Why are we not all using mobile banking yet? While the up take has been good, it is still far from ubiquitous. Billy Bambrough takes a closer look at the latest Buzzcity report into mobile banking and how it is used around the world
When you’re involved in the digital banking "revolution" it’s easy to forget that the majority of people rarely consider it. This fact could not be made more clearly than by a statistic flagged up by mobile ad company Buzzcity who, in their global mobile banking survey, discovered that a third of people (31%) mistakenly believed their bank did not offer mobile banking at all.
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Over a quarter (27%) of the 6,000 people surveyed across 20 countries said they didn’t know whether they could use their phone for banking, while 26% said they did not know whether their bank provided mobile banking services.
While many people were unaware of the services offered, 33% of survey respondents felt that they do not need mobile banking, more than the 31% who said mobile banking is easy and useful.
Among the respondents 31% said their phones were not capable of mobile banking (compared to 30% last year), despite all phones being capable of basic SMS banking.
Security fears are less of a concern that previously with 20% of respondents avoiding mobile banking due to security concerns in March 2014, down from 34% in July 2013.
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By GlobalData
Nearly a fifth (18%) of respondents said that their bank has not yet offered them mobile banking.
Report author and Buzzcity CEO KF Lai told RBI: "Anxieties will persist, but this apparent indifference among users many may yet be the biggest hurdle to overcome."
In July 2013, our study of the BuzzCity audience revealed that 26% of adults have used their phones for banking transactions and another 16% ‘might try it soon’.
The survey covered countries across The Americas, Asia, Africa and Western Europe in March 2014 amongst 6,000 adults from 20 of BuzzCity’s benchmark countries.
The results suggested that mobile banking is moving to the mainstream but also prompted the question "Why aren’t more people banking with their mobiles?"
According to Lai, there’s too much reliance on above-the-line activities like TV and not enough below-the line interaction and customer education, particularly face-to-face.
"Consumers are saying ‘My bank hasn’t offered it to me!’ and this challenge hasn’t yet been met," says Lai.
The take up of mobile banking in every market around the world has been impressive, perhaps suggesting banks needn’t spend money attracting customers
Lai explains: "Organic growth doesn’t have to mean slow growth! First Direct (UK), launched in 1989, has grown to a little more than one million customers. Globe BankO Philippines, since 2009, has also grown to more than one million customers.
"While both are branchless banks, the late starter, Globe, has grown rapidly mainly through below-the-line activities with their distribution partners. There is an imperative for traditional banks because the competition is getting stiffer as more non-traditional players, like telcos who have better distribution, enter the banking space."
While still in its infancy, mobile banking has reached a stage where it is not hard to imagine a time when 100% of current account users will bank on their mobile, if they have one.
Unlike other channels it is less dependent on other variables, such as location of physical branches.
Lai says: "Really, everyone with a mobile will be mobile banking. This can mean mobile as an alternate channel and mobile in alternative financial services e.g. remittances, pay day loans. They may not all use banks as we know them but will soon get used to the idea of airtime as money in the same way a debit card is cash!"
Lai thinks the high percentage of non-mobile using customers have a misconception of how the service can be used.
"Creating a brand presence is important of course but many in the past have portrayed it as a premium service for "high end" users. That messaging needs to change," says Lai.
"So, it’s refreshing to see "My Mum’s Magic" from NatWest’s recent campaign where mobile banking can even be ice cream money! It communicates effectively what the product is in practical terms. The communication needs to be supported with clear messaging that will drive customers to trial. It’s also important to have trained and motivated staff that can explain the benefits and uses of the app – basically, people that can teach the customer how to acquire the magic."
Monetising the mobile channel is something banks have yet to figure out. While cross-selling is an obvious goal, Lai thinks it unlikely we’d ever see third party ads on a banks mobile app, despite a captive audience.
Lai says: "Banks are already cross promoting all their latest offers on their web and mobile sites (many now take a mobile first responsive design philosophy). There’s no reason they shouldn’t do this on their service app – although they may not necessarily run external ads!
"Banks now run credit card campaigns with their merchant partners and will probably run similar (rewards) campaigns with their merchant partners for mobile payments."
The underbanked leads growth in mobile payments
A previous BuzzCity report from October of 2013 found that amongst working adults over a quarter (26%) are using their phones for some form of financial or banking transaction, with nearly a fifth (16%) intending to try mobile banking. But it is those without bank accounts, ironically, that are fuelling the growth of mobile payments – a higher percentage than those with bank accounts.
Surveying 17,000 consumers across 22 countries on their attitudes to mobile banking and payments, the report revealed that of those who are already mobile banking, balance enquiries (30%), bank transfers (26%) and cash withdrawals (28%), are the top three most-used banking features. When it comes to non-banking activities, 13% now use their phones to receive their salaries, and 12% pay for goods via their phones.
The research has brought to the fore the emerging demographic group of the underbanked who make up 30% of working adults using mobile.
The underbanked are connected with exposure to mobile financial services and this is fuelling the growth of mobile payments: a higher percentage (19%) is using mobile payments for paying bills then those with traditional bank accounts (13%).
Mobile is bridging the gap for those with no access to traditional banking services – some 12% use mobile money transfer services.
The underbanked are not necessarily a high credit risk group. While many (43%) believe they don’t have enough money to open an account, only 8% have a bad credit history. At least a fifth (21%) feel they do not need a bank account probably because banks do not offer services that are important to them, such as fast cheque cashing services (31%) and small cash loans (50%).
When it comes to everyday purchases, cash is still king (73%) but nearly a fifth (16%) now regularly use mobile payments, fast closing the gap on debit and credit cards (23%). In such a short space of time mobile payments are becoming the norm.
Mobile payments are also used for paying bills (13%) and like for like with Credit / Debit Cards (13%). The underbanked also favour cash, with the second form of chosen payment being mobile (19%), followed by the use of prepaid cards (15%).
Lai says that : "Our research is showing a seismic shift in global consumer confidence when it comes to mobile banking, as well as how and what people are using mobile payments for.
"Mobiles are intrinsically wedded to our daily lives and our research highlights that this now extends to how we bank, whether we are with or without a traditional bank account – and what we are happy to pay for with via our mobiles. For the underbanked the mobile phone has become, in addition to a communication and surfing device, a necessary banking and payment channel and is filling a gap that the banks cannot meet."
The rise of mobile payments is clearly being fuelled by the underbanked but the next phase of growth for mobile banking and payments will be among those with bank accounts who are not yet using their mobiles for banking (44%). It is apparent that further education among potential mobile bankers will need to be implemented across the board to reassure them of the security and safety aspects and emphasise the availability, and convenience of third party transactions.
