American financial institutions should mine the untapped market of offline customers as a potential target audience for mobile banking and payment services, a survey commissioned by VeriSign suggests.
Until now, banks have been focused on moving customers from the online to mobile channel, says VeriSign, which partnered Fiserv and M-Com on the survey.
This means they are simply migrating some transactions from one low-cost self-service platform to another, making it difficult for banks to make a substantial return on their investment in m-banking.
The survey of 501 US mobile phone users, conducted by Palmer Research, suggests banks should instead target offline customers that use more expensive channels. Nearly two-thirds of respondents that do not bank online say they contact their financial institution once a week or more through channels such as call centres and interactive voice response systems.
Yet 60% of these customers would be interested in using at least one service via their handset if it was offered during a typical month.
Adam Clark, CEO, M-Com, says: "Mobile banking is by far the lowest-cost non online banking channel available today, at an estimated eight cents a transaction. If you compare that to other banking channels such as call centre at $3.75 and IVR at $1.25 or even ATM at 85 cents, you can see how moving consumers to mobile banking will yield significant cost savings."
The survey also shows that financial institutions should target the growing audience of smart phone users for mobile banking. Over three quarters of smart phone users say they would likely adopt mobile banking services in the future versus just 54% of basic cell phone users.
In addition, the survey again highlights the importance of educating customers about security, with 53% of respondents citing concerns about m-banking's safety as a key barrier that would prevent them from using it.
"Even though we have yet to see significant security threats when it comes to mobile banking, financial institutions need to address concerns over security to help consumers overcome their fears," says Charles Landry, general manager, products and innovation, VeriSign Messaging and Mobile Media.