Tablets and Banking: A Potent Mix

When we think about tablet computing—and we should be doing that a lot—here’s just one figure we need to absorb and fully internalize: 138 million.

No, that’s not how many tablet users there are now, or might be in the near future. It’s how many individuals will be using their tablet to do their banking by 2018.

Think about it: Just four short years ago, tablets basically didn’t exist (apologies to those with longer memories of the Newton and other attempts to create a full-on mobile computing market). Then the Apple iPad arrived, and the world changed.

Now, according to “Tablet Banking Forecast 2014 – 2018: Design and Deployment Strategies for Mass Adoption,” a new report from Javelin Research, tablets are well on their way to replacing laptops in the standard consumer environment. Adoption has officially hit the 50% mark, a stunning achievement by any measure.

Sure, there are inevitably signs of a slowdown. It was just reported that iPad sales fell by 9% in the last quarter, and the company’s revenue has also been hurt (in relative terms, of course—Apple still has big profits) by the fact that people are buying cheaper models. But on the flip side, Apple is also partnering with previous arch-nemesis IBM to sell industry-specific iPads, starting as soon as this fall. That could have a huge impact on tablet adoption and use.

But whatever happens in the big picture, the most relevant statistic may be that the number of people using tablets to do their banking has increased tenfold in just the past three years. That’s likely a growth spurt we’ve never before experienced in our industry, and we need to take note. It means undertaking a full evaluation of what we’re doing now to cater to this market, and what we should be doing instead.

Here’s the reality: We all acknowledge that there’s been a steady march toward mobile banking—the numbers are undeniable. Bank of America had 13.2 million mobile customers last year; now it’s up to 15.5 million, a 17% rise. Wells Fargo just announced that it’s got 13.1 million active mobile customers, a 22% spike over last year. It’s 23% in Chase’s case, and 21% for Citigroup.

So is that a march or rather a sprint? And if it is a sprint, are we keeping up?

Let’s also acknowledge that this is all a good thing. The practice not only helps save banks money but also offers enormous convenience to those who have accounts but might live in remote areas, and a new level of access to those who are unbanked. By any definition, this is a source of incredible new revenue and profit streams.

But change doesn’t come easy. When the Internet itself first arrived, the sheer level of opportunity caused consternation in many industries, and financial services was no exception—for online banking to succeed, many standard operating procedures had to be radically transformed, which inevitably created problems. Then the move toward company-specific applications, especially as they applied to the mobile universe, brought another transition. That was accompanied by its own high level of discomfort, thanks to the diversity of form factors and operating systems involved.

So that brings us back to the tablet. Yes, it’s one more mobile device, a fundamental component of the larger mobile universe. But is there more to it?

After all, the laptop was the original mobile device—we carried it around in a way that the desktop PC never allowed, and that changed our basic relationship with the computer. It took a while for many companies and their application developers to grasp that fact. As tablet adoption speeds forward at a breakneck pace, replacing laptop usage in the process, should we be developing strategies that are specifically for this form factor, rather than the laptop above and the smartphone below?

It may be a little early to be asking that question. But then again, looking at the numbers, maybe not.

What We’re Reading: Underbanked, Mobile Game App, DDoS

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

  • They May Be Underbanked, But They’re Highly Networked

American Banker

A remarkable 68 million Americans today lack full access to traditional financial services, such as a bank account or credit card, or choose not to use them. Interestingly, though, these financially underserved individuals are far from disconnected. They are actually more active users of mobile phones and social media than the population at large. The vast majority of the so-called “underbanked” are highly networked, using their mobile devices to connect via social media, purchase goods online and, increasingly, conduct financial transactions.

Read more

  • BB&T Teaches Leadership Creed with Mobile Game App

Bank Systems and Technology

The Winston-Salem, N.C., bank released a mobile app this month called Legacy: A BB&T Leadership Challenge, in which users play the role of a medieval hero enlisted by King Alpheus to help the land of Failburg succeed. (The king is named after BB&T founder Alpheus Branch.) Players gain influence – and proceed to the next level of the game – depending on how they interact with the characters.

