Mobile Banking In 2017

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One of the first “rules” I learned as an industry analyst was “Don’t comment on the competition’s research.”

So much for that rule. 

Another analyst firm has come out with its forecast on mobile banking adoption in 2017. According to an article in CU Times: 

“Much quicker than many expected, mobile appears primed to emerge as a dominant banking channel with a predicted 108 million users by 2017. That pencils out to some 46% of all U.S. bank account holders.”

My take: When I see forecasts like this, I typically do some back-of-the-envelope calculations to determine the feasibility of the forecast, and to help me figure out what assumptions were probably used to arrive at the number. 

I find the 108 million number doable. Here’s how I arrived at that conclusion:

Mobile banking adoption is highly driven by age (i.e., generation). Younger consumers, to date, have adopted mobile banking more aggressively, and that’s not likely to change. So, there are three key factors for determining how many mobile bankers there will be in 2017:

1. How many people of each generation will there be?

2. How many people will have a banking account?

3. How many people of each generation that has a banking account will adopt mobile banking?

Drawing on statistics from the US Census, I was able to estimate how many people there will be in the US in 2017, using today’s generational labels (i.e., in five years, the oldest boomers will be 70, but that doesn’t make them seniors — they’re still boomers).

Here’s my back of the envelope calculation:

                      Mobile adoption
         Est. pop       2012 2017   Banked  Total Mobile Bankers
Gen Y    75,000,000      39%  80%     90%    54,000,000
Gen X    40,000,000      28%  60%     90%    21,600,000
Boomer   75,000,000      15%  40%     90%    27,000,000
Senior   35,000,000      8%   20%     90%     6,300,000
        225,000,000                         108,900,000

At an 80/60/40/20% adoption rate across the generations, and assuming that 90% of the population is banked, 108 million mobile bankers by 2017 is pretty feasible. It assumes that the adoption rate for each generation will at least double in the next five years. That’s aggressive, but considering the rate of adoption of smartphones, not unrealistic. 

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