As U.S. banking consumers continue to embrace mobile technology -- and specifically, the widespread adoption of smartphones -- the use of mobile banking services is expected to approach 50% by 2016 versus 15% today.
And, already today 39% of consumers say that having a mobile offering is either "extremely important" or "important" in their decision to switch primary banks. That's according to a study released today by AlixPartners LLP, the global business-advisory firm.
Today's 15% of consumers using mobile banking is up from just 12% in the second quarter of last year, and that number includes nearly 30% of consumers between the ages of 18 and 34, and nearly 15% of consumers between 35 and 54.
"As banks and other financial services providers explore new offerings that deliver value-added services to consumers, the growing importance of mobile capabilities in the lives of consumers should be viewed as both 'tablestakes' and an opportunity for differentiation," said Bob Hedges, managing director in the Financial Services Practice at AlixPartners. "Clearly, these devices' extraordinary value to consumers has raised the bar on what consumers expect from their financial services providers and placed greater importance on the role of mobile banking in bank selection. Those financial services providers that focus on mobile offerings as competitive differentiators will be winners in the future."
According to the AlixPartners study, when comparing the set of features for choosing a new bank between consumers who currently use mobile banking and those who do not, mobile played a decisive role in mobile banking users' bank selection decision. Thirty-two percent of consumers who switched banks in the past year and who also used mobile banking chose mobile banking as a preferred bank attribute, versus only 6% of non-users who also switched banks. In addition, among mobile banking users who switched banks, more chose mobile as a preferred attribute than chose any traditional consumer banking selection criteria, including fee levels (24%), branch convenience (21%), customer service (21%) and deposit rates (9%).
"Given today's margin-compressed environment, it becomes critical foral for financial services providers to address mobile-oriented consumers -- who prefer lower cost-to-serve channels and have a more attractive financial profile," said Teresa Epperson, also managing director in the Financial Services Practice at AlixPartners. "Our research continues to highlight the attractiveness of consumers who use mobile services and the importance for banks to focus on attracting and retaining those consumers."
The research findings suggest the following characteristics of mobile banking users:
Younger: 55% of mobile banking users are between 18 and 34, vs. 25% for non-users;
More affluent: average income for mobile banking users is $71,000, vs. $59,000 for non-users;
Buy more financial services products: mobile banking users hold 3.1 products with their bank, vs. 2.8 for non-users.
Looking ahead, as mobile banking usage continues to expand, there will be more pressure on banks to differentiate themselves by identifying and deploying key mobile apps that will attract and retain customers.
"As mobile banking gains more users and just offering basic mobile banking capabilities is perceived by consumers as tablestakes in bank choice, it will be critical for financial services providers to continue to develop innovative and easy-to-use mobile banking apps," said Hedges.
Today, according to the survey, the ability to use a mobile remote deposit capture (RDC) feature is the leading mobile driver for bank selection. According to the findings, 65% of consumers who are "at least somewhat likely" to switch for mobile, said the ability to deposit a check with their mobile device was the leading feature that would cause them to switch. This reflects a 22 percentage-point increase over the second quarter of last year, when 43% of consumers chose mobile RDC.
As consumers continue to migrate their banking behavior to mobile devices -- such as depositing a check with a mobile RDC feature instead of visiting a branch or ATM -- more opportunities will emerge for banks and other financial services providers to differentiate. One such area is bill payment, where today less than 2% of consumers said they use their mobile device to pay bills. The mobile device holds the potential for a significant role in bill payment as consumers continue to seek mobile capabilities that allow them to meet their financial needs anytime, anywhere.
"Moving forward, consumers' mobile behavior and expectations will continue to rapidly evolve. Financial services providers need to recognize the growing importance of rapid development and deployment cycles for mobile offerings, in order to both keep pace with consumer expectations, as well as to maintain relevance with today's consumers who have an insatiable appetite for mobile-oriented innovation," said Epperson.
AlixPartners, through its 2011 acquisition of Mercatus LLC, has been tracking and evaluating consumer banking behavior and preferences, and more specifically, the adoption and growth of mobile financial services, since 2008. The AlixPartners Mobile Financial Services Tracking Survey, formerly known as the Mercatus Mobile Financial Services Tracking Survey, has been conducted semiannually with an online panel of U.S. consumers ages 18 and older. The study captures several emerging trends in how consumers use mobile devices to manage their personal and financial lives. The research also explores consumer banking channel behaviors and preferences, as well as the decisions and criteria consumers use to choose their primary banking provider. The latest survey was conducted in mid-December 2011 to an online panel of 6,000 Americans.