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Mobile banking: the substance behind the hype

There has been a lot of debate lately as to whether mobile banking and payments are more than just hype, with cynics purporting that consumer adoption will not take off. While consumers may not be rushing to get their hands on the latest banking app (yet), there is no doubt that a step change in consumer behaviour is taking place.

This is evident in the 360,000 downloads of Lloyds TSB’s newest banking app just one month after its launch! Add to that the finding that 14% of US banking customers use mobile devices to access their banking services – which from past experience suggests this trend will soon transpire in the UK – then the consumer appetite for mobile banking is certainly alive and kicking.

Meanwhile, in the payments space, PayPal recently revealed that its UK customers perform an average of five transactions per month via their mobile phones, leading to the prediction that mobile retail sales will hit the £2.5 billion mark by 2016. All these figures show that consumer adoption is taking off – and this is only the beginning.

The fact is, with the ubiquity of smartphones – 70% of all mobile phones sold in the UK in the three months to September were smartphones – the way that consumers think and behave has changed considerably.

Consumers are becoming used to being connected at all times and the ability to ‘do’, ‘find’ and ‘buy’ at the click of a button. As a result, they expect instant access to information and services and the ability to act on impulse through the one common device they all carry in their bags or pockets. While common misconceptions around mobile security remain, increasingly security concerns are no longer acting as a deterrent to the use of mobile financial services as consumers look for this type of convenience in all walks of life. Starbucks can vouch for that – it recently announced that it processed more than 20 million mobile payment transactions this year.

So while security is paramount and must be taken seriously , this should not stop banks and other financial services providers from going to market. As illustrated through the findings above, offering instant access to finances on the move will drive customer acquisition, retention and brand loyalty.

With a whole generation of digital natives waiting in the wings, ready to choose their banking providers, a lack of mobile banking services could be a reason to write off some providers. We may not yet be at the tipping point when it comes to mobile banking but there is no doubt that consumers have already gone mobile and that this point is on the horizon. Listening to the cynics will only mean playing catch-up while others stay ahead of the game.


Comments: (4)

A Finextra member
A Finextra member 15 November, 2011, 12:00Be the first to give this comment the thumbs up 0 likes

Perfectly balanced assessment. 

Lets hope the banking backends are speedy enough to allow smartphones to complete banking sessions without running out of battery!

I use the Amex Android app - very convenient.  My bank doesn't have an app yet.

A Finextra member
A Finextra member 16 November, 2011, 08:39Be the first to give this comment the thumbs up 0 likes

The substance behind the hype...

"360,000 downloads of Lloyds TSB's app"... BUT they have 16 million customers, so only 2% of customers have the app and 98% don't.

"14% of US customers us mobile devices for banking" BUT this means that 86% don't.

"Paypal mobile retail sales will hit the £2.5 billion mark by 2016" BUT you missed the context from the original research that this is going to be 5.9% of retail sales... by 2016. Or 94% of sales will NOT be by mobile by 2016.

"Starbucks processed more than 20 million mobile payments this year" - BUT Starbucks sell approx. 4 BILLION cups of coffee a year... so, despite the push, 99.5% of Starbuck's payments are non-mobile.

A Finextra member
A Finextra member 18 November, 2011, 10:43Be the first to give this comment the thumbs up 0 likes

All news things start somewhere - and this small substance is still significant imho.  Better to have all that growth potential.

A Finextra member
A Finextra member 21 November, 2011, 21:35Be the first to give this comment the thumbs up 0 likes

There is far more interest in mobile banking (Blog heading)  and mobile payments (somehow became part of the blog) from payments professionals, than there is from Joe public....  Apps are often transient, often less than 20% are used...  the first major mobile banking hack is going to cause significant negative impact.... Is mobile banking and payments going to find a niche? of course it is, however no-one can predict the size of the niche as there are simply too many moving parts... However,  The Hype is entirely predictable.... it will continue.... Digital Natives (eg my son at UNI) wont be buying starbucks on his mobile - any more than I will - other digital natives may love mobile coffee.... early adopters for sure..... the rest of us?????

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