Consumers’ Use of Mobile Financial Services 2013 Maximilian Schmeiser Federal Reserve Board The analysis and conclusions set forth in this presentation represent the work of the author and do not indicate concurrence of the Federal Reserve Board, the Federal Reserve Banks, or their staff. Mention or display of a trademark, proprietary product, or firm in the presentation by the authors does not constitute an endorsement or criticism by the Federal Reserve System and does not imply approval to the exclusion of other suitable products or firms.
Motivation for Report • How consumers access financial services is evolving: – Rapid increase in use of mobile banking and mobile payments in only a few years • These changes have the potential to affect consumer finances and consumer behavior • May also provide a means of promoting economic inclusion and expanding financial access to the unbanked or underbanked • Report released March 2013 (http://www.federalreserve.gov/econresdata/consumers -and-mobile-financial-services-report-201303.pdf)
Survey Background • Board conducted two consecutive surveys (in 2011 and 2012) to monitor these developments in mobile finance and assess consumer perceptions/expectations. Presented are the results from the 2012 survey. • Survey instrument developed by the Board with assistance of Federal Reserve System advisory group • Deployed by GfK to their nationally representative probability-based online panel of respondents called KnowledgePanel. For the 2012 survey: – Median time to complete survey of 16 minutes – Data collection from November 16 th , 2012 to November 27 th , 2012. – Total of 2,600 respondents: 1,328 of whom had responded to the first survey and 1,272 were new respondents.
Presentation Outline • Mobile banking: – Obtain financial account information and conduct transactions with financial institution(s) • Mobile payments: – Make payments, transfer money, or pay for goods and services • Shopping with mobile technology • Perceived security of mobile banking and mobile payment technology to protect personal and financial information
Key Numbers • Among all mobile phone users: – 28% used mobile banking in past 12 months – 15% used mobile payments in past 12 months • Among smartphone users (52% of mobile phone users) – 48% used mobile banking in past 12 months – 24% used mobile payments in past 12 months
Change in mobile banking and mobile payments 2012 2011 24% M obile payment s users (smart phones) 23% 15% M obile payment s users 12% 48% M obile banking users (smart phones) 42% 28% M obile banking users 21% 0% 60%
Mobile Banking Mobile Banking uses a mobile phone to access your bank account, credit card account, or other financial account You can use mobile banking by: • Accessing your bank’s web page through the web browser • Via text messaging • Using a downloaded application
Mobile Banking by Age Total (%) 21.5 26.9 27.2 24.4 18-29 30-44 No (%) 15.1 24.3 30.1 30.6 45-59 60+ Yes (%) 38.6 33.7 19.4 8.3 0% 20% 40% 60% 80% 100%
Mobile Banking by Race Total (%) 68.3 10.75.813.8 White, Non-Hispanic Black, Non-Hispanic No (%) 70.4 10.1 5.612.6 Other, Non-Hispanic Hispanic 2+ Races, Non-Hispanic Yes (%) 63 12.16.3 16.8 0% 20% 40% 60% 80% 100%
Mobile Banking by Income Total (%) 23 19.7 19.2 14 24 Less than $25,000 $25,000-$39,999 No (%) 25.5 20.1 18.8 13.4 22.3 $40,000-$74,999 $75,000-$99,999 $100,000 or greater Yes (%) 16.7 18.9 20.3 15.7 28.4 0% 20% 40% 60% 80% 100%
When did you start using mobile banking? 33% 25% 18% 17% 6% In t he last 6 6 to 12 mont hs 1 to 2 years M ore t han 2 I don't mont hs ago ago years ago remember
What was the main reason why you started using mobile banking when you did? I got a sm ar t phone 37% 30% I liked t he convenience of mobile banking M y bank st ar t ed offering t he service 19% Ot her 4% I becam e comf or t able w it h t he securit y of mobile banking 3% Ther e is no bank branch near my home 2% To receive f r aud alert s or check my account f o r fraudulent t ransact ions 2%
Change in: Using your mobile phone, have you done any of the following in the past 12 months? 2012 2011 87% Checked an account balance or recent t ransact ions 90% 53% Transf erred money bet w een t w o account s 42% 49% Dow nloaded your bank's mobile banking app 48% 29% Received a t ext message alert f r om your bank 33% 27% M ade a bill payment using banking w ebsit e or app 26% 24% Locat ed t he closest in-net work ATM for your bank 21% 21% Deposit ed a check using mobile phone camer a 11% 5% Refused t o answ er 3% 1% Ot her banking-relat ed act ivit ies 1%
