TowerGroup, a financial research company, projects that mobile banking users will quintuple in the next four years, going from 10 million active users this year to more than 53 million in 2013.
Have things really changes that much over the last years? Is mobile banking really up and coming? Well, there is some strong evidence supporting the statement.
‘Digital natives’ — young adults, 18- to 25-year-olds who grew up with computers and do everything from their phones are a growing customer segment and one that is eager to take onboard new mobile applications. The strong adoption of social media by this customer segment also opens the door to different ways of advertising one’s services, for example receiving a Tweet promoting a new product or special rate prompts the consumer to click on a link from his phone and subscribe to the new product.
Consumers’ ability to know their account balances anywhere and anytime is a key factor. Especially in light of the financial crisis, customers want to be on top of their finances. Services like Mint.com and Yunoo.com allowing customers to consolidate their banking accounts and access everything through their mobile are already very popular.
Most mobile banking programs perform some of the basics — letting you check your balance, deposits, withdrawals and transfer money to pay regular monthly bills, as well as providing a list of ATMs and bank branch addresses. However, mobile banking will eventually allow users to make payments at the physical point of sale. This fusion of mobile banking and mobile contactless payments “mobile contactless payments” will make up 10% of the contactless market by 2010 according to Celent. If one looks at the number of initiatives in terms of contactless payments, P2P payments – who doesn’t have a Paypal account – there is some evidence supporting these projections too.
More and more consumers now have phones that have mobile Internet access too (in the U.S. this is between 35 and 40 percent of wireless subscribers). Smartphones (those with generally bigger display screens, web access and e-mail), the iPhone, … make mobile banking more and more appealing. It all just becomes more ubiquitous. Like online banking, this form of bank access may soon become commonplace.
How safe and secure is it? According to Javelin Strategy & Research an estimated 50% of mobile users think mobile banking is not secure. Mobile devices are easy to loose, however the convenience often outweighs the risk. It is also about what services you make available to your customers, if you only offer payments to nominated accounts by mobile banking, the worse the criminal can do is to pay your electricity bill. To safeguard against security risks, mobile users should use their device PIN codes, download mobile apps only from their financial institution, switch Bluetooth off when not in use, and avoid lending their phone to strangers to minimize the chance of someone downloading a malicious app onto the device. Educating customers is paramount here.
What next? We saw from the projections and supporting evidence an exponential increase in mobile banking users, who, over the next few years, will be demanding mobile information and newer mobile services from their banks. To maintain a competitive edge, it is important for banks to listen to their customers’ needs and provide vital information on new products and services. And as mobile banking becomes more developed and widely accepted, banks will have to adapt and develop mobile banking products or risk losing a valuable customer base.