Mobile Banking: To App or Not to App
Eileen St. Pierre, The Everyday Financial Planner
Perhaps you’ve seen the commercial – a bride and groom on their wedding night are depositing checks into their account using their bank’s app on their smartphone. Mobile banking has been growing in use, especially by younger generations. Research on how consumers use mobile devices to access financial services and make financial decisions is still in its early stages. In March 2012, the Federal Reserve published the results of an internet survey. Here are some of the key findings:
Improved Financial Decision-Making
- By far the most common use of mobile banking is to check account balances (90%), followed by transferring money between accounts (42%) and receiving text alerts (33%).
- Many mobile banking users check their balance or credit limit before making a large purchase. More than half decided not to buy an item because of insufficient funds.
- One third of mobile banking users receive text message alerts from their bank and nearly all reported taking some action in response to a low balance alert.
- Consumers would like to use their mobile phones to track their finances on a daily basis. Just over 20% of respondents use a personal financial management program or website, on average five times per month.
- Almost half of respondents want to use their phones to compare prices while shopping.
- About a third wants to receive discount offers and coupons, as well as location-based promotions, on their mobile phones.
- But only a quarter wants to use their phone as a “mobile wallet” using their phone to pay at the point of sale.
Reaching the Underbanked and Unbanked
- Underbanked consumers may have a checking or saving account, but also use another type of financial account such as a prepaid debit card or payday loan.
- Mobile phone use is high among younger generations, minorities, and those with low levels of income – groups that are more likely to be underbanked or unbanked. Research done by the Center for Financial Services Innovation found that consumers under the age of 25 are increasingly comfortable with being underbanked.
- 57% of the underbanked and 18% of the unbanked in the survey had a smartphone.
- The underbanked were substantially more likely to make bill payments using their mobile phones.
Not everyone wants mobile banking
- Many mobile phone users felt their banking needs were being met without the use of mobile banking.
- Concern over security was the primary reason given for not using mobile banking.
Given time, perhaps these security concerns will subside and mobile banking will become more accepted by us older folks. I remember the first time I filed my tax return electronically – I didn’t sleep well that night.