Study: Mobile Banking Not Just for the Affluent
Mobile banking users are not necessarily more affluent than nonmobile bankers, according to Boston-based research firm Aite Group, and credit unions should invest in debit cards, prepaid cards and merchant-funded awards to attract new members.
The mobile channel also can help with potential lost income from the looming debit interchange cap, Aite said, basing its conclusions on surveys that polled 54 credit unions and 1,011 mobile and nonmobile consumers.
Only 40% of credit unions surveyed offered some type of mobile service to their customers, compared to banks’ 62%, although the percentages of credit unions who said they were likely to develop specific mobile banking features in the future tended to be greater than those of banks.
If credit union executives are thinking that mobile banking is mostly for higher income early adopters and that it will need 10 or 15 years to scale to mass-market adoption, they might be surprised to learn, the report pointed out, that income levels of mobile and nonmobile bankers were nearly the same within each generation, with nonmobile users’ income even slightly edging out the income of mobile users in Gen X and Gen Y.
According to the report, consumers are writing fewer checks and using their debit cards more, with mobile users tending to outpace nonmobile users in these trends across all generations.
Ron Shevlin, author of the report, recommended that financial institutions embrace the change.
"Although banks aren’t happy with the proposed legislation to reduce the interchange fee to 12 cents, something is better than nothing. And nothing is what banks get for check-based transactions. If mobile banking adoption leads to changing behaviors–e.g., fewer checks, more debit card usage–then banks stand to gain financially from mobile banking," Shevlin wrote.
The report estimated that driving up mobile adoption could increase credit unions’ debit interchange revenue by 8% per year.
Prepaid cards are another area where mobile users have surpassed nonmobile consumers in usage. Even though only 19% of mobile users use prepaid cards, the report noted, they generate the same amount in prepaid card interchange fees as do nonmobile users.
The data also showed that mobile users tend not to use the mobile channel by itself–a greater percentage of consumers used both online banking and mobile banking (13%) than used mobile banking exclusively (7%).
In fact, mobile users even surpassed nonmobile online users in the percentage who checked their account balances online 10 times or more during the fourth quarter of 2010.
All that balance checking will reduce overdraft fee revenue, the report predicted, and financial institutions would be wise to take advantage of mobile marketing, especially with mobile users tending to use more electronic coupons and make more purchases with their phones than their non-mobile banking counterparts.