The Future of Mobile Banking: Market Shift or Market Growth?
?? Jim Marous
Top 5 Retail Banking Influencer, Global Speaker, Podcast Host and Co-Publisher at The Financial Brand
Despite a slow, steady growth of mobile banking and mobile payments users, there is still a large percentage of consumers who do not see the benefits of accepting digital banking. Can the banking industry encourage non-users to embrace mobile technology?
By Jim Marous, Co-Publisher of The Financial Brand and Publisher of the Digital Banking Report
For the fifth consecutive year, the Federal Reserve has conducted a survey examining trends in the adoption and use of mobile banking, payments, and how mobile financial services impact how consumers engage with their financial institution. According to the Federal Reserve Board report, “Consumers and Mobile Financial Services 2016,” 43% of adults with mobile phones and bank accounts reported using mobile banking – an increase of 4% from last year’s survey and 10% from the 2013 study.
As would be expected, mobile banking use is significantly higher for those consumers with smartphones (53%). Among smartphone owners with a bank account, the increase in users increased only 1% during the past year, the same amount as in the previous 3 years. This almost stagnant growth continues to raise the question as to whether the growth in mobile banking use is caused by the increase in consumers upgrading their mobile devices as opposed to being the result of marketing efforts by banks and credit unions.
Use of mobile payments continues to run at about 50% of the overall mobile banking user base, with 28% of the smartphone users with bank accounts having made a mobile payment in the past 12 months and 24% of all mobile users indicating the same. Despite significant hype of mobile payments by the banking industry, there was no growth in use by the key target of smartphone owners.
Of particular concern to banks and credit unions should be that there is still a significant proportion of consumers who have no desire to use mobile banking or make mobile payments in the near future. The reasons for non-use vary from being satisfied with current ways of conducting banking to not feeling that mobile channels are secure. It remains to be seen whether continued improvement in functionality and security features will result in new mobile banking users or simply a shift in market share of current users from one organization to another.
Mobile Banking Demographics
Reflecting the rates of mobile and smartphone usage among different demographic segments, younger consumers are more likely to use mobile banking than older consumers. For those with a mobile phone and a bank account, 67% of those in the 18 – 29 age range used mobile banking in 2015 compared to only 34% for those in the 45 – 59 age group. Usage has generally increased from year to year for all age groups, and is greater for smartphone owners. The rate of growth has been higher for the older segments, who were slower to adopt mobile banking initially.
Also consistent with the data from previous surveys, minorities continue to be more likely to use mobile banking than non-Hispanic whites. In particular,
Hispanic mobile phone users with bank accounts showed a higher rate of use of mobile banking (56%) compared to mobile phone users with bank accounts overall (43%). As with most segment delineation, the difference in use by minorities correlates with mobile and smartphone usage variances ...
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Banking Professional - Lecturer in Retail Banking
7 年There's so much complexity to this debate and the situation is both dynamic and security sensitive, so it's probably impossible to be definitive on the matter. For example as a consumer; security, convenience & speed are important to me (so digital fraud bothers me as much as old-fashioned card fraud and skimming). Using my card is easier and faster than mobile at the store and sometimes I'm happier leaving my phone in the hotel safe rather than going out with it. My AppleMac is a luxury big screen price of furniture but I wouldn't want to prepare presentations on my mobile versus using my MacBook Air ... funny thing choice heh.????
Banking Professional - Lecturer in Retail Banking
7 年I find Jim's Financial Brand content is always thought provoking ... and note from his previous commentary that he has highlighted there's a difference between customer preferences for payments (mobile being predominant) and other banking needs (loans, mortgages, investment advice et al) where the human touch is the predominant preference across most demographics. The current debate is polarised on the wrong issues ... time we saw more professionalism in retail banking, which requires investment in staff development and of course
Managing Director | Driving Financial Technology and Innovation | Strategic Ideation
7 年Great content, thanks for posting. Investment in a smooth, frictionless omnichannel experience is key to adapt to the ways that consumers wish to do business. At least at my company, our goal is to be there for our clients when they want and where they want. An increasing portion of our demo wants a strong mobile self-service experience so it's our responsibility to build and promote it. Channel/transaction shift out of traditional brick and mortal centers is very real so we must adapt.
Why should we be in a rush to "move" customers to mobile?... Customers should be encouraged to use the channels they want, when they want. Mobile isn't secure, so those concerned about security are wise. If they don't see enough utility to warrant the risk, efforts to persuade them will be unsuccessful. And don't use transactional unit cost to try to justify mobile shift.... only total cost matters. Adding channel use in mobile, without significant cost reductions in other channels only increases total cost. How many branches are you going to close and how many customer service staff (branches and call centers) are you going to fire?