Mobile Banking Poised for Rapid Growth
Published on: 11th Aug 2009
Note -- this news article is more than a year old.
A new report from IDC Financial Insights emphasizes that banks need to prepare themselves today for the imminent wave of mobile adoption to avoid being left behind by competitors. The study indicates that while current economic conditions may have curtailed both consumers' demand for mobile banking and banks' willingness to invest in it in the short term, things are still moving forward.
"This is the time for banks to invest in their strategies for mobile banking or risk playing rapid catch up once usage does take off," said Marc DeCastro, research manager, Consumer Banking and Credit/Community Banking, IDC Financial Insights. "Mobile banking for retail customers will become a staple no different than online banking. Just like online banking, the justification for offering a mobile solution will be based on customer retention and cost reduction. The convergence of technologies into the mobile phone will continue to attract customers to the technology, and banks will need to offer a solution."
IDC Financial Insights believes that payments might just be the "killer" application that propels mobile banking as mainstream. Social networking, while no doubt exploding in popularity, can also be a driver to more success in the future for mobile banking. In addition, the global economic recovery, which some economists believe has already begun, will likely help kick-start sales of mobile devices and data plans. Therefore, IDC Financial Insights recommends banks take a more strategic look at mobile banking rather than view it as simply an extension of online banking and bill payment. This includes reviewing the available platforms, listening to the suppliers, and listening to customers before making the investment. Despite the rocky start, mobile banking will be an important channel for retail customers.
The following are among the key findings presented in this study:
- When asked to name the most important initiative to the success of mobile banking, the most cited answer was ""expanding current features and functions." Payment initiatives were second, followed by security enhancements, carrier partnerships, and the development of a common platform.
- Balance information was cited as the number one type of mobile banking transaction. Transfer fund requests were second and appear more common than reviewing specific transaction information, indicating that customers realize the benefit of two-way mobile banking - not just getting information, but being able to act upon it. However, transferring money from one account to another because of low balances may, in fact, be the transaction that drives more end users to mobile banking.
- Over half of the suppliers surveyed feel that the U.S. adoption of online banking is slower than global adoption. The market potential, however, is significant. As the economy recovers and the digital generation continues to enter the workforce, the demographics suggest that the United States will be a fast follower to the rest of the world.
For mobile solution providers, IDC Financial Insights warns, it will be important to realize that pricing based on number of users may cause banks to avoid actively marketing to keep operational costs lower. In addition, it will be imperative to avoid any shortcuts in securing the mobile channel. Finally, IDC Financial Insights recommends the suppliers develop partnerships with carriers and handset providers and prepare for enhanced log-in authentication schemes as regulators rapidly respond to mobile banking.