What are the main reasons you have decided not to use mobile banking?* M y banking needs are being met w it hout mobile banking 5 4 % I'm concer ned about t he securit y of mobile banking 4 9 % I don't see any reason t o use mobile banking 4 7 % I don't have a sm ar t phone or my phone can't mobile bank 4 0 % I don't t rust t he t echnology 14% 11% The cost of dat a access on my wireless plan is t oo high It is t oo difficult t o see on my mobile phone's screen 10% I don't have a banking account 6% Ot her 5 % It's difficult or t ime consum ing t o set up mobile banking 5 % I don't do t he banking in my household 5 % 1% M y bank charges a fee for using mobile banking Refused t o answ er 0% * n=1,709
Assuming that any concerns you have about mobile banking were addressed, which of the following activities would you be interested in None, I don't want to use mobile banking n doing with your mobile phone?* 56% 33% Check an account balance or check recent transactions 21% Transfer money between t wo accounts 17% Deposit a check electronically using your mobile phone camera 17% Receive text message alerts from your bank 17% M ake a bill payment using online banking website or app Download your bank's mobile banking app 12% 1% Refused to answer *n=1, 709
Age distribution for individuals who would not mobile bank, even if their reasons for not mobile banking were addressed 12% 38% 21% 18-29 30-44 45-59 60+ 29%
Potential for Growth • 10% of those not currently using mobile banking think that they will probably use it within the next 12 months • 14% of those who don’t think they will adopt mobile banking within 12 months indicate that they are likely to do so eventually • Higher rates of use among smartphone users imply that as smartphone adoption grows so too will use of mobile commerce
Potential for Growth • Future adoption question was asked in 2011 mobile survey: – Of those consumers who reported that they will “definitely” adopt mobile banking in the next 12 months, 45 percent had by 2012 survey – Of those consumers who reported that they will “probably” adopt mobile banking in the next 12 months, 35 percent had by 2012 survey • Mobile banking adoption intention strongly correlated with actual behavior
Mobile Banking and Consumer Behavior
What t ypes of t ext alert s do you receive?* Low balance alert s 6 3 % Fr aud alert s 3 9 % Paym en t d u e alert s 3 7 % Ot h er 20% Saving r em inder s 8% Ref used t o answ er 2 % * n =168
act ions did you take aft er receiving t he alert?* yxwvutsrponmlihgfedcbaWTSRPONLFD Thinking of t he m ost recent low -balance alert you received by text m essage, w hich of t he follow ing Tr ansf er r ed m oney int o t he account w it h 54% t he low balance Reduced m y spending 36% Deposit ed m oney int o t he account w it h 24% t he low balance None 14% * n=109
Mobile Payments Mobile payments are purchases, bill payments, charitable donations, payments to another person, or any other payments made using a mobile phone You can make payments by: • Accessing a web page through the web browser on your mobile device • Sending a text message (SMS) • Using a downloadable application on your mobile device The amount of the payment may be: • Applied to your phone bill (for example Red Cross text message donation) • Charged to your credit card • Withdrawn directly from your bank account
Mobile Payments by Age Total (%) 21.6 27 27.1 24.3 18-29 30-44 No (%) 18.7 26 29 26.2 45-59 60+ Yes (%) 38.1 32.3 15.9 13.7 0% 20% 40% 60% 80% 100%
Mobile Payments by Race Total (%) 68.5 10.65.813.7 White, Non-Hispanic Black, Non-Hispanic No (%) 69.5 10.2 5.613.3 Other, Non-Hispanic Hispanic 2+ Races, Non-Hispanic Yes (%) 62.3 13.1 7 16.3 0% 20% 40% 60% 80% 100%
Mobile Payments by Income Total (%) 23 19.7 19.2 14 24 Less than $25,000 $25,000-$39,999 No (%) 25.5 20.1 18.8 13.4 22.3 $40,000-$74,999 $75,000-$99,999 $100,000 or greater Yes (%) 16.7 18.9 20.3 15.7 28.4 0% 20% 40% 60% 80% 100%
When did you start using mobile payments? 29% 19% 18% 16% 13% In t he last 6 6 to 12 mont hs 1 to 2 years M ore t han 2 I don't mont hs ago ago years ago remember
What was the main reason why you started using mobile payments when you did? yxwvutsrqponmlkihgfedcbaWVUTSRPONMIGDCBA I liked the convenience of mobile payments 34% I got a smartphone 29% The ability to make mobile payments became available 14% Other 10% I became comfortable with the security of mobile payments 10% A store I visit started offering the service 1%
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