Better technologies for mobile devices, proliferation of banking apps and increased consumer appetite for staying connected are converging to propel mobile banking penetration. On the technology device front, recent double-digit growth in smartphone adoption has enabled consumers to expand the activities they can perform via mobile phone connections — including banking online. One-half of smartphone owners have banked online with their mobile phones within the past 30 days vs. only 13 percent of those with conventional mobile phones with Internet access.

1. Clearing the Runway for Mobile Banking Adoption
Consumer Insight Brief
May 2011
Paul McAdam, SVP of Research and Thought Leadership, FIS
Mandy Putnam, Director of Research and Thought Leadership, FIS
www.fisglobal.com

2. Clearing the Runway for Mobile Banking
Adoption
Convergence Drives Penetration Large Banks Lead the Way with Apps
Better technologies for mobile devices, proliferation Downloading a banking app is the number one
of banking apps and increased consumer appetite predictor of whether someone engages in mobile
for staying connected are converging to propel banking. Seventy-one percent of mobile banking
mobile banking penetration. On the technology users have downloaded a banking app. Beating out
device front, recent double-digit growth in sports, photography and shopping apps, banking
smartphone adoption has enabled consumers to apps are among the most popular types of apps
expand the activities they can perform via mobile (Figure 2).
phone connections — including banking online.
One-half of smartphone owners have banked online Figure 2: Types of Apps Downloaded by Mobile
with their mobile phones within the past 30 days vs. Phone Owners Who Download Apps
only 13 percent of those with conventional mobile
phones with Internet access (Figure 1).
Games 70%*
Social Networking 57%
Figure 1: Mobile Banking Penetration by Entertainment 55%
Mobile Phone Ownership News & Weather 49%
Navigation 44%
50%* Communication 41%
Banking 37%
Sports 28%
Photography 27%
Shopping 23%
Books & Reference 21%
13%
P2P Payment App 20%
Personalization 20%
Health & Fitness 20%
Lifestyle 16%
Smartphone Conventional mobile
phone with Internet Travel 15%
access Business & Finance 14%
Education 14%
*Read as: 50% of smartphone owners banked online
with their mobile phones in the past 30 days
*Read as: games are downloaded by 70% of mobile phone owners
who download apps
During this past year, penetration of the Android
operating system soared past the more business-
oriented BlackBerry and, along with its iPhone rival,
fueled the proliferation of apps, including banking
apps. The current number of mobile banking apps is
estimated at between 1,400 and 1,600 1.
2
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3. Clearing the Runway for Mobile Banking
Adoption
Two characteristics – 1) generation and 2) the type Figure 3: Mobile Banking App Usage by Generation
of financial institution where customers have their
primary checking account – stand out from others
in defining who uses mobile banking apps.
1) Gen Y members are avid app users in
general and account for more than one-half
(54 percent) of banking app users. They also
account for 43 percent of the smartphone
owners though they represent only 26
percent of the survey sample population.
Their banking app usage is double the norm
(Figure 3). The oldest Gen Y customers are
now 31 years old. On the precipice of nest-
building, Gen Y members are avid
consumers that demand quick access to
funds wherever they are and whenever
they need them. Access to mobile banking
is cost-of-entry in growing the Gen Y
customer base. *Read as: 54% of mobile banking app users are members of Gen Y
2) Large banks are leading the way in Figure 4: Mobile Bank App Usage by FI Type
providing apps to their customers.
Customers of the top-10 banks account for
58 percent of banking app users (Figure 4).
The top banks are doing a better job of
providing banking apps to their customers
and in making their customers aware of
their mobile offer. As a result, the top-10
banks capture more than their fair share of
mobile banking users – 52 percent of
mobile banking users vs. 37 percent of
consumers in the survey. Customers of the
top-10 banks also report greater
satisfaction with their mobile banking
experience and, thus, will be more likely to
*Read as: 58% of banking app users are Top 10 Bank customers
stick with the institution providing them
with mobile banking services.
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4. Clearing the Runway for Mobile Banking
Adoption
Satisfaction with mobile banking has risen Appetite for Connectivity
significantly year-to-year. Customers who use
Fuels Adoption
mobile banking apps to access their financial
institutions report the highest satisfaction level – at
The number two predictor of mobile banking
88 percent. Satisfaction with alternative types of
adoption is frequent usage of the Internet via one’s
access – text messaging and through the Internet
mobile phone. Eighty-eight percent of mobile banking
browser – also has improved significantly year-to-
users describe their mobile phones’ Internet
year (Figure 5). No doubt, better devices and the
capabilities and usage as: I have Internet access on my
proliferation of apps are positively affecting
mobile phone, and I use it frequently. In contrast, only
customer satisfaction with financial institution
about one-quarter of mobile phone owners in general
connections via mobile devices.
describe their mobile phone usage this way. Another
Figure 5: Satisfaction with Mobile Banking 29 percent of mobile phone owners have Internet
(top-4 box on 11-point scale) access on their phone but either do not use it very
often or do not use it at all.
