Mobile banking shifts into higher gear
A new study indicates that banking customers are increasingly willing to use their smartphones for certain banking needs.
This post comes from Brian O'Connell at partner siteMainStreet.
A new study from the Federal Reserve says that 20% of bank customers used mobile banking at least once in the past year, and 20% more say they will use it by the end of 2012.
The survey, Consumers and Mobile Financial Services (.pdf file), gauges the growth of mobile banking and concludes it's definitely shifting into higher gear.
The Fed pulled together all the survey numbers, did some calculations and now concludes that at least one in three American banking customers who own a smartphone will engage in mobile banking by 2013.
The good news for banks -- and for bank customers who want to conduct their financial business via mobile phones -- is that the mobile banking industry hasn't even hit the halfway point in terms of "critical mass." The Pew Research Center (.pdf file) says that 35% of U.S. adults owned a smartphone as of May 2011, leaving plenty of room for growth in the market.
But it's the demographic data that really resonates. According to the Fed, Americans between the ages of 18 and 29 account for about 44% of all mobile banking users, while U.S. adults 60 and older account for only 6% of all users.
That in itself isn't a surprise -- younger consumers are usually first in line when using new technologies. But what may be an eye-opener for banks is the fact that the traditionally "under-banked" are trending ahead of the rest of the population in terms of mobile-banking usage. The Fed report says that 29% of consumers who use check-cashing services and/or payday lenders used mobile banking in the past year.
By and large, consumers use their cellphones to check bank account balances or track recent transactions. Fewer consumers, the Fed reports, use mobile banking to actually pay bills or deposit a check via their phones.
What may be keeping a lid on growth is a general distrust among consumers about the security effectiveness of mobile banking. The Fed report says survey respondents were "more likely" to say that mobile banking was "unsecure" or "didn't know" how secure the technology might actually be. (Post continues below.)
Some other revealing data from the Fed study include the following:
- 87% of the U.S. population has a mobile phone.
- 44% of mobile phones are smartphones (Internet-enabled).
- 84% of smartphone users have accessed the Internet on their phone in the past week.
- 21% of mobile phone owners have used mobile banking in the past 12 months.
- The most common use of mobile banking is to check account balances or recent transactions (90% of mobile banking users).
- Transferring money between accounts is the second-most common use of mobile banking (42% of mobile banking users).
- The primary reason why mobile phone users had not yet adopted mobile banking was that they felt their banking needs were being met without the use of mobile banking (58%).
- Concerns about the security of the technology were the primary reason given for not using mobile payments (42%) and the second most common reason given for not using mobile banking (48%).
- 62% of the under-banked who use mobile payments have used it to pay bills.
Clearly, mobile banking is making huge strides among consumers.
Once banking customers are convinced that the technology is safe to use, and as more consumers purchase smartphones, mobile banking may hit critical mass much sooner than banks might think.
More on MainStreet and MSN Money:
Copyright © 2014 Microsoft. All rights reserved.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Some workers lose up to a quarter of their paychecks paying off old debt from credit cards, medical bills and student loans, as well as child support.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'