Read more

  • Biometrics Has Potential in Mobile Banking Apps

Barlow Research

Apple finally delivered on its much hyped biometric capabilities in September when it released its new iPhone 5S with a built in fingerprint identity sensor, Touch ID. It had been rumored to be in the works for several years and the public was finally able to view how the finger printing technology works. Touch ID has some great benefits; it is a user-friendly way to let users get to their information quicker and it also allows a fingerprint to authorize a purchase from the iTunes or App store. These two capabilities have potential for the future of mobile banking apps.

Read more 

  • DDoS Growing; CUs Unprepared

Credit Union Times

The DDoS threat keeps growing. Third-party experts and credit union executives—primarily speaking anonymously on the subject—said most credit unions have done nothing to protect themselves against the threat, which has been increasingly linked with theft of funds at financial institutions. “They are remarkably naive,” said an expert, who asked to remain anonymous, of credit unions. Added a senior engineer at a Northeast credit union with more than $500 million in assets, who also requested anonymity, “We haven’t had any outages and we haven’t installed any new defenses.”

Read more

  • Top 100 Banks & Credit Unions Adding The Most New Facebook Likes

Financial Brand

The top 100 banks and credit unions on Facebook ranked by their new ‘Likes’ in the last 90 days through September 2013.

Read more

  • Executives see no letup in mobile trend

Miami Herald

There are 7 billion activated cellphones worldwide, about the same as the population. About 6 billion hours of video are accessed on YouTube every month. Of that, 70 percent is from outside the United States; 25 percent is accessed on mobile devices. On Friday morning, panelists at WorldCity’s Tech Connections event — executives Marcelo Caputo of Telefonica, Jose Antonio Rios of Celistics, Mark Hans-Joachim Crofton of SAP, Juanjo Duran of YouTube and Richard Wadsworth of MasterCard Worldwide — shared these numbers as well as a glimpse into the future. The consensus: There will be no letup in the speed of mobility or big data, particularly in Latin America.

Read more

What We’re Reading: Finovate, Mobile Payments, Underbanked

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.


  •  Use of Overdrafts Hits 14-Year Low: Report 

American Banker 

U.S. consumers are overdrawing their checking accounts less frequently than at any time in the last 14 years, according to new survey data. So far this year, the average consumer at a bank or credit union is overdrawing their checking account about seven times annually. That’s down from a peak of nearly 10 overdrafts per year in 2008 and 2009, the economic research firm Moebs Services found. Banks and credit unions have responded to the decline by raising their overdraft fees, says Michael Moebs, the firm’s chief executive officer. The average overdraft fee hit $30 in the second quarter of this year, up from $29 in the previous three months.

Read more

  • 5 Ways Mobile Banking Is Evolving: Finovate

Bank Systems & Technology 

Several new technologies demoed at Finovate this week showcased new ways that mobile is solving pain points for banks and their customers. Mitek won the first place prize at Finovate this year for its mobile photo account opening solution that it unveiled at the show. Mitek wasn’t the only company making use of the smartphone camera in a new solution at the event. Capital Access Network, a small business finance specialist, showcased their Mobile Funder, a tablet-based tool for financial sales/ISO representatives selling small business loans.

Read more

  • McDonald’s Testing Mobile Payment App as U.S. Sales Stumble


McDonald’s Corp. is currently testing a mobile payment application in Salt Lake City and in Austin, Texas, Lisa McComb, a spokeswoman, said today in an e-mail. McDonald’s, which today reported U.S. same-store sales that trailed estimates for August, is looking for ways to make it easier for diners to load up on Big Macs, McWraps and smoothies. It’s not alone in seeking to ignite growth at a time when many Americans are eating out less. Burger King Worldwide Inc. offers a delivery service with a $10 minimum order in some U.S. cities, while Chipotle Mexican Grill Inc. has a mobile ordering app.

Read more 

  • Digital Case Studies – What’s Next: The Search for Disruptive Innovation

Celent Banking Blog

Over the past five years digital technology has evolved significantly. Many financial services firms have moved past the exploration stage and are now more committed to the mobile channel. There is increased demand for expanded capabilities and functions and users expect “always on” access through an app on their smart devices.  Celent has seen a rise in the focus on mobility solutions across the enterprise and this trend is expected to be a sustained area of investment for the short to medium term. In short, there is a broad consensus that digital channels and mobile platforms represent a critical path forward.

