More advanced mobile banking functionalities such as bill payment are driving momentum in the adoption of transactional mobile banking services, according to a new report from Juniper Research.

The “Mobile Banking for Developed & Developing Markets” report reveals that mobile device owners are becoming increasingly more confident in using basic informational mobile banking services. This confidence will translate to growing engagement with transactional banking services as consumers look for tighter control over their finances and deal with their busy lifestyles.

“Banks are realizing that consumers expect – and will demand – mobile access to their accounts; expect not merely to be pushed information, but also to be able to perform the same array of tasks that they can on the desktop – transfer funds, pay bills, set up direct debits and so on,” said Windsor Holden, research director at Juniper Research, Hampshire, Britain.  “Thus any bank which does not offer such a service as standard will be at a competitive disadvantage.

Triple-play mobile banking
The report forecasts that the number of transactional mobile banking users will grow from 185 million in 2011 to over 550 million in 2016 as consumer become accustomed to “push” mobile banking and as smartphone adoption increases.

Additionally, as consumers engage in increasingly mobile lifestyles, approximately 80 percent of total mobile banking customers will pay their bills via a mobile device by 2016.

The increased use of transactional services is likely to provide an impetus for financial services institutions to integrate other elements of mobile commerce, according to Juniper.

Triple-play mobile solutions from banks that combine SMS, Web browser and mobile applications have the highest adoption rates among users, according to the report.

However, not all banks offer customers an SMS banking option.

“The triple-play option is popular as there is clear evidence that consumer prefer a choice of delivery according to the service engaged,” Mr. Holden said.

“It is perhaps surprising that a significant minority of banks have yet to offer an SMS-based product: given the ubiquity of text – and end-users’ familiarity with the mechanism – it is ideal of a means of reaching a bank’s entire user base,” he said.

Security issues
Those users already paying bills via mobile will continue to conduct transactions as they become accustomed to the services.

However, growth in transactional banking services does face challenges, including user security concerns and the rapid growth in spyware and malware in mobile. This could dampen enthusiasm for mobile transactional banking, particularly among older demographics.

Juniper expects that transaction frequency will be higher in developing regions where physical branches are few and far between, meaning users do not have many alternative options for bill payment.

Overall, the services being offered by financial organizations are catching up with what consumers are looking for in mobile banking.

“There is significant variation even on a market-by-market basis, but I would say that the lag between service demand and service supply has diminished over the past year,” Mr. Holden said.