Survey: Consumer Usage And Perceptions About Mobile Banking

Late last month, the Federal Reserve Board (FRB) released the results of its latest survey of mobile usage by consumers for online banking. Key findings:

• 87% of the U.S. adult population has mobile phones
• 52% of mobile phones are smartphones (Internet-enabled)
• 87% of smartphone users accessed their devices to access the Internet during the past week
• 28% of all mobile phone owners used their devices for mobile banking during the past 12 months, up from 21% in December 2011
• 48% of smartphone owners used their devices for mobile banking during the past 12 months, up from 42% in December 2011
• 10% of mobile phone users who don't perform mobile banking expect to do so within the next 12 months

The specific mobile banking tasks consumers said they perform:

• 87% check account balances
• 53% transferr money between accounts
• 21% deposit checks
• 24% of smartphone users made mobile payments during the past 12 months,
• 42% made an online bill payment, down from 47% in 2011
• 6% of smartphone users made a retail point-of-sale payment during the past 12 months, up from 1% in December 2011. 22% want to use their mobile devices for retail purchases

Perceptions about the technology:

• 54% of mobile phone users said the primary reason they do not use their device for mobile banking is that their banking needs were already being met without the use of mobile banking. This is down from 58% in 2011
• 38% said concerns about the security were the primary reason for not us mobile banking. This is down from 42% in 2011
• 49% said security was the second most common reason given for not using mobile banking. This is up from 48% in 2011
• More than a third of mobile phone users who do not use mobile payments don’t see any benefit
  from doing so, and find it easier to pay with another methods (e.g., cash, credit, debit, prepaid)

Other tasks respondents said they use their smartphones for:

• 42% comparison shop while in retail stores
• 32% scan a product’s barcode to find the best price for the item
• 64% percent of those who comparison shop have changed where they purchased the product based on the information found
• 44% browse product reviews or get product information while shopping at a retail store
• 70% of those who browse product reviews have changed the item purchased based on the information found
• 64% of mobile banking users checked their account balance before making a large purchase
  in the past 12 months. About half of them did not purchase an item as a result of their account balance or credit limit

Who uses mobile phones:

• 10% are unbanked (neither they nor their spouse have a checking, savings, or money market account)
• 10% are underbanked (have a bank account, but also use a payroll card, payday lender, check cashier, or auto title loan)
• 59% of the unbanked have access to a mobile phone, half of which are smartphones
• 90% of the underbanked have access to a mobile phone, 56% of which are smartphones
• 49% of the underbanked said they used mobile banking during the past 12 months

The terms "unbanked" and "underbanked" are labels used within the banking industry. The FRB defines mobile banking as using a mobile phone to access a bank account, credit card account, or other financial bank account. So, mobile banking includes using the mobile phone's web browse, text messaging, or application features.

The reasons unbanked consumers gave for why they don't have a checking, savings, or money market account:

How consumers said they use the money from payday loans:

The reasons consumers said for why they don't use mobile banking services:

The reasons consumers said for why they don't use mobile payments:

Consumers' perceptions of the security of mobile phones and mobile banking:

Regarding mobile payments, the report found:

"Despite the increasing availability of phones equipped with near field communication (NFC) chips for use with NFC-based payment services, retailers and consumers appear to be trending toward adoption of non-NFC-based payment services. Indeed, consumers making mobile payments were nearly twice as likely to have used a mobile app or barcode to make their payment as to have made a payment by waving or tapping their phone."

How consumers with checking, savings, or money market accounts do their banking:

• 85% of banked consumers said they had visited a branch and spoke with a teller in the past 12 months
• 74% said they used an ATM machine
• 74% said they used online banking
• 34% said they used telephone banking
• 29% said they used mobile banking

The report's authors concluded:

"The two factors limiting consumer adoption of mobile banking and payments are concerns about the security of the technology and a sense that they don’t offer any real benefits to the user over existing methods for banking or making payments. With regards to security, consumers have actually become more likely in the past year to report that they simply don’t know how safe it is to use mobile banking, suggesting that consumers need to be provided with reliable and accurate information on the level of security associated with the various means of accessing mobile banking. In terms of the value proposition to consumers, the significant number of mobile users who reported an interest in using their phones to receive discounts, coupons, and promotions or to track rewards and loyalty points suggests that tying these services to a mobile payment service would increase the attractiveness of mobile phones as a means of payment."

The FRB's Consumer Research Section sponsored the survey and developed the report. GfK (formerly Knowledge Networks), an online consumer research firm. administered the survey from November 16 to 27, 2012. Nearly 2,600 respondents ages 18 or older completed the survey. The FRB conducted its first mobile survey in December, 2011.

Download the FBR "March 2013 - Survey of Consumers' Use of Mobile Financial Services" report (Adobe PDF, 941 kbytes).