Most of us know the Federal Reserve Board as the central banker for the United States. It is the entity that conducts the nation's monetary policy, supervises and regulates banking institutions, provides financial services to those institutions, and stabilizes the financial system during times of crisis.
But fewer people know that the Fed has a vibrant research department that provides cutting edge data on issues that affect consumer finance, including how we pay for things.
The Fed recently released “Consumers’ Use of Mobile Financial Services 2013,” which updates similar research done in 2011. Within the payments industry you won’t find a hotter topic than mobile payments (unless it’s EMV, but that’s a story for another day). But it can be difficult cutting through all the hype to get an accurate picture of how consumers look at mobile: who uses it, who doesn’t, what do they use it for, and how confident are they in mobile as a payment system.
The Fed, with no dog in the hunt, has done this. “Consumers Use of Mobile Financial Services 2013” is a thorough collection of data with objective analysis. It covers 4 areas: mobile banking, mobile payments, shopping with mobile technology and how secure consumers think it is to entrust important personal information to a channel like mobile.
Among the report’s findings:
· 52% of mobile phone users own smartphones and are significantly more likely to be users of mobile payments. The logical conclusion is that as more and more people get smartphonesthe adoption of mobile commerce will also grow.
· Age has a lot to do with whether a consumer adopts mobile banking. Fewer than 9% of respondents 60 or older copped to having tried mobile mobile banking.
· 37% of those surveyed said that the main reason they began banking by mobile phone was that they got a smartphone.
· Consumers who engage in mobile banking are most likely to check an account balance or recent transaction, or to transfer money between two accounts.
Those who had adopted mobile payments appear pleased with the channel. Over 90% of these respondents said they were “satisfied” or “very satisfied” with their mobile payment experiences. In fact, a number appeared ready to take the next step in the mobile payment march. About a third of them said it was “likely” or “very likely” they would use contactless payments if given the change. That’s up from 5% in the previous survey.
The report also digs into why consumers have rejected the concept of mobile banking. The reasons seem to be more visceral than anything else. Top reasons include having their banking needs met by more traditional channels, and concerns over security.
Only a third of mobile banking users, when asked to rate the overall security of mobile banking, labeled it “safe” or “very safe,” hardly a ringing endorsement.
Despite the lingering concerns over security, more and more consumers are using their mobile phones to check their bank balances or buy their morning coffee. And while use of mobile payments has remained constant over the last two surveys, according to the Fed, the use of mobile banking is up 33% over the last year.
Clearly these gains are tied to the increasing proliferation of smartphones. As mobile telephony grew over the last 15 years, proponents of mobile commerce kept saying that it would take off once the industry found the “killer app” that would drive the market. It appears now that the killer app wasn’t an app at all. It was the phone itself.