6 sure things about mobile banking
July 10, 2012
Other than death, taxes and the title of a sweet-but-predictable adolescent lust film from the 80s, there are few sure things in life.
A reporter recently asked me how mobile banking was changing the way people bank. As I started to answer, I just kept coming up with all these sure things!
1. Mobile is a paradigm shift
We know—like the Internet "paradigm shift" before it—that "mobile is big and growing." There are more than 6 billion mobile subscribers (that’s 87% of the world) and 1.2 billion mobile Web users worldwide. In the U.S., 25% of Internet users are exclusively mobile.*
2. Mobile is changing the way people do things (everything, really)
Mobile searches have quadrupled in the last year.* When you Google "how many apps are there" you find "with over 500,000 apps, there's an app for almost anything." A few examples:
- Reservations—you can now make restaurant or travel reservations on-the-go (or at home) with your tablet or smartphone. Travel agents? Does anyone even talk to them anymore?
- Directions—how many of us still use a separate GPS or MapQuest? Most folks I know get directions right from their phones.
- Addresses and phone numbers—I haven’t looked at a phone book in years, or even searched on my laptop. My smartphone is faster (although the phone book made a better doorstop).
- Metronomes—my daughters lost the one they used for piano practice … and felt no need to confess. Instead they simply loaded a metronome app onto their iPods.
- Flashlights—do you still carry one? Instead of a lighter, what do we hold up at rock concerts today?
3. And banking is surely no exception
Mobile banking lets people (other than my mother) do what even online banking couldn’t do … bank whenever they want, wherever they are. (My mother is a whole different sort of mobile banker … she walks to her bank every week to make deposits.)
I loved mom's bank teller Mavis, but I haven't seen her in years and probably will never see her again. Although I amnot one of the 21% of mobile phone owners who used mobile banking in the past 12 months,* I do bank online … and I am one of the 11% who will probably use mobile banking within the next 12 months.
People are using mobile banking to check balances and transactions, transfer money or make mobile payments. Ultimately, we’ll have a full-service branch in our back pockets, with unprecedented power and convenience. In fact,PayPal predicts that by 2016, we won't even have physical wallets. Some people think we may not even have brick-and-mortar banks in the future.
4. Mobile reaches different kinds of bank customers in different ways
- Compulsive savers—with a bank in your pocket, you can stay on top of your finances anytime, anywhere. And yes, there are people who check their bank balances as often as the rest of us check Facebook (or for us not-so-youngsters, our email).
- Millennials—younger people use their mobile devices more than their laptops. Mobile represents a great opportunity to build a relationship with this underserved segment—right at the time in their lives when they’re starting to earn and save.
- Unbanked and underbanked—this is a growing population in the U.S., and it includes not only younger people, but migrant workers and lower-income consumers. Mobile banking offers a new and different way to access these underserved customers.
5. We know there will be some growing pains
According to the Federal Reserve, privacy and security concerns were the #1 reason people didn’t use mobile payments and the #2 reason they didn’t use mobile banking (42% and 48%, respectively).** However, as technology improves and people become more comfortable with it, the rate of adoption will continue to climb. And that’s just on the consumer side. Companies also have to embrace mobile, which includes absorbing the initial cost and effort of defining the strategy and developing the platform.
6. These things have a way of working out
This may be the biggest sure thing of all. Remember when ATMs and online banking first appeared on the horizon? They were scary too at first. And then … they just became a great big necessary convenience.
Marketers and industry experts have been talking about the mobile tipping point for years. But this is it. Really. We’ve tipped, gravity is taking its course and banks had best harness the change. It's a sure thing, and we'll adapt and enjoy the journey along the way. (And maybe, as Professor Taub advised his students in The Sure Thing, you just might have to live it to write about it.)
** Survey, Board of Governors of the Federal Reserve System, March 2012