Read more 

  • A Mobile Wallet for the Underbanked

Fast Company

Banks and private startups are all pushing digital wallets–smartphone software packages that allow users to connect their bank accounts or credit cards to their phone, and then make payments through NFC, mobile money transfers, or other technology. Wipit, which offers mobile banking services through Boost Mobile, just received a new round of Series A funding from VCs Core Innovation, who join current investors H&R Block and Euronet Worldwide. The amount of funding was not disclosed, but Core managing partner Arjan Schutte will join Wipit’s board.

Read more 

  • Study: Smartphones, tablets drive close to half of all online banking

 Fierce Mobile Content

Forty-three percent of all online banking activity in the U.S. now occurs on smartphones and tablets, according to the annual xAd/Telmetrics Mobile Path to Purchase Study. Millennials are driving the trend: Forty-three percent of mobile banking users are under the age of 35, and one-third indicated that smartphones are the most critical device for their personal banking needs, the study reveals. In addition, 62 percent of younger bankers have completed a purchase on a mobile device and lean heavily on those devices in all phases from initial research through conversion.

Read more

Fast Facts: What You Might Not Know About Prepaid Cards

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more. This iteration focuses on the ins-and-outs of prepaid cards: a flexible financial alternative for underbanked individuals.

A flexible financial alternative for underbanked individuals, prepaid cards are among the fastest growing payment products in the United States, proving to save money both for users and the American taxpayer.

FACT: Prepaid cards provide an effective alternative for millions of consumers who don’t have access to a checking account and, increasingly, a convenient additional financial tool for many consumers who have checking accounts. Almost $1 trillion in payments from employers and the government are made to 80 million adults in the U.S. who are financially underserved. For many, replacing paper checks with direct deposits is not an option.

FACT: Prepaid cards allow the 11 million households in the U.S. without bank accounts to be part of the mainstream American economy, make electronic payments, and receive electronic fund transfers.

FACT: A 2012 study finds that 73% of prepaid card holders are highly satisfied with the product, 61% prefer prepaid cards to credit cards, and only 37% prefer to use cash.

FACT: Prepaid cards are inexpensive to use. According to a 2011 Bretton Woods study, prepaid cards only cost users an average of $185 per year, while it costs on average $273 per year to use a basic checking account and $256 per year to use a check casher.

FACT: A 2012 Pew study found that prepaid cards are less expensive than checking accounts for financially inexperienced consumers.

FACT: Prepaid cards are widely accepted. Cards from large brands, such as Visa and MasterCard, can be used everywhere debit cards are accepted and at millions of ATMs worldwide.

FACT: Prepaid cards are safe by allowing consumers to make purchases and pay bills without carrying large amounts of cash. In addition, prepaid cards frequently provide zero liability to the cardholder if it is lost or stolen.

FACT: Nearly all prepaid cards in the U.S. are issued by banks, as a 2012 survey found 47 percent of banking customers are more likely to use prepaid cards if offered by their financial institution.

FACT: Prepaid are useful for all kinds of people in a variety of contexts. For example, they facilitate inclusion and build financial literacy skills by helping families limit spending and stay on a budget.

FACT: Prepaid cards are used by people of all income levels. Of those who are likely to use prepaid cards, 26.4% earn less than $35,000 per year, 36.7% earn between $35,000 and $65,000 per year, 22.1% earn between $66,000 and $100,000 per year, and 14.8% earn over $100,000 per year.

FACT:  Governments are turning to electronic payments because they are efficient and cost effective. Prepaid cards allow those without bank accounts, including 4 million Social Security recipients, to still receive their payments in an easy, electronic way.

FACT: Prepaid cards save taxpayer dollars. While it costs the federal government $1.03 to issue each paycheck, it only costs 10.5 cents to issue an electronic payment. The U.S. Treasury estimates it will save more than $1 billion over 10 years by switching from a check-based system to electronic payments with a prepaid card option.

