We hear so much these days about the dominance of mobile banking these days that the occasional nugget of news pointing the other way can serve as a reality check. Try this: Fewer than one in four consumers say they would use their smartphone like a credit card to make payments, even if they had the relevant app. That’s the word from our cousins across the pond in a new survey of U.K. consumers conducted by YouGov on behalf of outsourcing firm Firstsource Solutions.
It’s not as if there’s a technological deficiency at play here—more than a third of the respondents have already downloaded mobile banking apps, 70% of them like really like what they have and almost as many use those apps at least once a week, usually to check balances or make a transfer.
So why is there such strong resistance at the other end? Is there a whole population of Luddites that we need to persuade? The survey does offer some answers. Fully 80% of the naysayers cite security as the primary obstacle—basically, that their personal financial information will be compromised. (On an unrelated note, one in five say they’re worried about their battery running out.)
There’s no question that data security is a huge concern. The non-stop headlines over government spying, periodic stories about high-profile breaches at big-name banks and retailers and the constant sales pitches for new security products all play a part in undermining consumer confidence. Without that confidence, it’s very difficult to induce large-scale behavioral changes.
In a sense, it’s like bumping up against the ceiling. The early adopters will take quick advantage of emerging capabilities generated by a flood of new technologies, and a large number will join in gradually. But then there’s a limit—beyond that, it takes dedicated, broad-based and ongoing campaigns to lure the unconvinced. In some areas of technology-enabled banking, we may be there now.
In this context, it might instructive to look at markets where technologies and economies have grown together, in essence allowing mobile capabilities to leapfrog traditional methods since they weren’t there in the first place.
For example, it’s now being reported technology firms expect a boom in anti-money laundering software within the next year. That’s because, following a spate of media reports, the Reserve Bank of India recently fined 22 banks for flouting regulations and issued cautionary letters to seven more. This is a market that began an experiencing massive economic growth at around the same time as easy-to-use mobile and other forms of IT were becoming mainstream. Many consumers opened their first bank accounts through new technologies. Now we’re in the second phase—more mature practices with greater security and regulations and less potential for fraud.
But here, too, there’s a big picture to consider.
Over the last couple of decades, for good or bad, technology has been at the core of most changes in the banking industry. As industry analysts have observed, the current migration to cloud computing enables better cost control, eases scalability and and lowers operational risk. But if it’s good for the institution, does that automatically mean it’s good for the individual?
The industry faces enormous changes in the months and years ahead. As Bill Michael, EMA head of financial services at KPMG, said to attendees at a conference recently, “There is a new trajectory and it is one where universal banking doesn’t exist as it does today, where retail and investment banking may be split and where the interests of countries, and their banks, come first.”
A lack of sufficient confidence in mobile banking security is just one sign of potential problems. In this environment, technology needs to serve as the bridge between the largest conglomerates and the lone consumer. We need to get it right.