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Mobile Banking Explodes, Fast Becoming a Basic Expectation

Nearly 30 million Americans — or 1 in 10 — accessed financial services accounts (bank, credit card, or brokerage) via their mobile device in Q4 2010, an increase of 54% in 12 months, an increase of more than 10 million.

According to comScore’s quarterly Mobile Financial Advisor report, the number of people accessing their financial accounts specifically through a mobile app exploded, more than doubling from 4.9 million users to 10.8 million since Q4 2009.

comScore Size of Mobile Banking Audience

Only 26% of those using the mobile channel say it is their preferred method of accessing financial accounts, according to comSocre’s study. Half of all those using mobile banking tools prefer using personal computer. 10% still opt for the branch as their primary touchpoint.

“The ubiquitous nature of mobile devices affords financial brands an important channel to reach and engage customers, whether it’s at home, work or on-the-go,” said Sarah Lenart, VP/comScore. “in this competitive market, marketers will need to focus on continually improving the mobile customer experience and adjusting to the changing landscape.”

ComScore also looked at what may be preventing consumers from accessing financial accounts via mobile devices. They found that some people simply prefer managing their finances on desktop/laptop computers while others have security concerns.

comScore Reasons Why People Don't Use Mobile Banking

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The rise of the mobile channel

A study by Javelin Strategy & Research shows that mobile web usage skyrocketed from 17% in 2009 to 34% in 2010, as more consumers equipped themselves with better mobile phones, mobile browsers and data plans. 77% of all smart phone owners are currently using their phones to access the mobile web. 37% of mobile bankers clicked through a mobile advertisement, compared to 9% of all consumers.

Javelin’s “Mobile Marketing and Advertising” report also identified the preferred mobile activities of consumers who accept mobile marketing, finding that personal financial management activities rank high among all uses.

“Financial institutions need to be where their customers are, and actively engage their customers on multiple levels,” said Mary Monahan, Managing Partner and Research Director of Javelin Strategy & Research. “SMS text is currently the most common medium for marketing, so FIs will want to consider how to utilize text messages in their mobile marketing and advertising campaigns.

Javelin also found that mobile banking is a requirement for Gen Y consumers. About 28% of Gen Y consumers have used mobile banking in the past 90 days, compared with 18% of all consumers. Gen Y consumers switch banks for mobile banking, use it frequently, and value it. Javelin’s findings have critical implications for financial institutions and their marketing strategies as they race to meet Gen Y’s needs for real-time and secure data, mobile communication preferences and downloadable apps.

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Analysis & Takeaways

Consumers are increasingly wiring their lives around mobile devices. To reach Gen Y, mobile banking is essentially a must-have. In the very near future, basic mobile banking tools will be ubiquitous, and people of every generation will expect them. Financial institutions will then compete to see who can deliver the most bells and whistles in their mobile banking systems. It won’t be a question of “if” you have mobile banking. Consumers will gravitate to those financial institutions with the coolest, most sophisticated and robust platform available.

Financial institutions offering mobile solutions today already have a leg up on their competitors. Those without mobile banking yet need to start their plan today. Is their core data system capable of accommodating mobile tools? How will marketing drive adoption rates?

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Comments

  1. Most newer mobile browsers can handle a FIs regular online access system. For smaller FIs there is no need to get hung up on customized/expensive apps.

  2. Touching on Fred’s comment above, he is right that mobile browsers can display the FIs regular marketing and online banking sites; however, the quality of the user experience is an entirely different matter.

    While I also agree with Fred that an FI need not always invest huge sums into a native app, I will suggest that banks/CUs would be wise to invest in at least mobile optimized versions of their marketing and banking websites.

    A website optimized for the unique display characteristics, input devices and bandwidth considerations of a mobile device will deliver a better user experience than a website designed for traditional browsers. Generally, better user experience often results in higher adoption rates and lower attrition rates for online services.

    While you can pound in a nail with a screwdriver, a hammer will do a much better job. Drawing on this analogy, I’d propose that mobile optimized websites are the hammer while native apps, in the right situations, are pneumatic nail guns.

    I’m currently wrapping up a white paper to serve as a primer for banking executives to explain the basics of mobile apps versus mobile optimized websites, as well as the pros & cons of each. Visit http://primer.inetsolution.com to request a free copy.

    Jason

    P.S. To put the cost into perspective, the investment to create a mobile optimized website typically costs our clients less than the money they spend on their board room furniture.

  3. More and more people are using a mobile device to connect to the web. Financial institutions need to keep up with this trend to remain relevant. It’s comparable to when banks starting opening up ATM’s. Those that didn’t have them, or didn’t have many, were left behind.

  4. Mobile companies and Financial Institutions although are considering a move technology wise ( using NFC) to get more and more people to use mobile banking, there are still a few considerations, both Technology and Payments Infrastructure wise to be looked upon.

    To NFC or Not to NFC?
    http://ezinearticles.com/?To-NFC-or-Not-to-NFC?&id=6171300

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