Online and Mobile Banking - US - November 2010
Online banking is now firmly entrenched as the preferred banking channel for American consumers. About 80% of U.S. consumers use online banking, and about half of them pay their bills online. This report looks at the growth of online banking, how consumers use the service, and features that they find attractive. It also looks at other issues of interest to the industry, including:
- Despite the tremendous growth in online banking over the past decade, banks can do more to entice their customers to conduct more financial activities online, particularly bill payments. Customers who do more of their banking online are more likely to buy additional financial products and services, and less likely to defect to another bank. However, many consumers, particularly among Generation Y, prefer to pay at the biller’s website
- No more than 20% or so of U.S. consumers use their mobile phones to conduct banking activities. That is up sharply from recent years, but it is far below the usage rate in other countries
- The biggest impediment to mobile banking in the U.S. is the phones themselves—too few consumers own “smartphones” with internet access and browsers that facilitate banking by phone. But market forecasts predict that smartphones will garner close to a 50% market share as early as the end of 2011, more than double their current share
- The weak economy and the perilous state of consumer finances are actually a positive driver for mobile banking. Many consumers are waiting until the last minute to pay their bills, meaning they must use expedited payment options such as online bill pay and mobile banking to avoid late charges
- Payments through mobile phones in the U.S. tripled in 2009 to $1.2 billion, but that was only about a tenth of the volume of mobile payments in Japan. Mobile payments—using a cell phone as an actual payment device—lag behind other countries partly because credit, debit, and prepaid cards have already displaced cash to a large degree in U.S. Because of this, merchants and consumers need to be convinced that mobile payments are superior to plastic. The payments industry must also decide which technology will eventually become the market standard, and who will pay for such a system
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