Mobile Banking: Boom Or Fizzle?

As reported in Finextra, TowerGroup expects the number of mobile banking users in the US to increase four-fold in just one year, from 1.1 million in 2007 to 4.6 million users in 2008, and then up to nearly 29 million in 2011. The growth, according to the analyst firm “will be driven by major improvements in technology across wireless networks, handsets and applications.”

Contrast that with Forrester’s view that “today’s consumers still aren’t very interested in mobile banking.” According to Forrester, even among the most likely adopters of mobile banking — Gen Yers who bank online, pay bills online, and use text messaging — only 16% are interested in mobile banking.

I was chatting recently with someone from a third analyst firm who confirmed that his company’s numbers are in line with the Forrester numbers.

My take: Tower’s forecasts are way out of line. And not simply because there’s an apparent lack of interest today. Instead, it’s because technology improvements, in and of themselves, aren’t enough to generate demand.

For Tower’s estimates to come true, banks will need to make significant investments — not just in the technology, but — in marketing the service to drive adoption. I don’t see it happening. There are too many better places for FIs to put their money than in mobile banking technology and marketing.

Last point: I’m anticipating that those who read this will vehemently disagree with me, because of their interest in mobile banking.

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