Friday, December 5, 2008

MOBILE BANKING GROWTH

Mobile Banking Is Still in Its Infancy
Financial institutions are investing heavily to build technological platforms and strategic partnerships to capitalize upon the growth of the mobile banking channel. We wanted to separate the hype from the reality by exploring one fundamental question: Is there really significant consumer demand for performing banking activities on a mobile device? The results of a recent survey targeted at online bankers illustrates that the mobile market, although still in its infancy, is poised for future growth.
One of the obvious drivers of mobile banking adoption is consumers having access to the internet from their mobile device. Our research indicates that 72% of online bankers never access the internet from their mobile device (see below). Mobile internet access will undoubtedly rise, as technology advances and “smart phone” adoption (Blackberry, iPhone, etc.) proliferates; however, if almost ¾ of online bankers never access the internet from a mobile device, how many people actually utilize mobile banking services? The answer is not many, as only 5% of online bankers currently use a mobile device to check a banking account.

It is clear that mobile banking is still in its infancy, but what about future growth prospects? Our research reveals that consumers are significantly more likely to view mobile banking as “very useful” (23%) than “not at all useful” (12%) (see below). It is interesting to note that 28% of respondents currently appear to be indifferent towards mobile banking, neither citing the functionality as useful or not useful.

Many of these indifferent consumers are likely to demand mobile banking functionality once the technology and partnerships make the usability of this banking channel easier for the average consumer. One good example is a current Bank of America (BAC) promotion for free mobile banking to current online customers. The messaging promotes the accessibility, convenience, and security of mobile banking.

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