Smartphone adoption is exploding but mobile banking isn't along with it, primarily because of security concerns, a new report says.

Based on interviews with 13,000 consumers in three surveys taken over the past 16 months, Javelin Strategy & Research says that while smartphone ownership jumped as much as 40%, mobile banking adoption seems to have actually plateaued.

“With the explosive growth of smartphone ownership … and constant buzz about such hot new technologies as mobile wallets for payments, financial institutions expected that mobile banking growth would continue to skyrocket as well,” the San Francisco firm said. “Tech-savvy consumers are increasing their use of smartphones to do almost everything these days – everything, that is, except mobile banking and purchasing.”

Aggressive promotion apparently hasn't overcome security fears. Javelin said that between 2009 and 2010 the number of consumers who rated mobile banking as “unsafe” or “very unsafe” increased by more than half, from about 25% to 40%. That was before the major data breaches of this year.

“These data breaches make consumers feel even more uneasy about using mobile channels,” the think firm said in its new report, titled “Smartphone Banking Security: Mobile Banking Utilization Stalls on Consumer Fears.”

“This study is a wake-up call to FIs to look into what consumers really want,” said Philip Blank, Javelin's managing director for security, risk and fraud. “First and foremost, FIs need to address consumers' needs around security and communicate to consumers their commitment to creating a safe and trusted channel for mobile banking.”

Javelin's report was based on surveys taken in July 2010, March 2010 and March 2011.

Gartner also released a report this week that says mobile payments adoption worldwide is growing fast but not as fast as expected.

Instant Insights /

Smartphone Use Soaring, Not So Much Mobile Banking

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