone connections — including banking online.One-half of smartphone owners have banked online Figure 2: Types of Apps Downloaded by Mobilewith their mobile phones within the past 30 days vs. Phone Owners Who Download Appsonly 13 percent of those with conventional mobilephones with Internet access (Figure 1). Games 70%* Social Networking 57% Figure 1: Mobile Banking Penetration by Entertainment 55% Mobile Phone Ownership News & Weather 49% Navigation 44% 50%* Communication 41% Banking 37% Sports 28% Photography 27% Shopping 23% Books & Reference 21% 13% P2P Payment App 20% Personalization 20% Health & Fitness 20% Lifestyle 16% Smartphone Conventional mobile phone with Internet Travel 15% access Business & Finance 14% Education 14%*Read as: 50% of smartphone owners banked onlinewith their mobile phones in the past 30 days *Read as: games are downloaded by 70% of mobile phone owners who download appsDuring this past year, penetration of the Androidoperating system soared past the more business-oriented BlackBerry and, along with its iPhone rival,fueled the proliferation of apps, including bankingapps. The current number of mobile banking apps isestimated at between 1,400 and 1,600 1. 2© 2011 Fidelity National Information Services, Inc. and its subsidiaries.
    • Clearing the Runway for Mobile Banking AdoptionTwo characteristics – 1) generation and 2) the type Figure 3: Mobile Banking App Usage by Generationof financial institution where customers have theirprimary checking account – stand out from othersin defining who uses mobile banking apps. 1) Gen Y members are avid app users in general and account for more than one-half (54 percent) of banking app users. They also account for 43 percent of the smartphone owners though they represent only 26 percent of the survey sample population. Their banking app usage is double the norm (Figure 3). The oldest Gen Y customers are now 31 years old. On the precipice of nest- building, Gen Y members are avid consumers that demand quick access to funds wherever they are and whenever they need them. Access to mobile banking is cost-of-entry in growing the Gen Y customer base. *Read as: 54% of mobile banking app users are members of Gen Y 2) Large banks are leading the way in Figure 4: Mobile Bank App Usage by FI Type providing apps to their customers. Customers of the top-10 banks account for 58 percent of banking app users (Figure 4). The top banks are doing a better job of providing banking apps to their customers and in making their customers aware of their mobile offer. As a result, the top-10 banks capture more than their fair share of mobile banking users – 52 percent of mobile banking users vs. 37 percent of consumers in the survey. Customers of the top-10 banks also report greater satisfaction with their mobile banking experience and, thus, will be more likely to *Read as: 58% of banking app users are Top 10 Bank customers stick with the institution providing them with mobile banking services. 3© 2011 Fidelity National Information Services, Inc. and its subsidiaries.
    • Clearing the Runway for Mobile Banking AdoptionSatisfaction with mobile banking has risen Appetite for Connectivitysignificantly year-to-year. Customers who use Fuels Adoptionmobile banking apps to access their financialinstitutions report the highest satisfaction level – at The number two predictor of mobile banking88 percent. Satisfaction with alternative types of adoption is frequent usage of the Internet via one’saccess – text messaging and through the Internet mobile phone. Eighty-eight percent of mobile bankingbrowser – also has improved significantly year-to- users describe their mobile phones’ Internetyear (Figure 5). No doubt, better devices and the capabilities and usage as: I have Internet access on myproliferation of apps are positively affecting mobile phone, and I use it frequently. In contrast, onlycustomer satisfaction with financial institution about one-quarter of mobile phone owners in generalconnections via mobile devices. describe their mobile phone usage this way. AnotherFigure 5: Satisfaction with Mobile Banking 29 percent of mobile phone owners have Internet(top-4 box on 11-point scale) access on their phone but either do not use it very often or do not use it at all. The distribution of consumers who describe themselves as using the Internet on their mobile phones frequently skews heavily toward younger generations. One-half (51 percent) of frequent mobile Internet users are members of Gen Y and one-third (34 percent) are members of Gen X (Figure 6). Though Gen Y members are the most voracious consumers of the Internet while on-the- go, both Gen Y and Gen X have large appetites for connectivity. Figure 6: Have and Use Internet on*Read as: in 2011, 88% of mobile banking users Mobile Phone Frequentlyaccessing their FI through an app were satisfied withmobile banking *Read as: 51% of consumers who have Internet access on their mobile phones and use it frequently are members of Gen Y 4© 2011 Fidelity National Information Services, Inc. and its subsidiaries.
