Mobile banking is a hot topic at banks and credit unions. Yet, by the end of 2011, just 25 percent of financial institutions will have deployed some level of mobile banking capabilities. That percentage, however, is double what it was at the end of 2010, and will likely double again by the end of 2012.
In December 2010, Aite Group surveyed 1,011 U.S. consumers to gain insight into their mobile banking habits and preferences. The survey findings revealed five important factors for financial institutions to consider when developing their mobile banking strategies:
Mobile bankers are mainstream consumers
Income level plays little role in the likelihood of engaging in mobile banking. The average income of mobile banking consumers is $52,952 – just $131 more than the average income of non-mobile bankers. In fact, the higher average income of mobile bankers is driven by Boomers. The average income of mobile banking Gen Yers and Gen Xers is actually lower than that of non-mobile bankers of the same generation.
Popular thinking says that mobile banking consumers are more affluent than other consumers. Aite Group’s research shows, however, that while mobile bankers are younger than non-mobile banking consumers, within each generation, their income levels are relatively equal.
Mobile bankers are balance checkers
Nearly one-third of mobile bankers checked their account balance using a mobile device 10 or more times in the fourth quarter of 2010. In addition, 57 percent of them checked their account balances online 10 or more times. That’s nearly equal to the percentage of non-mobile banking customers who access their accounts online.
Mobile bankers check their balances because they don’t want to overdraw on their accounts. Increased mobile banking adoption will further depress banks’ overdraft fee revenue beyond the decline they have seen as a result of recent regulatory changes. Whereas online bill pay and debit cards made it easy for bank customers to overdraw on their accounts, mobile banking gives consumers the ability – through balance checking and proactive alerts – to avoid accidently doing so.
Mobile bankers are electronic coupon-clippers
Nearly four in 10 mobile bankers use electronic coupons – those received online on through a mobile device – more frequently today than they did two years ago. In addition, nearly a quarter of them rely less on paper coupons than they used to. In contrast, non-mobile bankers are less likely to be using electronic coupons more than they did two years ago, or relying less on paper coupons. The shift to electronic coupons is especially prevalent among mobile banking Gen Xers and Boomers.
The shift in coupon use from paper to electronic among mobile bankers emphasizes the need for marketers – from financial services firms to retailers and merchants – to be able to reach customers and prospects on their mobile devices.
Mobile bankers are mobile purchasers
Nearly four in 10 mobile bankers made a purchase with their mobile device in the fourth quarter of 2010. Few non-mobile bankers made mobile purchases, on the other hand – just 15 percent of non-mobile banking Gen Yers and 10 percent of non-mobile banking Gen Xers. Among the mobile banking segment, Gen Yers were the most frequent mobile purchasers, averaging nearly eight mobile purchases per person during the quarter.
Because mobile bankers are more likely to make mobile purchases, banks have an opportunity to steer mobile purchases to the cards offered by the bank. In addition, merchants collaborating with financial institutions on merchant-funded rewards programs will be able to more effectively target offers for products that are frequently purchased with a mobile device, for example, music, games, and apps.
Mobile bankers are migrating away from checks
Check volume has declined, and fewer consumers are writing checks as often as they did two years ago. What bank executives might not know is that a higher percentage of mobile bankers have moved away from checks than non-mobile bankers.
Meanwhile, across the generations, a higher percentage of mobile bankers have increased their use of debit cards than among non-mobile bankers, and fewer mobile bankers are using debit cards less today than they did years, when compared to non-mobile bankers.
Although banks aren’t happy with legislation that has reduced interchange fee, something is better than nothing. And nothing is what banks get for check-based transactions. If mobile banking adoption leads to changing behaviors – such as fewer checks and more debit card usage – then banks stand to gain financially from mobile banking.
Ron Shevlin is a senior analyst at Aite Group in Boston.
