Javelin Strategy & Research's latest report uncovers a widening gap between mobile banking adoption rates at smaller banks and credit unions compared to larger financial institutions (FIs).
Only 21% of consumers at regional and community banks and 15% of consumers at credit unions use mobile banking versus 37% of consumers at giant banks. Mobile banking is growing rapidly, jumping by 63% since last year and fueled by smartphone adoption. As tablets have exploded onto the scene, promising to transform mobile banking once again, smaller FIs will continue to fall behind, unless they change their strategies to improve their offerings and capture a solid customer base of mobile bankers. Javelin's latest mobile channel forecast addresses how banks and credit unions can position themselves to succeed as mobile banking institutions and keep pace with larger FIs.
More than 50% of consumers are expected to become mobile bankers by 2016. With 92% of the top 25 banks now offering mobile banking, smaller banks and credit unions risk losing valuable customers — especially smartphone and tablet customers — to these institutions and must focus on building out their mobile banking capabilities in order to compete.
"The key challenge for smaller FIs is attracting the right demographics," said Mary Monahan, Executive Vice President and Research Director, Mobile at Javelin. "The typical mobile banking customer is young (ages 18 through 44), ethnic (typically Asian, Latino, or African American), and high income (earning more than $75K). Customers at regional and community banks and credit unions are significantly older, less wealthy, Caucasian, and less tech-savvy. FIs must broaden their services, appeal to a wider range of demographics, and attract new clients if they want to succeed."
"Smaller banks and credit unions have always prided themselves on providing superior customer service, so they cannot continue to ignore the mobile channel," said Jim Van Dyke, President, Javelin. "Resource-constrained institutions should focus initially on the browser method, currently used by a majority of mobile consumers. It is the most cost-effective and easiest to deploy. Howy. However, these FIs need to focus future efforts on developing app and SMS text banking to appeal to a broader array of users and technology."
Javelin's "Mobile Banking, Smartphone and Tablet Forecast 2011-2016: Mobile Banking Moves Mainstream to Mid-sized, Community Banks, and Credit Unions" report highlights mobile channel trends, identifies the roadblocks and drivers for mobile banking, (including smartphone and tablet users) and outlines strategies that community and regional banks and credit unions can use to boost consumer adoption of SMS text, downloadable apps and browser-based mobile banking. The report is based on surveys with 15 mobile banking vendors, a review of 23 FIs with mobile banking offerings, and survey data collected online from more than 17,400 consumers.
Selected Key Report Findings -Mobile Channel Forecast
Mobile is now the top communication channel. Mobile usage is surpassing online usage.
Consumers' use of mobile banking rose dramatically in 2011. Jumping by 63%, 57 million U.S. adults conducted mobile banking in 2011, increasing 63% over 2010.
Consumers use an assortment of channels for mobile banking. Most consumers continue to access their mobile banking accounts through the browser, a financial habit established through online banking. At the nation's largest banks, where the triple play, that is, mobile banking through browsers, apps, and SMS text, is offered, this tendency flips: More customers use apps and SMS than browsers.