    • Clearing the Runway for Mobile Banking AdoptionMobile Banking Users Are More Active Mobile banking users are trading paper for plastic. They make more debit card purchases and debit cardMobile banking users’ financial habits differ cash back transactions than non-users (Figure 8).markedly from non-users. Mobility increases Mobile banking users write fewer paper checks,exposure to places where financial transactions can because they typically pay their bills online. Most arebe conducted. For mobile banking users, mobile paying their bills through their computers (86banking is not a substitute for a point of contact, percent) and mobile phones (42 percent), but smallbut instead, an additional point of contact with percentages are paying bills through tablet computerstheir financial institution. Usage of other channels is (e.g., iPad) (8 percent) and even Internet gamingnot diminished, but rather, is greater among mobile systems (7 percent).banking users. Compared with non-users, theymake significantly more visits to ATMs owned by Figure 8: Average Number of Transactionstheir banks and branch lobbies (Figure 7). in Past 30 DaysFigure 7: Points of Contact in Past 30 Days*Read as: mobile banking users made 4.1 visits totheir banks’ ATMs in the past 30 days, on average *Read as: mobile banking users purchased 15.3 times in the past 30 days, on average 5© 2011 Fidelity National Information Services, Inc. and its subsidiaries.
    • Clearing the Runway for Mobile Banking AdoptionMobile banking users are more likely oriented Mobile Banking Users Are Worth Ittoward accessing online financial services outside ofconventional financial institutions, which should be Indexed against non-users of each respectivecause for concern among traditional banks – generation, mobile banking users show higher assetespecially ones not offering a person-to-person balances. Gen X and Baby Boomer mobile banking(P2P) payment product. Six out of 10 mobile users’ assets are especially high compared withbanking users make P2P payments and nearly one their non-user counterparts. Both Gen X andin five uses an online personal savings service such Boomer mobile banking segments have aboutas SmartyPig. Sixteen percent use an online double the assets of non-users except forpersonal financial management service such as retirement/college savings, which still are aboveMint.com, Geezeo or Yodlee. In total, three- average. Even Gen Y mobile banking users comparequarters of mobile banking users access at least one favorably with non-users in their generation. Mobileof the listed online financial services (Figure 9). banking users’ savings balances are especially robust compared with their non-user counterparts (Figure 10).Figure 9: Online Financial Services Used Figure 10: Mobile Banking Users’ Asset Balance Indices*Read as: 60% of mobile banking users have used P2P *Read as: Gen Y mobile banking users have 28% higher balances in checking on average than non-users in Gen Y 6© 2011 Fidelity National Information Services, Inc. and its subsidiaries.
    • Clearing the Runway for Mobile Banking AdoptionIndices on credit and loan balances paint a somewhat Indices for store-branded credit cards are very highdifferent picture, though mobile banking users for both Gen Y and Gen X relative to major credittypically index above their non-user counterparts for card indices. Retailers seem to be doing a better jobmost types of credit and loan balances (Figure 11). than the major credit card issuers and the financialReflective of their greater resources to acquire things institutions with which they co-brand their cards atduring lifestages when acquisition is most common, capturing younger generations’ loyalty.Gen Y and Gen X mobile banking users have higherbalances than their non-user counterparts in every In contrast to Gen Y and Gen X, mobile bankingcredit and loan category. users who are Baby Boomers have indices above their non-user counterparts only in automobile andFigure 11: Mobile Banking Users’ Credit and Loan educational loan categories. With nearly threeBalance Indices times the amount in their checking accounts, mobile banking Baby Boomers are likely more financially solvent than their non-user counterparts especially regarding short-term or revolving credit. Clear the Runway There is abundant runway ahead for mobile banking usage beyond early adopters. Key tailwinds include continued smartphone and tablet adoption as well as mobile payment options on the horizon. Today’s mobile banking users will become the early adopters of mobile payment. (Consumers’ attitudes about adoption of NFC mobile payments will be detailed in a future report). Smartphone adoption is projected by Nielsen and others to continue its recent pattern of double-digit growth near term. Also, tablet users are projected by Forrester Research to equal the number of current smartphone subscribers within the next two years2. With larger screens, tablets hold a key advantage over smartphones for online banking. The small screen on smartphones is an impediment for one out of five (19 percent) mobile phone owners who have phones that connect to the Internet but do not bank via their mobile phones.*Read as: Gen Y mobile banking users have 22% higher majorcredit card balances on average than non-users in Gen Y 7© 2011 Fidelity National Information Services, Inc. and its subsidiaries.
