Banks Prepare for Mass Adoption of Mobile Banking

Several forecasts predict that by 2015, 50% or more of US mobile users will be conducting banking transactions from their mobile devices, and financial institutions are looking to cash in on consumers’ increasing desire to check account balances, pay bills and transfer funds with their phones. “The demographics, usage patterns and mobile device landscape are such that for mobile banking to reach the projected adoption levels, financial institutions will need to invest in a combination of SMS, mobile-optimized Websites and applications to effectively serve the needs of their existing customers and to attract new ones,” said Noah Elkin, eMarketer senior analyst and author of the new report,“Mobile Banking: Financial Services Firms Look to Cash In.”

Estimates of mobile banking adoption vary widely, but all point to healthy growth. Studies conducted in 2009 by Mercatus, Mintel Comperemedia and Experian Simmons put the usage rate between 7% and 11%. According to a January 2010 survey by Luth Research for the Mobile Marketing Association, mobile banking usage was 17% among the overall US population and 19% among mobile phone users. Research among smartphone users, however, reveals much more extensive mobile banking adoption. Data Innovation’s January 2010 “Mobile Money Study” found that nearly 70% of smartphone users had accessed mobile banking, payment or financial services in the past three months. Under the current growth rate, it is likely that mobile banking will eventually surpass PC-based banking, Mr. Elkin said. Financial services strategy and consulting firm Mercatus predicts the inflection point will occur in the US by 2015. In emerging markets, particularly those where mobile penetration exceeds that of PCs, the tipping point may come even sooner.

“Online and mobile banking go hand in hand today—but may not necessarily do so tomorrow,” Mr. Elkin said. “Currently, the two channels are closely intertwined. But increasingly, banks will begin to decouple their online and mobile offerings to capture non-online bank users and the sizable underbanked population that is more likely to favor mobile over PC-based Internet access.”