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Mobile banking to hit 1B users by 2017: study

By
January 10, 2013

Mobile banking is expected to grow at a global compound annual rate of 18 percent to eventually reach one billion consumers in the next five years, according to a new study from Juniper Research.

Juniper’s “Mobile Banking: Handset & Tablet Market Strategies 2013 – 2017” report looks at how mobile banking is spreading in both developed and underdeveloped countries. Overall, the report points to the growing maturity in the space over the past year.

“Since our previous report on mobile banking published in January 2012, the dominant conclusion concerns the level of maturity in number and innovation of mobile banking services being offered in the market across several geographical areas, demonstrating that banks now regard the mobile channel as an indispensible revenue-stream,” said Nitin Bhas, senior analyst at Juniper Research, Hampshire, England.

Bank on mobile
Juniper Research’s prediction for one billion mobile banking users  by 2017 will be equivalent to more than 15 percent of global mobile subscribers.

Last year Juniper released a study estimating that half a billion consumers would use mobile banking in 2013 (see story).

Juniper Research’s current forecast is that more than 590 million phone owners will use their device for mobile banking by the end of 2013.

Additionally, the report outlines which markets will have the highest mobile banking penetration. The United States, Western Europe and Far East and China rank as the top areas for mobile banking, likely due to high smartphone and tablet ownership.

Other areas with high mobile penetration include Latin America, Central and Eastern Europe and India.

“Given exceptionally high mobile penetration and a greater banked population, mobile banking and payments forms only a component of a broader commerce offering in developed nations,” Mr. Bhas said.

“In the developed regions of the world, the retail banking industry is being exposed to a now inexorable consumer and technology revolution driven by the ubiquitous mobile and compounded by a conglomeration of multiple other factors including the current economic downturn,” he said.

“In this tech-savvy consumer era, the banking industry in the developed world is conforming to a macro-wide trend and progressing in a similar fashion to that of say, the movie-rental or books market. Given the high prevalence of mobile technology compared to the low degree of financial inclusion, the emerging markets offer not only new possibilities for traditional banking but major potential for transformative banking by leveraging the opportunities afforded by the mobile.”

On-the-go finances
Mobile banking falls into two buckets, according to Juniper Research.

The first is additive, which applies to existing banking members and is a way for banks to offer clients new channels as a convenience to consumers.

Over the past year, big financial instutuions including Chase, Bank of America and Capital One have all significantly upped their mobile presence to meet a growing need from consumers to manage their finances from their mobile devices.

In fact, a study from Forrester Research in July 2012 found that banks are allocating one-third of their digital budhgets towards mobile (see story).

The second type of mobile banking is called transformational and reaches under-banked or unbanked consumers.

There is also a growing connection between mobile payments and banking, per the report. For instance, near field communication technology may not be directly tied to mobile banking, but the technology makes consumers more comfortable using their handsets to make financial-driven actions.

Similarly, the definition of mobile commerce continues to evolve.

Per the report, digital goods such as ringtones and wallpapers have traditionally been eyed as the core products bought over a mobile device.

With the growing adoption of smartphones and tablets in the past 12 months though, mobile commerce has grown to include the physical sales from ticketing, retail and mobile coupons.

As banks and financial institutions continue to see more clients using their mobile devices to manage their finances, financial institutions are increasingly using multi-pronged strategies that including SMS, mobile Web and applications to connect with consumers.

“While consumers use both tablet and smartphone devices for accessing their bank accounts, the experience can be vastly different on each device – this will depend on whether the app or browser is optimized for the tablet device,” Mr. Bhas said.

“As consumer tablet adoption continues to rise, there will be significant migration of purchasing and transaction activity from laptops and desktops to tablet devices, with consumers increasingly engaging in online shopping while watching television,” he said. “We expect this trend to be replicated within the banking industry as well.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York

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