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Mobile banking: Increased acceptance equals greater opportunities for FIs

April 19, 2013 by Rebecca Hellmann — Marketing and Sales Coordinator, Welch ATM

Mobile devices have become a part of everyday life around the world, used for banking, entertainment, communication, payments, budgeting and even shopping. A recent survey by the U.S. Federal Reserve focused not only on the general growth in mobile usage but also on the increasing number of U.S. consumers turning to mobile for their financial service needs.

Mobile phone and mobile Internet access have become much more widespread in the United States; 87 percent of the population now own mobile phones, 52 percent of which are smartphones. More surprisingly, the Federal Reserve found that 28 percent of mobile phone owners have used their phones for mobile banking in the last 12 months. An even larger proportion of smartphone owners (48 percent) have done the same. The most common uses of mobile banking are to check account balances or recent transactions (87 percent), and to transfer money (53 percent) and deposit checks (21 percent).

Many financial institutions are seeing the growth in mobile technology as an opportunity to reach new client bases, which is how FIs in many emerging markets have found success. The unbanked and under-banked in these markets have embraced the accessibility and convenience of opening bank accounts and making payments through their mobile phones. 

The key to this success has been the growing prevalence of mobile devices and Internet availability in these countries. By offering a wide range of inexpensive and easy-to-use services through mobile devices, financial institutions have been able to attract clientele that were previously unattainable.

U.S. financial institutions are seeing a similar situation in unbanked and under-banked markets. While the share of unbanked and under-banked consumers in the U.S. has remained relatively constant at 10 percent, the Federal Reserve reports that 59 percent of the unbanked and 90 percent of the under-banked have access to mobile phones. Forty-nine percent of the under-banked already report having used mobile banking in the past 12 months.

Perhaps even more interesting than the prevalence of mobile in the these communities is that mobile users are actually growing comfortable with using their phones as a way to access money and even pay for goods and services.

While the number of consumers using their phones regularly to make some form of mobile payment is still small, the increase in mobile banking use could be a sign that unease about mobile financial security in the U.S. is waning.

The Federal Reserve found that 15 percent of mobile users have made a mobile payment in the last 12 months, the most common payment being some form of online bill payment. However, 22 percent of mobile phone owners have expressed an interest in using their phones to make purchases at the POS.

The advent of EMV and, eventually, near field communications in the U.S. could push this change to occur even more rapidly, applying mobile payment options at the ATM as well as at point-of-sale throughout the country.

Forward-thinking financial institutions may want to increase focus on mobile applications or mobile-friendly websites, and also begin seriously considering ways to ensure that consumers are able to continue to use their FI’s cards, even when using their mobile device to make the transaction. 

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