Each year since 2011 the Federal Reserve has conducted a "Consumers and Mobile Financial Services" survey of over 2,000 US adults on their use of mobile banking. The study focuses on the consumer trends and the use of mobile devices to access financial and banking services, and to help make financial decisions.
I consider this study to be one of the best in the industry for a number of reasons. First, with now five years of consistent reports, trends are more clearly highlighted in these Fed reports than the numerous single reports that have been published in the industry. Second, the methodology is fully detailed in the reports and appears well designed. There is nothing hidden under the covers, and no cherry picking of results. Also, the questions are very consistent year over year, and are not designed with any bias towards any technology services provider or hidden agenda. And finally, it's done by the Federal Reserve, which is entrusted to provide the nation with a safe, sound, and accessible banking system.
Is mobile adoption leveling off?
In their latest report, the Fed report that the use of mobile banking continues to rise, with 43% of all mobile phone users with a bank account using mobile banking, up from 39% and 33% in the prior two years. But along with that increase, the percent of smartphone banking users (a smartphone is defined as any Internet-enable phone) has leveled off, with only a one percent increase in each of the last two years. Clearly by some measures, mobile adoption is leveling off. Some Akamai banking customer have reported a leveling off as well.
Security - A barrier to mobile adoption:
What are the reasons for this leveling off of adoption? The Fed study has an excellent question to help us understand this, directly asking users why they don't use mobile banking. Comparing the 2016 report with the 2015 report, we see security now increasing as a barrier to mobile adoption, with nearly 75% citing this as a top concern.
The digital transformation efforts in many banks is directly related to the continue success of mobile banking. The leveling off of adoption will impact not only the transformation programs within banks, but will leave the door open for FinTech disruption by digital or mobile-only banks now entering the market.
To improve the adoption rate, the security concerns of the non-mobile-banking consumers must be addressed. Technology, marketing, and consumer education can all play a roll here. Regulation E, for example, provides excellent fraud protection to consumer banking accounts. Do consumers understand how Reg E protects them while using mobile banking? Do banks properly explain this?
Here's a test: Open your favorite mobile banking app and see if you can find a security guarantee. I tried this with two banking apps that I use. One has an easy to find, pre-login, very brief security guarantee, clearly stating that that I am not liable if I report unauthorized transactions within 60 days (Reg E). The second app has a 30 page, impossible to read, "privacy and security" notice that reads like a contract. I skimmed it, and could not spot a security guarantee.
Security is more than the technical controls that a bank provides. Banks absolutely need the technical controls in place, but they also need to put their customers at ease and build trust. Security is also a state of mind, and some banks understand this better than others.
Rich Bolstridge is Chief Strategist, Financial Services at Akamai Technologies
He will be speaking on mobile adoption at the Net Finance conference, April 18-20 in Miami, and will also be attending the FS-ISAC Spring Summit May 1-4 in Miami. If you are attending either of these conferences, please reach out to Rich at: firstname.lastname@example.org