May 05, 2014

Why aren't more people banking with their mobiles?

By Hisham Isa, Vice President (Marketing)

Financial institutions have a long way to go in terms of educating consumers about the availability and advantages of mobile banking.

That's the key conclusion of a BuzzCity survey of mobile users in twenty benchmark countries across four continents.

Contrary to popular belief, concerns about security are not holding back the industry. While that may have been an issue in previous years, the problem today boils down to awareness.

Let's take a look at a few numbers and trends.

First, the vast majority of banks offer some form of mobile banking service.
  • We investigated 179 major banks that are used by people who participated in the BuzzCity survey.
  • 97% offer internet banking, which is accessible (though not optimal) on many phones
  • At least 90% offer m-banking via SMS, USSD, mobile sites or apps.
Breaking this down further, we find that
  • 73% of banks provide text-based banking that does not require an internet connection
  • 65% have at least one mobile banking app and
  • nearly 1/3 have mobile banking sites
Text banking is the simplest of the technologies above. Basic services include checking account balances, transaction inquiries and cheque status. In some places, SMS is now even used to authenticate cash withdrawals at ATM machines, replacing the old ATM cards.

Second, more people are using m-banking.
  • In July 2013, 26% of survey respondents, aged 20 and over, told BuzzCity that they've used their phones for banking transactions.
  • Just eight months later - in March 2014 - this figure has risen to 31%. These consumers have not only tried mobile banking, they find it "easy and useful".
  • There's no major age bias for mobile banking. Young and old alike are likely to use it. We do find that adoption by men is higher, though, than by women.
So with mobile banking moving to the mainstream, why aren't more people banking with their phones?

1. Consumers don't know that their bank offers m-banking.  Ask consumers whether their bank offers these services and less than half say 'yes'.

2. Consumers think their phones are not "m-banking enabled". Actually, every cell phone is capable of some form of m-banking, but most consumers don't realise this.

3. Consumers don't see the value proposition. One in three mobile users simply say that they don't need m-banking. About half of these have bank accounts and half do not.

4. Other concerns: security, reliability, ease of use. These are all issues, but they're secondary concerns compared to the three points above.

In addition, the percentage of users who cite security as a concern has dropped from 34% in July last year to 19% now. Many of these consumers still use mobile banking despite their privacy and security concerns.

Moving Ahead

There are two clear trends above that need to be addressed by banks and other businesses that have a stake in seeing the adoption and success of mobile financial services.

The first is awareness.  While at least 9 out of 10 banks offer some form of m-banking, there's a big disconnect between what's on offer and consumer perception of what's available.  Consumers also need to realise that they don't need a high-end phone for mobile banking.

The second is value.  While 31% of mobile consumers think m-banking is useful, an even greater number - 33% - don't see a need for it.  Clearly, the value proposition needs to be better presented and the market for using mobile financial services needs to be expanded to include more merchants.

Coming up next:  A wakeup call for banks! We take a look at mobile players who are making headways into the financial industry.

Read more about Mobile Banking in the April 2014 edition of The BuzzCity Report.