Mobile is no longer for a small slice of society; it’s redefining the way people live on a global scale. Today, 2.6 billion people walk the earth with a smartphone in their hands. By 2020, this number will likely hit 6.1 billion, or 70 percent of the world’s population.
In addition to the growing proliferation of mobile phones in society, the way we use them is evolving, too. Less than 10 years ago, many consumers were reluctant to dip their toes into the waters of mobile banking. But today, that’s changed. Even if you don’t personally use mobile banking services, there’s a good chance many of your friends and family do: Today, 69 percent of mobile users currently do some form of banking on the their phones. And consumers are increasingly using mobile for more complex interactions, moving beyond checking their account balance to transferring funds and even applying for loans.
As mobile banking continues to experience hyper consumer growth, the financial services industry is trying to adapt, and ultimately determine how mobile fits into banking’s big picture.
Mobile creates a myriad of opportunities to revolutionize banking. Forrester predicts that by 2017, 108 million customers in the U.S. alone will be using mobile banking. Consumers are hungry for new ways to make their banking easier and more efficient. Proactive banks have an opportunity to transform consumer behavior, win millennial customers and satisfy existing customers by taking advantage of the unique differentiation opportunity of mobile.
Mobile certainly will bring more changes for the financial services industry. Here are five of the biggest ways mobile banking has already reimagined the landscape – so far:
#1. Brick-and-mortar banking is officially passé.
Growing numbers of people are mobile-only customers who have either stopped using or significantly reduced their use of other banking touch points. In Crittercism’s 2015 Banking Survey, more than half of the 235 individuals surveyed reported banking online, while more than one third use mobile apps for their banking.
This shift has caused another phenomenon: Banking with a brand-name institution is now less important to consumers. There’s been a move to “white-label” banking, where banks provide the financial capabilities for payment wallets like Google Wallet and Apple Pay. For example, T-Mobile’s Mobile Money product sits atop of Bancorp Bank, but we are really only aware of the T-Mobile brand.
#2. Millennials have emerged as mobile trailblazers.
Millennials, the generation characterized as the “iGeneration,” are unsurprisingly leading the mobile charge.
Smartphones and tablets are central to Millennials’ “on-demand” lifestyle, making the mobile banking adoption rate for this group a whopping 46.6 percent. Globally, the millennial population looks to do their banking through a mobile app. Over 43 percent do it online via their bank’s website, while only 7.8 percent use a physical bank. This maps with Bank of America’s recent study, which found that nearly 3 in 5 Millennials use their bank’s mobile banking app – the most active users of any generation.
#3. Generation X is starting to dip their toes in mobile banking.
Although Gen Xers display a willingness to adopt mobile across the board, they lack the enthusiasm of their millennial counterparts. The reason is threefold: decades of status quo banking is ingrained in their minds, security concerns them and some find their bank’s existing mobile interface or app difficult to work with.
However, more and more Gen X consumers are becoming comfortable with the idea of more extensive mobile banking – and banks need to prepare for the swell in users, and accompanying demand for support these users will create.
#4. The amenities consumers value have changed.
In the past, consumers would consider factors like location, interest rate and even personal relationships with bank staff before choosing a bank. But today, the decision-making process is different. Because checks are now often deposited via smartphone and direct deposit, there is rarely a need to visit a physical brick and mortar bank location. That means amenities such as bill pay, lack of fees and control over money transfers have become more important.
Today, the landscape is competitive, to say the least. Banks compete against each other every day, courting customers with special offers and advanced services that promise to make their lives a little easier. Mobile capabilities are on this list – in fact, they’re among the most lucrative lures at a financial services brand’s disposal.
#5. Mobile wallets and other disruptive technologies are becoming the rule, not the exception.
Prepaid cards and mobile wallets have become major disruptive forces in the financial services industry. Not only do they give consumers new vehicles in which to store money, bitcoin, Apple Pay, PayPal and others, they also bring new ways to manage transactions. And since these alternatives to paper cash are often combined with negligible interest rates, banks must continue to find new strategies to adapt to the rise of these new consumer banking options.
Mobile will continue to shape the financial services industry in the years to come. To learn more about the trend – and the changes still yet to come – download Crittercism’s 2015 Banking Survey.
Andrew Levy, CSO at Crittercism.