Mobile-Banking Use Up, But Still Mainstream

The use of mobile-banking services is increasing, but many consumers still prefer to bank online or at branches for more-complex transactions, new study data suggest.

IDC Financial Insights, a Boston-based advisory research and consulting company, conducted the research in November, polling 1,008 U.S. adults ages 18 to 75 by phone. Of the participants, only 660 had mobile devices, and just 113 had used a mobile-banking service. However, 21% of total participants noted they used mobile banking to interact with their financial institution, up from 10% who did so in a similar survey IDC conducted in 2008.

Despite the increase, the use of mobile-banking services remained behind consumer use of branches, ATMs, the Internet and call centers, the research found. About 69% of participants said they visited a branch between one and four times per month.

Though more consumers accept mobile banking, some financial institutions are wary about setting up a mobile-banking channel because it drives few, if any, revenue opportunities, IDC Financial said in the report.

Indeed, mobile banking introduces a new cost structure without providing revenue opportunities, especially because consumers are unwilling to pay for the service. However, new features, such as remote deposit capture, may provide financial institutions potential revenue, according to IDC Financial.

Moreover, any time a bank can create products designed to keep consumers loyal, it can make money, Marc DeCastro, IDC Financial research manger for consumer banking, tells PaymentsSource.

Financial institutions are not alone in their hesitance to support mobile banking; respondents 55 and older viewed mobile phones as a means of communication, not as a payment device, DeCastro says. Consumers ages 25 to 34 are most likely to bank using their mobile phones, the research found.

However, of the 113 participants who specified they had used mobile banking, only 35.5% said they had checked balances on a deposit, prepaid card or debit card account using their mobile phone.

And of the 660 participants, only 6.8% had used their mobile phones during the previous three months to initiate a bill payment from their bank’s online-banking product.

Mobile banking may be gaining in popularity, but it is not yet a mainstream banking channel, IDC Financial contends. However, "consumers are going to expect mobile banking as another banking option," DeCastro says. But for now, "if you ask a consumer what their preference is, they like completing more-complex transactions, such as large credit decisions, refinancing and investment opportunities, at an actual bank," he says.

This story has been reprinted with permission from PaymentsSource.