It’s a fact that smartphones dominate today’s technology and are now the universally preferred devices used to access the internet.
As well as the functional - business and social daily use of mobile phones - we are also seeing a rise in the adoption of mobile banking (or mBanking), which allows customers to bank or pay for goods or services (online or in shops) without the need for cash or a credit card.
It’s clear that there are some big developments in mobile banking; this week we have had the announcement of the launch of Paym, the banking industry's new mobile phone payments system (to be launched later this year) along with the recent announcement of Zapp (that will allow its customers to pay for goods or services in shops or online without the need for cash or a credit card) to their smartphone and tablet apps.
But despite these advancements, only 26% of mobile users are using their phones for financial or banking transactions, while another 16% are considering, demonstrating a strong lack of awareness amongst would-be mbankers. For those who are mBanking, the top three most-used banking features include balance enquiries (30%), bank transfers (26%) and cash withdrawals (28%), indicating that ‘self-serving’ banking is currently the most popular banking option with mobile users.
But if mobile banking is so simple, why aren’t we all mBanking?
So why is mobile banking not yet universally adopted by the masses?
In a recent BuzzCity Mobile Banking report, it was reported that 34% won’t mobile bank for fear of security issues and 30% felt that they didn’t have a suitable device. A further 12% stated that mobile banking facilities were not yet available to them.
It’s apparent that we’re still some way from mobile-payment domination and one of the main challenges for consumers is lack of awareness combined with the ‘security’ fear. Many people, particularly the older generation, still aren’t ready to have their personal banking details stored in a mobile device, even though it is secure.
According to a PriceWaterHouseCoopers report 85 % are afraid of their phones getting stolen, 79% are afraid of having their information stolen while transmitting payments wirelessly and 74 % are afraid of having too much information in the same place.
But the idea of a plastic card with a metal strip being more secure than a mobile phone which requires authentication is irrational. There are unarguably enough known cases of credit card fraud for people to be equally wary, so it’s a fear of the unknown that is the greater barrier.
More adoption by merchants
Even with mobile payment apps like PayPal, only a small percentage (15%) of smartphone users use their devices to regularly purchase goods and services; a fraction of the potential mobile banking market.
Merchants, including the main high street retailers must embrace the mobile payment revolution and start to adopt mobile payment strategies to take advantage of the potential market. For brands that already have, including Pizza Express (that has been offering mobile payment options since 2011) and Starbucks (which also launched mobile payments in the same year) - the proof is in the profit; Starbucks reported that over 10% of all transactions in the US and Canada were made by mobile at a reported value of over $1 billion to the company.
Education is key
So mBanking is here – and set to grow at speed. But it’s clear that the banks and financial institutions need to put a lot more effort into education and awareness via all communication channels and across all media platfoms amongst the potentially huge demographic of potential adopters.
They need to understand how consumers harness the functionality and proficiency of their technology to ensure that their customers get the best and most efficient service and continue to keep using mobile payments services.
But for everyone to truly benefit – the merchants must come on board and support the market for all to profit.