    • Clearing the Runway for Mobile Banking AdoptionHeadwinds to mobile phone adoption indicate the financial institutions if traditional banks and creditneed to increase: 1) awareness, 2) banking app unions fail to deliver on expectations.penetration and 3) appetites for mobile bankingamong customers. Top-tier banks and alternative financial institutions are doing a better job of providing apps that boost 1) Currently, 44 percent of mobile phone customer satisfaction with mobile banking. Second- owners do not know if their FI offers tier banks have more work to do – especially in the mobile banking. Lack of awareness can be area of customer satisfaction – in order to earn their fair share of the growing market of connected reversed through improved consumers. All financial institutions need to work to communication. increase awareness of their mobile banking offers among current customers and prospects. 2) The number one predictor of mobile banking usage is downloading a banking Figure 12: Reasons for Not Doing Mobile Banking app. Increasing app availability will increase penetration. 3) Preferences for online banking via computers and concerns about security also represent impediments to the diffusion process (Figure 12). One in five (19 percent) non-users report the reason why they don’t do mobile banking is because they just have not bothered to try mobile banking yet. Their indifference could be reversed through communication of a clear value proposition and “sampling incentives.” Those with security concerns (28 percent) will require different messages to assuage their worries.ConclusionOffering mobile banking is the price of entry forattracting the emerging customer who is connectedto the Internet 24/7. This customer is “worth it” andwill seek financial services from non-traditional *Read as: 38% of non-users prefer to bank online with their computers 8© 2011 Fidelity National Information Services, Inc. and its subsidiaries.
    • Clearing the Runway for Mobile Banking AdoptionCitations:1 Interview with Jim Breune, netbanker.com., April 8, 2011.2 Forrester Research eReader Forecast, 2010 to 2015 (U.S.), Jan. 4, 2011.About the ResearchClearing the Runway for Mobile Banking Adoption is part of a series of Consumer Insight Briefs based on primaryresearch conducted by FIS Enterprise Strategy. The research findings herein are based on a 60-question, onlinesurvey completed by about 4,000 U.S. mobile phone owners in February 2011. The survey was fielded by FISEnterprise Strategy to a consumer panel maintained by Survey Sampling International.The definitions of age generations used in our analysis are the standard U.S. Census Bureau definitions: Gen Y,born in 1980 or later; Gen X, born from 1965 – 1979; Baby Boomer, born from 1946 – 1964; Mature, born in1945 or earlier.The study’s primary objective was to determine the impact of mobile devices on behaviors related to financialtransactions, including accessing accounts, paying bills, depositing checks and making purchases.About FISFIS (NYSE: FIS) is the world’s largest global provider dedicated to banking and payments technologies. With along history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100countries. Headquartered in Jacksonville, Fla., FIS employs more than 32,000 people worldwide and holdsleadership positions in payment processing and banking solutions, providing software, services and outsourcingof the technology that drives financial institutions. FIS is ranked 426 on the Fortune 500, is a member ofStandard & Poor’s 500® Index and consistently holds a leading ranking in the annual FinTech 100 list. For moreinformation about FIS, visit www.fisglobal.com.Clearing the Runway for Mobile Banking was authored by Paul McAdam, SVP of Research and ThoughtLeadership at FIS and Mandy Putnam, Director of Research and Thought Leadership at FIS.Please contact the authors if you have questions about the research or how the results apply to your financialinstitution.Paul McAdamPh: 708.449.7743paul.mcadam@fisglobal.comMandy PutnamPh: 614.414.4207mandy.putnam@fisglobal.com 9© 2011 Fidelity National Information Services, Inc. and its subsidiaries.