PayThink | October 20-22, 2014 | Phoenix

Mid-Year Mobile Banking Update

Back in December, Mitek made several predictions about the changing mobile banking landscape. These included predictions about mobile marketing, mobile enrollment, mobile deposit, and mobile banking adoption. Now that we’re halfway through the year, how are the predictions bearing out? Which predictions are coming true and what new influences may impact mobile banking in the future?

In September 2013, 147.9M people in the U.S. owned smartphones according to ComScore, with nearly 50% of smartphone owners using mobile banking. Additional mobile statistics for 2013 included:

  • 25% more U.S. consumers owned smartphones than did in 2012
  • 60% more U.S. consumers owned tablets than did in 2012
  • 48% of smartphone owners were mobile bankers
  • 38% more mobile banking users had deposited a check using their smartphone than in 2012
  • 21 of top 25 U.S. banks offered Mobile Deposit
  • 67% of consumers valued depositing a check with a photo
  • 46% of consumers value enrolled a new bill payee using the phone’s camera

With these trends as a backdrop, Mitek made predictions in December of last year that 2014 would be a big year for the adoption of new mobile imaging solutions at the consumer level and that FIs would increase their investment in marketing to mobile-only consumers. In an exclusive interview, Mike Strange, CTO of Mitek, provides a recap of how these predictions are panning out.

Prediction #1: Financial Institutions Will Start to Market to Mobile-Only Users

Status: Coming true – but FIs need to be doing more in the future.
According a report from Mercator Advisory Group entitled, ‘Mobile and Tablet Banking: Key to Customer Retention,’ banking via a mobile device is fast becoming a preferred way for consumers to conduct their banking activities and manage financial information on the go. However, while we see numerous plans to cater to mobile users operationally, these campaigns often target existing customers (not new or untapped customers) to drive them to the mobile channel.

If firms are listening to the market and analysts, they should be thinking mobile first. Even though analysts are finding online banker and mobile banker behavior is largely the same (checking balances, viewing recent transactions and transferring funds), mobile bankers could – and want to be – doing so much more. Mobile Deposit is just the start for mobile bankers.

Google recently did a study on mobile banking that found that two in five mobile users will turn to a competitor’s site if their bank is not mobile-optimized. And 48 percent of U.S. mobile users report they feel frustrated and annoyed and believe “the company doesn’t care about my business” when a site doesn’t work well on a mobile phone.

We work with many of the companies leading the charge for new mobile opportunities and targeting mobile-only users. In Forrester’s report, ‘Five Trends Shaping The Next Generation Of North American Digital Banking,’ they call out U.S. Bank for their mobile photo bill pay solution, Simple for their intuitive mobile user interface and Intuit for recognizing the desire for mobile tax services, as mobile innovators.

So, while there are definitely in-roads being made to market to mobile customers, we don’t believe that FIs are doing enough to greet mobile-centric customers from the first moment. Banks need to start rolling out services that capture mobile-first moment for consumers. For example: using mobile devices in a branch to encourage additional adoption of mobile banking. These types of activities are far more likely to translate into a migration of channels for consumers.

Prediction #2: Simplified Mobile Enrollment Will Significantly Reduce Account Opening Abandonment Rates

Status: Too early to tell.

The Online Banking Report (just purchased by The Financial Brand) recently did a study on Mobile Account Opening where they predicted that financial institutions would see 2 to 2.5 million checking accounts opened and funded through mobile devices (both smartphones and tablets) in 2014. They also noted that by 2020, that number will grow five- or six-fold to 10 to 12 million.

So, while this data shows a definite increase in mobile account opening volume, there isn’t enough information available to show the impact on drop off rates. We are seeing tremendous interest in mobile enrollment on a tablet outside the branch. Rollout of “non-traditional” (tablet assisted) enrollment campaigns (in-store, at sporting events, airlines, etc.) indicates momentum is building. This also shows that FIs are placing more importance on simplifying the enrollment process for customers. But, there is still a long way to go – just look at the number of paper applications still being filled out in-branch, at the airport, etc.

Prediction #3: Mobile Deposit Will Be The Preferred Way to Load Prepaid Cards and Deposit Checks

Status: Coming true and expanding beyond prepaid cards to create opportunities for non-traditional banking organizations.

In the last six months, multiple tech and telecom companies have been using prepaid cards as their entry point into consumer wallets and the banking industry. Mobile deposit has been the catalyst to make it possible for companies like T-Mobile to offer prepaid debit cards. This is an obvious fit since T-Mobile customers already have the mobile devices needed for mobile banking.

This may have a bigger and more meaningful impact on the industry as a whole than what we originally predicted, since these companies have the advantages of offering bank-like services without the regulatory oversight of traditional FIs.

Prediction #4: By The End of 2014, The Majority of Americans Will Have Access to Mobile Deposit

Status: Holding true

We are only seeing increased adoption of mobile deposit. In our last earnings call, we reported that more than 2,200 financial institutions have signed to deploy mobile deposit and 1,750 are live as of March 30, 2014. That matches with a recent Federal Reserve survey that found that 38 percent of mobile bankers used their phone to deposit a check in the past 12 months, up from 21 percent in 2012.

In addition, we did survey with RemoteDepositCapture.com earlier this year and found that 63 percent of respondents currently offer mobile deposit and 33 percent plan to offer it within the next 12 months.

Just one of our customers, FirstBank started offering Mobile Deposit about a year ago and has already processed about a quarter of a million deposits using the mobile deposit technology. They’re also seeing about 6,500 new users per month.

Prediction #5: Mobile Banking Adoption Will Continue to Increase

Status: Holding true

According to the Federal Reserve’s ‘Consumers and Mobile Financial Services 2014‘ report, 51 percent of smartphone owners have used mobile banking in the past 12 months (up from 48 percent a year earlier), showing that mobile banking adoption continues to grow, and that that a majority of smartphone owners now use mobile banking. The report also notes that 12 percent of those mobile phone users who are not currently using mobile banking think that they will probably use it within the next 12 months.

According to Forrester’s ‘2014 US Mobile Banking Functionality Benchmark,’ the importance of mobile transactional functionality is expected to only increase as users become more comfortable using their smartphones for banking transactions. Forrester calls out Chase and U.S. Bank for offering the most extensive transactional functionality.

They site leading firms as those that offer:

  • A variety of bill pay options
  • Easy ways to pay other people
  • Mobile remote deposit capture
  • Contactless mobile payments to let customers make in-store purchases with their phones

Emerging Trends

FIs Will Start Adopting ‘Smart Limits’ to Regulate Deposits and Asset Availability for Customers

2014 is the first time that we can confidently say that smart limits are becoming a best practice, but there is still room for improvement. Forty percent still have a one-size fits all approach and there is still a lot of variability in the industry. As of today there is still no single standard as it relates to how FIs determine deposit limits, funds availability and risk. In the next six months this will start to see this change.


Mike Strange is an experienced mobile technology leader. Prior to joining Mitek, Mike was CTO of Green Dot, where he led the strategy architecture and implementation of their reusable mobile platform to serve the underbanked. Mike also served as a director at Neudesic, where he led practices and projects, including systems architecture, product development, business intelligence, data warehousing, and CRM implementations. Mike has a degree in Computer Science from MIT. He can also be found on Twitter.


Jim MarousJim Marous is a recognized financial industry strategist and publisher of Retail Banking Strategies for The Financial Brand. Marous publishes the Digital Banking Report and is a consistently highly rated speaker worldwide, presenting on global trends, distribution strategies, customer experience, digital banking, advanced marketing and marketplace disruption. You can follow Jim on Twitter and LinkedIn.

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