With Mobile Banking, the Future Gets Closer

It’s always good to see a comprehensive study, especially one based on a survey, that offers more than just a snapshot in time. “Consumers and Mobile Financial Services,” the brand new report from no less an authority than the Federal Reserve Board, is perfect in that regard. It comes with a mountain of data on where we are in this perfect triangulation of money, technology and human behavior.

For the record, there’s clearly considerable movement in this market—consumers are using mobile devices to carry out personal banking functions more than ever before, and every specific function is clearly trending upward. However, there are also signs that adoption is not as fast, nor as widespread, as other mobile-enabled capabilities.

First, the good news, and there’s plenty of it. Fully 87% of the U.S. population now has a mobile phone, and nearly half of those qualify as ‘smartphones’—that is, offering Internet access. In turn, nearly a quarter of those consumers, or 21%, engaged in mobile banking activities during the past 12 months, and another 11% say it’s likely they’ll do the same during the next 12.

Drilling down one level deeper, the most frequent use of mobile banking capabilities is to check account balances or recent transactions—that’s the word from 90% of mobile banking users. The second most common activity is transferring money between accounts, attributed to 42%.

However, the numbers fall precipitously when it comes to more complex activities: 21% of mobile payment users use the ability to transfer money directly to another person’s bank, credit card or PayPal account, and only 12% made a mobile payment in the past year.

Security is clearly a major concern: 48% cite this as the primary obstacle to mobile banking, and 42% say it’s why they don’t make mobile payments. However, what the report also seems to indicate is that rather than using mobile devices and capabilities for a new kind of banking, they’re all basically doing the same thing.

In fact, more than a third of mobile phone users who don’t use mobile payments either don’t see any benefit to be derived from using mobile payments, or actually find it easier to pay with another method. Fully 58% specifically note that they haven’t yet adopted mobile banking because their needs are being met without it. That can’t be good news for the software developers working to create innovative applications for their banks’ customers.

Age is clearly a factor. Consumers between 18 and 29 account for only 22% of mobile phone users but exactly double that for mobile banking users. By contrast, only 6% of those 60 and over practice mobile banking (while they’re 24% of the mobile phone universe. In other words, there’s clearly an upward trend here. But is that enough?

The report has been hailed as a clear sign that mobile banking has a great future, and it clearly does. But it’s also possible to have a slightly contrarian view.

The practice of e-commerce surged only after consumer behavior changed with regard to shopping. Overcoming the same security concerns they have now (if anything, the fears were greater then, given that it was still a novelty), shoppers bought more, and bought differently, than they did otherwise. Mobile banking needs to make a similar leap.

The reality is that consumers have an ambivalent relationship with money; they don’t look at the bank the way they do the grocery store. The general availability of more applications and online services is vital, but it may not be enough. As professionals, we have some work to do in persuading our customers that mobile banking is not just safe, but that it also enables them to do many things they can’t do otherwise. Only then will the future get here faster.