Article
Mobile banking is a key driver for growing smartphone use
Smartphone users comprised 27 percent of the mobile-phone market in 2010, up from 20 percent a year ago.
June 9, 2010
Smartphone users comprised 27 percent of the mobile-phone market in 2010, up from 20 percent a year ago, according to a study released Wednesday by Javelin Strategy & Research Inc.
Consumers this year owned 75 million smartphones, an increase of 22 million smartphones from 2009, says James Van Dyke, president and founder of Javelin Strategy & Research, which issued the report, "2010 Mobile Banking Behaviors: Fewer Handsets in the U.S., Yet Smartphone Growth Exceeds Expectations."
Mobile banking is a key factor driving smartphone purchases, Van Dyke tells ATMmarketplace. "I would say mobile banking plays an important role because more bank transactions are conducted on smartphone platforms," he said. The transactions include checking balances, transferring funds and paying bills. "Smartphones are little computers."
Fifty-four percent of smartphone owners are active mobile bankers. They are a young, diverse group, earning relatively high incomes, according to the report.
More than 1 in 5 consumers earning more than $75,000 annually use their smartphones for mobile banking. African Americans, Latinos and Asians use mobile banking at higher rates than Caucasians, the study found.
"With increased penetration by smartphones into the marketplace, financial institutions have to prepare for a customer base with access to advanced mobile functionality, higher likelihood of full data plans and more secure mobile browsers," the report says.
The study notes, however, only 18 of the nation's 40 largest banks offer mobile banking. Bank of America, Wells Fargo and Citibank offer mobile banking.
"After the big banks, there is a dropoff in banks offering mobile banking," Van Dyke says. USAA, a San Antonio, Texas-based bank, offers remote deposit capture, enabling customers to deposit checks from their mobile phones, and Bank of America and Wells Fargo have discussed offering the service.
Banks that offer mobile banking, however, have a competitive advantage over banks that do not, Van Dyke says.
"Nationally, seven percent of bank customers switched to banks that offered mobile banking, and more than 11 percent of USAA's and Bank of America's new customers joined the financial institutions because they offered mobile banking," Van Dyke said.
The smartphone market for mobile banking also is very competitive.
Google's Android phone is very close to taking a bite out of Apple's iPhone for use in mobile banking, although BlackBerry owners represent the majority of the smartphone market.
In the past 90 days, 49 percent of iPhone users compared with 48 percent of Android owners used their phones for mobile banking. Twenty-nine percent of BlackBerry owners used their phones for mobile banking during the same three-month period, the study found.
So what does the growth of smartphones that provide mobile banking and remote deposit capture mean for the future of ATMs?
"Nothing is going to happen in a big way, but I think ATMs will die a death of a thousand cuts," Van Dyke said.
Smartphone penetration grew at the same time overall cell phone use dropped because of the recession, Javelin found. Twenty-three million U.S. consumers in 2010 either dropped their mobile phone contracts or lost their mobile phones as part of losing their jobs, the study found.
For its study, Javelin, which is based in Pleasanton, Calif., primarily collected in March online data from a random-sample panel of 5,211 households. Javelin also gathered information from a sample panel of 3,000 mobile phone users in July 2009 and online data from a sample panel of 2,779 respondents in April 2009.
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