By: Daryl Tolliver
The mobile banking industry got off to a slower start than many analysts predicted. Many consumers expressed security concerns about the applications in use, while many others simply did not see a need for mobile banking when they can access their accounts online. However, this sentiment has begun to shift, and several customer satisfaction studies reveal that consumers are demanding mobile features at higher levels.
According to new data from Juniper Research, mobile banking is expected to grow by 18 percent globally over the next five years. By 2017, more than one billion people are projected to be mobile banking users, up from 590 million in 2013. The study also notes that while this figure only represents 15 percent of the mobile subscriber base, nearly 50 percent of all mobile subscribers are unbanked.
"Since our previous report on mobile banking published in January 2012, the dominant conclusion concerns the level of maturity in number and innovation of mobile banking services being offered in the market across several geographical areas, demonstrating that banks now regard the mobile channel as an indispensable revenue-stream," said Nitin Bhas, senior analyst at Juniper Research.
Mobile banking allows institutions to reach two types of demographics
The study also found that mobile banking gives financial institutions and credit unions the opportunity to reach a wider potential customer base. On the one hand, it enables them to instill loyalty and customer satisfaction among their existing clients. In addition, this may help draw new clients that are heavily integrated in the financial world and are dissatisfied with their existing institutions.
On the other hand, mobile banking may also enable institutions to appeal more heavily to underbanked demographics. Studies show that many underbanked consumers are loyal mobile users, and the convenience with which they can process transactions - as well as the lowered costs - may be attractive to these groups. This may be particularly true for credit unions and community banks which still offer rewards checking and reasonable fee structures.
While many underbanked citizens are dismayed by the heavy fee structures of behemoth banking institutions, many pay exorbitant amounts in fees to conduct financial transactions through non-banking entities, such as check cashing services and payday lenders. Community institutions with mobile applications may provide the kind of security, savings and convenience that many underbanked consumers lack.