The distribution of consumers who describe
themselves as using the Internet on their mobile
phones frequently skews heavily toward younger
generations. One-half (51 percent) of frequent
mobile Internet users are members of Gen Y and
one-third (34 percent) are members of Gen X
(Figure 6). Though Gen Y members are the most
voracious consumers of the Internet while on-the-
go, both Gen Y and Gen X have large appetites for
connectivity.
Figure 6: Have and Use Internet on
*Read as: in 2011, 88% of mobile banking users Mobile Phone Frequently
accessing their FI through an app were satisfied with
mobile banking
*Read as: 51% of consumers who have Internet access on their
mobile phones and use it frequently are members of Gen Y
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5. Clearing the Runway for Mobile Banking
Adoption
Mobile Banking Users Are More Active Mobile banking users are trading paper for plastic.
They make more debit card purchases and debit card
Mobile banking users’ financial habits differ cash back transactions than non-users (Figure 8).
markedly from non-users. Mobility increases Mobile banking users write fewer paper checks,
exposure to places where financial transactions can because they typically pay their bills online. Most are
be conducted. For mobile banking users, mobile paying their bills through their computers (86
banking is not a substitute for a point of contact, percent) and mobile phones (42 percent), but small
but instead, an additional point of contact with percentages are paying bills through tablet computers
their financial institution. Usage of other channels is (e.g., iPad) (8 percent) and even Internet gaming
not diminished, but rather, is greater among mobile systems (7 percent).
banking users. Compared with non-users, they
make significantly more visits to ATMs owned by
Figure 8: Average Number of Transactions
their banks and branch lobbies (Figure 7).
in Past 30 Days
Figure 7: Points of Contact in Past 30 Days
*Read as: mobile banking users made 4.1 visits to
their banks’ ATMs in the past 30 days, on average
*Read as: mobile banking users purchased 15.3
times in the past 30 days, on average
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6. Clearing the Runway for Mobile Banking
Adoption
Mobile banking users are more likely oriented Mobile Banking Users Are Worth It
toward accessing online financial services outside of
conventional financial institutions, which should be Indexed against non-users of each respective
cause for concern among traditional banks – generation, mobile banking users show higher asset
especially ones not offering a person-to-person balances. Gen X and Baby Boomer mobile banking
(P2P) payment product. Six out of 10 mobile users’ assets are especially high compared with
banking users make P2P payments and nearly one their non-user counterparts. Both Gen X and
in five uses an online personal savings service such Boomer mobile banking segments have about
as SmartyPig. Sixteen percent use an online double the assets of non-users except for
personal financial management service such as retirement/college savings, which still are above
Mint.com, Geezeo or Yodlee. In total, three- average. Even Gen Y mobile banking users compare
quarters of mobile banking users access at least one favorably with non-users in their generation. Mobile
of the listed online financial services (Figure 9). banking users’ savings balances are especially
robust compared with their non-user counterparts
(Figure 10).
Figure 9: Online Financial Services Used
Figure 10: Mobile Banking Users’ Asset Balance
Indices
*Read as: 60% of mobile banking users have used P2P *Read as: Gen Y mobile banking users have 28% higher
balances in checking on average than non-users in Gen Y
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7. Clearing the Runway for Mobile Banking
Adoption
Indices on credit and loan balances paint a somewhat Indices for store-branded credit cards are very high
different picture, though mobile banking users for both Gen Y and Gen X relative to major credit
typically index above their non-user counterparts for card indices. Retailers seem to be doing a better job
most types of credit and loan balances (Figure 11). than the major credit card issuers and the financial
Reflective of their greater resources to acquire things institutions with which they co-brand their cards at
during lifestages when acquisition is most common, capturing younger generations’ loyalty.
Gen Y and Gen X mobile banking users have higher
balances than their non-user counterparts in every In contrast to Gen Y and Gen X, mobile banking
credit and loan category. users who are Baby Boomers have indices above
their non-user counterparts only in automobile and
Figure 11: Mobile Banking Users’ Credit and Loan educational loan categories. With nearly three
Balance Indices times the amount in their checking accounts,
mobile banking Baby Boomers are likely more
financially solvent than their non-user counterparts
especially regarding short-term or revolving credit.