FACT: Prepaid cards save paper. The U.S. Treasury estimates it will save 12 million pounds of paper over 5 years from making Social Security payments electronically.

FACT: A spring 2012 study finds that 95% of recipients are satisfied with the Treasury’s electronic benefit payment system and 93% would recommend it to friends and family.

You can view all previous Fast Facts at Copyright © 2013 The Financial Services Roundtable, All rights reserved.

New Technologies Are Coming for Unbanked, Underbanked

*This post originally appeared on MyBankTracker

In the past year, countless prepaid cards have flooded the nation to target the large portion of the American population that is either unbanked or underbanked. Acknowledging that the market for these alternative financial products is rapidly growing, more tech companies are catering to this group of consumers.

According to a recent survey by the FDIC, in 2011, 8.2 percent of U.S. households do not have bank accounts, up from 7.6 percent in 2009. And 20.1 percent of U.S. households have bank accounts, but rely on alternative channels for financial services (e.g., check-cashing, payday loans and money orders), up from 18.2 percent in 2009.

Even traditional banks have jumped on the bandwagon to compete against non-bank prepaid-card companies and get a piece of the prepaid-card market.

Last fall, Regions Bank started rolling out asuite of products and services that included a prepaid card and check-cashing and Western Union services. In July, Chase, the largest bank in the country, launched the Liquid prepaid card that does almost everything that a regular Chase checking account can do.

“As banks have steadily inflated the cost of banking, more and more depositors are seeking substitutes for bank accounts with escalating costs, high minimum balances and surprise fees,” said Jim Wells, president of Wellspring Consulting, a firm that specializes in solutions for the unbanked and underbanked.

But, with the proliferation of financial technology, the focus is shifting to serving the unbanked and underbanked through mobile devices.

Last week, at a Finovate conference, two companies demonstrated their versions of a mobile wallet for the unbanked or underbanked consumer.

The CAT (Cash and Transact) mobile wallet, by Emida, is an app that is based solely on the consumer’s smartphone. Through participating retailers, users can refill their CAT accounts with cash (for a convenience fee of $1.50). Then, they can use the funds to pay for purchases through the app.

The Flip mobile wallet, from PreCash, is an app that allows users to perform instant mobile check deposit and make expedited bill payments — two services that were never before available on a prepaid card account.

“Although these mobile-enabled, prepaid card-based accounts are attractive to far more than just low-income consumers, one key to success will be in making the services available via even the simplest of mobile devices,” said Wells.

In countries where financial institutions are hard to come by, mobile devices are the preferred channel for financial transactions. For example, more than 17 million mobile subscribers in Kenya use a mobile-phone-based money transfer service called M-Pesa, which enables users to deposit and withdraw money, pay bills, buy phone minutes and send money to bank accounts or other users.

In the U.S., the decreasing cost of smartphones may make it seem like everyone has a smartphone — but non-smartphones are still the most common mobile devices among the low-income population.

According to the Federal Reserve, 64 percent of the unbanked have access to a mobile phone (18 percent have a smartphone) while 91 percent of the underbanked have access to a mobile phone (57 percent have a smartphone).

Regardless of the types of mobile devices, the demand for alternative financial products and services is there.

And, history tells us that unbanked and underbanked consumers could be the users of the next wave of financial innovation.

In last year’s fall Finovate conference, card-linked offers made regular appearances on stage. Since then, card-linked offers became more available to bank customers. Bank of America, Capital One, American Express and many other financial institutions began providing card-linked deals.

Considering that the conference offers a good idea of what products and services we’ll see in the near future, it wouldn’t be a surprise to find that, by this time next year, there are more prepaid card accounts and other financial services that live on mobile devices.

 What are you offering your customers? Let us know in the comments below!

Infographic: Who are the Underbanked?

There are close to 2.5 billion people in the world who do not have an account at a financial institution; a population that is referred to as the underbanked. To help address this population and understand the financial gap, The World Bank has created the Global Findex, which is described as a financial inclusion database used to measure the use of financial services and identify those with the greatest barriers to access.

