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The Mobile Banking Imperative

Consumers are increasingly using mobile devices as banking tools — for everything from alerts and payments to budgeting and shopping. Indeed, mobile banking is no longer a value-added point of differentiation for banks and credit unions. It is fast becoming a basic consumer expectation.

A report released by the U.S. Federal Reserve examines the role of mobile technologies in financial products, services and decisions. The report, “Consumers & Mobile Financial Services,” takes a broad look at the mobile banking landscape. The results are based on an online survey of 2,290 participants, fielded in December 2011 and January 2012.

This information should be highly useful to financial marketers looking to target mobile banking offers at the right people with the right message.

Mobile Has Gone Mainstream

87% of the U.S. population now has a mobile phone (by comparison, 49% are on Facebook). 44% of mobile phones are smartphones (internet-enabled). 84% of smartphone users access the internet on their phone in the past week.

The ubiquity of mobile access is changing the way consumers access financial services. According to the report, 21% of mobile phone owners have used mobile banking in the past 12 months. Another 11% say they are likely to start using it sometime in the next year. An additional 17% of those who report that they are unlikely to use mobile banking in the next 12 months report that they will “definitely” or “probably” adopt mobile banking at some point.

Adding all these respondents together would imply peak adoption of 42% of all mobile phone owners. As smartphone users are more likely to adopt mobile banking than non-smartphone users, increasing smartphone adoption should further fuel mobile banking adoption.

Reality Check: Mobile is the future for transactional banking.

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In the report, the Federal Reserve defines “mobile banking” as using a mobile phone to access a bank account, credit card account, or other similar financial account. “Mobile banking” can be done either by accessing a bank’s web page through the web browser on a mobile phone, via text messaging, or by using an application downloaded to a mobile phone.

Consumers report using mobile banking up to 60 times per month; however, the median number of mobile banking transactions is four or five times in a typical month.

Of the consumers who use mobile banking, 62% report being “very satisfied” with their experiences, and another 32% report being “somewhat satisfied.”

The most mobile banking activity is checking account balances, which 9 out of 10 users have done. Transferring money between accounts is the second most common use of mobile banking (42% of mobile banking users). 12% of mobile users have made some sort of mobile payment in the past 12 months, most often a bill.

Many mobile banking users appear to be making use of their banks’ mobile applications, as 48% have installed such an application on their phones.

What’s Slowing Down Adoption Rates?

Perceptions of limited usefulness and concerns about security are holding back the adoption of mobile financial services. Concerns about the security of the technology were the primary reason given for not using mobile payments (42%) and the second most common reason given for not using mobile banking (48%). Three in five of those not using mobile banking simply felt their banking needs were already being addressed, and thus felt little motivation to add the channel.

Consumers who express concerns about the security of mobile banking are concerned with hackers gaining access to their phone remotely (54%), losing their phone or having it stolen (19%), and experiencing data interception by a third party] (18%).

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The Demographics of Mobile Bankers

Individuals between the ages of 18 and 29 account for approximately 44% of mobile banking users, relative to 22% of mobile phone users. Conversely, individuals age 60 and over account for only 6% of all mobile banking users, while at the same time they represent 24% of all mobile phone users.

Used mobile banking in
the last 12 months (by age)
Yes No Total
18 – 29 43.5% 16.8% 22.4%
30 – 44 35.7% 24.7% 27.0%
45 – 59 14.7% 30.2% 26.9%
60+ 6.1% 28.4% 23.7%
Number of respondents 372 1,626 1,998

Non-Hispanic black and Hispanic users show a disproportionately high rate of adoption of mobile banking, at 16% and 17% of all mobile banking users relative to 11% and 13% of mobile phone users respectively.

73% of all mobile banking users have at least some college education, but this education group represents only 60% of all mobile phone users.

The Underbanked = Heavy Mobile Bankers

As other studies have shown, the underbanked make significant use of mobile financial services. The underbanked represent comparatively heavy use of both mobile banking and mobile payments, with 29% having used mobile banking and 17% having used mobile payments in the past 12 months.

62% of the underbanked who use mobile payments have used it to pay bills. 10% of the completely unbanked report using mobile banking in the past 12 months, and 12% have made a mobile payment.

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CUNA | Youth Week 2014

Comments

  1. Ian Slimon says:

    For those not using mobile over security concerns, it would be interesting to know how many are using online banking (from a home-based computer) or phone banking – from their mobile, and choosing not to download sensitive information to a handheld device. Accessing balances, transferring money (even receiving a text) could all be handled via a phone, but not necessarily be regarded as “mobile banking”.

  2. Mobile banking activities will continue to rise as more and more people are beginning to buy smart phones. I would not be surprised to see the PC eventually become obsolete.

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