More than 50% of consumers are expected to become mobile bankers by 2016. With 92% of the top 25 banks now offering mobile banking, smaller banks and credit unions risk losing valuable customers to these institutions and must focus on building out their mobile banking capabilities in order to compete.

However, Javelin Strategy & Research’s latest report uncovers a widening gap between mobile banking adoption rates at smaller banks and credit unions compared to larger financial institutions.

Only 21% of consumers at regional and community banks and 15% of consumers at credit unions use mobile banking versus 37% of consumers at larger banks.

Smaller financial institutions will continue to fall behind, unless they change their strategies to improve their offerings and capture a solid customer base of mobile bankers. Javelin’s latest mobile channel forecast addresses how banks and credit unions can position themselves to succeed as mobile banking institutions and keep pace.

“The key challenge for smaller financial institutions is attracting the right demographics,” says Mary Monahan, executive vice president and research director, Mobile, at Javelin. “The typical mobile banking customer is young (ages 18 through 44), ethnic (typically Asian, Latino, or African American), and high income (earning more than $75K). Customers at regional and community banks and credit unions are significantly older, less wealthy, Caucasian, and less tech-savvy. Financial institutions must broaden their services, appeal to a wider range of demographics, and attract new clients if they want to succeed.” Clearly not all community-based institutions will be able to do that, given the limited geographic scope they cover. Yet even in smaller communities there are usually noticeable demographic or ethnic subgroups.

“Smaller banks and credit unions have always prided themselves on providing superior customer service, so they cannot continue to ignore the mobile channel,” says Jim Van Dyke, president, Javelin. “Resource-constrained institutions should focus initially on the browser method, currently used by a majority of mobile consumers. It is the most cost-effective and easiest to deploy. However, these financial institutions need to focus future efforts on developing app- and SMS-text banking to appeal to a broader array of users and technology.”

Selected key report findings include:

•    Mobile is now the top communication channel. Mobile usage is surpassing online usage.

•    Consumers’ use of mobile banking rose dramatically in 2011. Jumping by 63%, 57 million U.S. adults conducted mobile banking in 2011, increasing 63% over 2010.

•    Consumers use an assortment of channels for mobile banking. Most consumers continue to access their mobile banking accounts through the browser, a financial habit established through online banking. At the nation’s largest banks, where the triple play, that is, mobile banking through browsers, apps, and SMS text, is offered, this tendency flips: More customers use apps and SMS than browsers.

https://www.javelinstrategy.com/news/1311/92/Smaller-Banks-Facing-Widening-Gap-in-Mobile-Banking/d,pressRoomDetail

 

 

[This article was posted on February 22, 2012, on the website of ABA Banking Journal, www.ababj.com.]

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