A study by Javelin Strategy and Research suggests that larger banks, armed with greater resources, have jumped into the mobile banking applications area at a level that small banks and credit unions have not generally been able to match, says Mary Monahan, Javelin Strategy and Research EVP and Research Director, Mobile.
Also, the complexity of mobile banking, with the many devices to support, as well as text messaging, mobile apps and web channels, smart phones, tablets and PCs, make it harder for smaller institutions to respond, says Monahan.
And there are key challenges to be faced. For one thing, younger consumers “are migrating to the larger banks” that do offer the mobile banking features, says Monahan. “As a result, the small bank clientele is older.” If younger customers are the bulk of future customers, you seen the danger.
About 11 percent of users have switched from smaller institutions to larger institutions, the study found. To be sure, about 20 percent of switchers say they moved because of “fees.”
But mobile banking users also tend to be younger, disproportionately in the 18 to 34 age bracket, and also tend to be wealthier, says Monahan. “They are more likely to have incomes over $100,000 a year, for example. And about half of tablet owners already are using mobile banking, suggesting that tablets will become an important new platform.
Of the top 25 banks, 30 percent already have developed tablet apps, the survey suggests. And Monahan notes that tablet apps have to be custom built for tablets, not ported over from existing PC apps.
As you might expect, users check balances, search for ATM locations and shift money between accounts. The coming new app, though, is peer-to-peer money transfer, and about 26 percent of banks already support that function in some way.
In many cases, users take advantage of that feature to do things such as splitting restaurant bills, for example. About 27 percent of survey respondents say they are interested in mobile P2P payments.
About 22 percent of institutions already support remote check deposit as well. But half the survey respondents say they will be adding remote check deposit within a year.
After a pause in 2010, mobile banking adoption surged by 63 percent in 2011, rising to 57 million from 35 million U.S. adults, representing 22 million consumers in one year, according to a new study by Javelin Strategy and Research.
Over the next five years, mobile banking is projected to increase at a steady compound annual growth rate (CAGR) of 10.3 percent as financial institutions roll out new offerings and the pent-up backlog of demand is eased, says Monahan.
Smart phones are the immediate platform to be accommodated. Over the next five years, it is estimated that 68 million consumers will become new smart phone users, rising to 72 percent of the mobile phone user base. Smart phone adoption from 2011 to 2016 is projected to rise at a CAGR of 11.9 percent .
Smart phones currently drive mobile banking: Half of smart phone owners use mobile
banking versus 14 percent of non-smart phone owners, Javelin notes.
Tablets are the next frontier. The number of tablet users in the U.S. is expected to more than double over the coming year from its current base of 16 million (for an increase of 113 percent).
The number of adults using tablets is estimated to increase at a CAGR of 40.3 percent over the next five years.
By 2016, it is projected that 40 percent of mobile consumers, or 87 million people, will have adopted a tablet.
And it is new applications both smart phones and tablets enable that could emerge as important new mobile banking capabilities, Javelin argues.
Video messaging provided by Microsoft Skype, video chat services such as Apple FaceTime and Google Talk allow for easy face-to-face messaging between devices that could provide much of the personal feeling of face-to-face communication.
Fears related to security and uncertainty about value are the main
roadblocks to initial consumer adoption of mobile banking. Also, perception of the value of mobile banking is a factor of age: Younger consumers are more likely to understand its worth, Javelin says.
Mobile P2P, mobile offers, mobile remote deposit, and all features that use the inherent nature of the phone will build the value proposition. And faster mobile networks will help. Lack of speed was the most common reason for dissatisfaction among customers who adopted the technology.
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