The World Bank created an infographic outlining details on who, and why people are underbanked. According to the Global Findex, “3/4 of the world’s poor do not have a bank account, not only because of poverty, but also due to costs, travel distance and paper work involved.” The index also found “gaps in financial inclusion across demographics, with women, the poor, youth, and rural residents at the greatest disadvantage.” See below for the full infographic and breakdown of stats on the underbanked.

Does your FI have measures in place to reach the underbanked population? Do you see this as a concern for financial institutions in the future? Let us know in the comments section to Tweet @Bankingdotcom.

by worldbank. Browse more infographics.

Versatility in the (Mobile) Bank

No one can dispute the upward trend in mobile banking, not just in North America and Europe, but also in Africa — where adoption rates have soared. The success stories are remarkable. Mobile banking’s best feature has proved to be its versatility. It has managed to succeed in a wide-range of places all with differing needs.

In Africa, where branches and ATMs aren’t readily accessible, mobile banking enables people to easily manage their finances. It can take days for customers to reach the nearest branch, time that would usually be spent working. To remedy this loss of productivity, employers formed partnerships with financial institutions (FIs) to help facilitate financial transactions with mobile phones. Now workers only need to visit a nearby mobile money agent, usually an existing store or shop, to receive their paycheck.

FIs win as well, as their customer base is expanded without costly infrastructure investments such as brick-and-mortar locations or additional ATMs. FIs don’t have to spend money training new agents either since agents are reputable, local business owners, who are used to handling money.

In North America and Europe, where branches and ATMs are more abundant, mobile banking serves other needs. Checking one’s balance, online bill-pay and account transfers are more commonly utilized. Mobile check deposit is becoming more popular since it saves a trip to a branch or ATM, and lowers the cost of check processing for the FI. Even if visiting a branch doesn’t mean a multi-day trek, who wants to spend their free time visiting a bank, especially when the same transactions can be accomplished with a mobile phone.

Security remains a concern anywhere in the world when dealing with money. FIs have taken this to task by providing a wide array of security measures such as PIN numbers, SMS authentication codes and individualized security questions – all designed to thwart criminals without sacrificing customer convenience. Even if the unthinkable happens and a handset is stolen or lost, the multi-layered security measures in place at most FIs should provide protection.

The world will never be without hackers, malware and thieves waiting to prey on ambivalent consumers. As long as customers and FIs remain diligent, “stuffing the mattress” will remain a much riskier option than banking, anywhere in the world. Mobile banking provides access for many to FIs, who otherwise would be unbanked. As smart phone and tablet adoption sky-rockets globally, so too will the usage of mobile banking. That is a fact you can bank on.

Mobile Banking and the Underbanked

As we’ve discussed in many recent posts, mobile banking continues to grow in popularity as more consumers utilize smartphone devices. The Intuit Financial Services 4th Annual Financial Management Survey found nearly one quarter (23 percent) of consumers are using a mobile device for banking needs and an additional 17 percent plan to try mobile banking in 2012.

Earlier this month, James Van Dyke of Javelin Strategy and Research delved into an interesting topic: low-income consumers and mobile banking. As Van Dyke writes in his article, the correlation between the low-income demographic and mobile banking shows an interesting connection.

Van Dyke looked a number of expert analyses, including a Javelin study of more than 3,000 U.S. consumers and presented the following data:

U.S. consumers who lack a depository bank or credit union account are:

  • Less likely to have a landline phone connection, by 10 percentage points
  • More likely to have a mobile phone, by six percentage points
  • Slightly more likely to own a smartphone (perhaps surprisingly)

Through his research, Van Dyke also found that the under-banked tend to tap into their finances more frequently and are more likely to be hyperactive users. For retailers this holiday season, this means the under-banked will be checking balances and finances on the spot to determine if they have the means to buy goods, but are also very likely to make purchases directly from their mobile devices.

Van Dyke wrapped up by offering his advice on the correlation between the under-banked and low-income consumers, “Strategist and technologists take heed: while it’s easy to think of new technology as having primary appeal to higher income individuals, mobile defies this truism because it is more likely to be the sole way for lower-income people to manage accounts and purchase goods.”

What are your thoughts on this research? Have you noticed a demographic split at your FI among mobile banking users? Tweet @bankingdotcom or leave us a comment below.