The longer we spend researching mobile banking, the more convinced I become that mobile banking is the most important innovation, or cluster of innovations, in retail banking in years, arguably in a century. Here’s why I think mobile banking is a much bigger deal than cash machines (ATMs), credit cards or home-based online banking:
- In developing economies that lack a dense infrastructure of branches, ATMs and fixed-line telecoms, mobile banking and payments are bringing millions of people into the formal banking system for the first time.
- In developed economies mobile banking will become the primary way many, perhaps most, customers interact with their banks. Banks need mobile banking to provide a platform for mobile payments and to protect their retail payments businesses from digital disruption as mobile payments start to replace card payments in shops.
We’ve just published some new research on mobile banking in Europe. Here are some of our main findings:
- Mobile banking is taking off across Europe. According to our Q4 2011 European Technographics Financial Services Online Survey of 13,629 Net users, one-fifth of Western European Net users with a mobile phone now use mobile banking. Surprisingly, given the seeming ubiquity of smartphones in European cities, SMS alerts are still the most popular form of mobile banking in most countries. But that’s set to change soon, because the use of online banking on mobile phones (mobile web banking) is growing fast and mobile banking app use is growing even faster. Customers who use mobile apps or mobile-optimized websites use a much wider range of functionality than those who only receive SMS alerts.
- Rapid growth is likely to continue. Mobile Internet use is exploding. Forrester expects smartphone ownership to continue growing rapidly across Europe to reach 67% of mobile phone owners by the end of 2016, while mobile Internet use will rise to 54% of mobile phone owners by 2016.
- There’s wide variation in what different banks offer. Overall, customers are most likely to use mobile banking for the most frequent interactions, like checking balances, reviewing transactions and transferring money between their accounts. To me the most interesting functionality comes when banks find ways for customers to do things in better ways or do entirely new things. Here are two of my favourite examples. Société Générale has a “fuel gauge” on the home screen of its iPhone and iPad apps, giving customers a simple way to see whether they are on track with their monthly budget (you can see a video, in English, about the iPad app here). Bankinter and some other Spanish banks offer a service called Hal-Cash that lets customers send money to other people’s mobile phones that the recipient can then withdraw as cash from any ATM, without a credit or debit card, using only the code received via SMS.
- The rising tide of mobile use won’t lift all boats. Digital banking teams will have to navigate around numerous obstacles, including the rapid pace of technology change, the technical challenges presented by diverse mobile platforms and the fact that 36% of mobile phone users who don’t use mobile banking say they ‘see no value in using it’. Forrester’s Technographics data already shows wide differences in mobile banking adoption between different banks.
The full report is available to Forrester customers here. We look in detail at what mobile banking functionality European banks are offering and at how customers are using mobile banking. We also provide recommendations on how digital banking teams can drive mobile banking adoption by listening to customers’ needs, focusing on helping customers achieve their goals, integrating mobile banking into wider multichannel strategy, choosing technologies carefully, and using education and security guarantees.