Clear the Runway
There is abundant runway ahead for mobile banking
usage beyond early adopters. Key tailwinds include
continued smartphone and tablet adoption as well
as mobile payment options on the horizon. Today’s
mobile banking users will become the early
adopters of mobile payment. (Consumers’ attitudes
about adoption of NFC mobile payments will be
detailed in a future report).
Smartphone adoption is projected by Nielsen and
others to continue its recent pattern of double-digit
growth near term. Also, tablet users are projected
by Forrester Research to equal the number of
current smartphone subscribers within the next two
years2. With larger screens, tablets hold a key
advantage over smartphones for online banking.
The small screen on smartphones is an impediment
for one out of five (19 percent) mobile phone
owners who have phones that connect to the
Internet but do not bank via their mobile phones.
*Read as: Gen Y mobile banking users have 22% higher major
credit card balances on average than non-users in Gen Y
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8. Clearing the Runway for Mobile Banking
Adoption
Headwinds to mobile phone adoption indicate the financial institutions if traditional banks and credit
need to increase: 1) awareness, 2) banking app unions fail to deliver on expectations.
penetration and 3) appetites for mobile banking
among customers. Top-tier banks and alternative financial institutions
are doing a better job of providing apps that boost
1) Currently, 44 percent of mobile phone customer satisfaction with mobile banking. Second-
owners do not know if their FI offers tier banks have more work to do – especially in the
mobile banking. Lack of awareness can be area of customer satisfaction – in order to earn
their fair share of the growing market of connected
reversed through improved
consumers. All financial institutions need to work to
communication.
increase awareness of their mobile banking offers
among current customers and prospects.
2) The number one predictor of mobile
banking usage is downloading a banking Figure 12: Reasons for Not Doing Mobile Banking
app. Increasing app availability will
increase penetration.
3) Preferences for online banking via
computers and concerns about security
also represent impediments to the
diffusion process (Figure 12). One in five
(19 percent) non-users report the reason
why they don’t do mobile banking is
because they just have not bothered to try
mobile banking yet. Their indifference
could be reversed through communication
of a clear value proposition and “sampling
incentives.” Those with security concerns
(28 percent) will require different
messages to assuage their worries.
Conclusion
Offering mobile banking is the price of entry for
attracting the emerging customer who is connected
to the Internet 24/7. This customer is “worth it” and
will seek financial services from non-traditional
*Read as: 38% of non-users prefer to bank online with their computers
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9. Clearing the Runway for Mobile Banking
Adoption
Citations:
1
Interview with Jim Breune, netbanker.com., April 8, 2011.
2
Forrester Research eReader Forecast, 2010 to 2015 (U.S.), Jan. 4, 2011.
About the Research
Clearing the Runway for Mobile Banking Adoption is part of a series of Consumer Insight Briefs based on primary
research conducted by FIS Enterprise Strategy. The research findings herein are based on a 60-question, online
survey completed by about 4,000 U.S. mobile phone owners in February 2011. The survey was fielded by FIS
Enterprise Strategy to a consumer panel maintained by Survey Sampling International.
The definitions of age generations used in our analysis are the standard U.S. Census Bureau definitions: Gen Y,
born in 1980 or later; Gen X, born from 1965 – 1979; Baby Boomer, born from 1946 – 1964; Mature, born in
1945 or earlier.
The study’s primary objective was to determine the impact of mobile devices on behaviors related to financial
transactions, including accessing accounts, paying bills, depositing checks and making purchases.
About FIS
FIS (NYSE: FIS) is the world’s largest global provider dedicated to banking and payments technologies. With a
long history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100
countries. Headquartered in Jacksonville, Fla., FIS employs more than 32,000 people worldwide and holds
leadership positions in payment processing and banking solutions, providing software, services and outsourcing
of the technology that drives financial institutions. FIS is ranked 426 on the Fortune 500, is a member of
Standard & Poor’s 500® Index and consistently holds a leading ranking in the annual FinTech 100 list. For more
information about FIS, visit www.fisglobal.com.
Clearing the Runway for Mobile Banking was authored by Paul McAdam, SVP of Research and Thought
Leadership at FIS and Mandy Putnam, Director of Research and Thought Leadership at FIS.
Please contact the authors if you have questions about the research or how the results apply to your financial
institution.
Paul McAdam
Ph: 708.449.7743
paul.mcadam@fisglobal.com
Mandy Putnam
Ph: 614.414.4207
mandy.putnam@fisglobal.com
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