Mobile Banking & Payments: Consumer Behavior in 2011

Mobile Banking & Payments:Consumer Behavior in 2011

Paul McAdam

Senior Vice President

Research & Thought Leadership

Research objectives and methodology

• Study Objective:

– Determine the impact of mobile devices on behaviors related to financial transactions

• Accessing accounts

• Paying bills

• Depositing checks

• Making purchases

• Methodology:

– 60 question online survey of 4,000 adults who own mobile phones

– Split evenly by gender

– Conducted in February 2011

– Sample provided by Survey Sample International

3

Profile of the survey respondent pool

Generation

4

Gen Y*

Gen X

Baby Boomer

Mature

Under $30K

$30K to

$60K

$60K to $90K

$90K to $125K

$125K +

Annual Household Income

Mean = 45 years Mean = $54,286

Source: FIS Enterprise Strategy, February 2011

Convergence driving penetration of mobile financial services

• Younger generations dominate

• Device improvements and additions facilitating mobile banking

• App proliferation allowing more consumers to access mobile banking

• Large banks are leading the way

• Satisfaction with mobile is increasing

• Mobile remote deposit and mobile payments will follow a similar adoption path

Devices Apps

Consumers

5

64%*

47%

22%

13%

Gen Y Gen X Baby Boomer

Mature

21%31%

54%66%

36%

37%

32%

26%43%*31%

14% 9%

Gen Y Gen X Baby Boomer Mature

A conventional mobile phone unequipped for Internet access

A conventional mobile phone equipped for Internet access

A smartphone

Gen Y is connected with mobile Internet devices


Access Internet on Mobile Phone Frequently

(base = total sample)

Type of Mobile Phone Owned(base = total sample)

*Read as 43% of Gen Y own smartphones

*Read as 64% of Gen Y access the Internet on their mobile phones frequently6

50% of smartphone owners use mobile banking; they comprise 76% of current mobile adopters


Penetration of Active Mobile Banking Mobile Phone Types among Mobile Banking Users(base = mobile banking users with Internet connection)

Conventional mobile phone with Internet access

24%

* Read as: 50% of smartphone owners use mobile banking

* Read as: 76% of mobile banking users use smartphones to access mobile banking

7

50%*

13%

Smartphone Conventional mobile phone with Internet

access

Smartphone

76%*

Mobile banking adoption is fueled by Gen Y and Gen X; 38% of Gen Y uses mobile banking


How Accessed Financial Services Online during Past 30 Days(base = respondents who bank online)

8

38%*

5%3%

22%

3% 2%

5%

1% 0%3%

0% 0%

Mobile phone Tablet Internet gaming system


* Read as: 38% of Gen Y accessed online banking via their mobile phone during the past 30 days

More than half of mobile banking users are Gen Y; Gen X utilization also strong


Mobile phone owners, Smartphone owners and mobile banking users by generation

*Read as 56% of mobile banking users are in Gen Y9

26%

43%56%*

27%

31%

32%34%

14%

10%13% 9%2%

Mobile Phone Owners Smartphone Owners Mobile Banking Users

Mature

Baby Boomer

Gen X

Gen Y

Except for checking balances, fewer financial activities conducted via mobile phone than by computer


Financial Activities in the Last 30 Days Done by Mobile Phone and by Computer(base = respondents who bank online through device)

*Read as: 88% of consumers banking online through their mobile phones checked their balances in their checking/deposit account with their mobile phone in the last 30 days

10

88%*

57%

34%

22%

29%

26%

16%

91%

84%

49%

28%

38%

41%

14%

Checked balances in checking / deposit account

Looked at checking / deposit transaction activity or monthly statements

Transferred funds between accounts at my bank

Accessed credit card or loan account information online

Checked loan / bill payment due dates

Transferred money from my account to another person or organization

Accessed / made transaction in investment accounts online

Mobile phone

Computer / laptop / netbook

Satisfaction with mobile banking has risen significantly

Source: FIS Enterprise Strategy, March 2010 and February 2011

Satisfaction with Accessing Bank Account with Mobile Phone

(Top 4 box on 11-point scale)

Satisfaction According to Primary Type of Mobile Banking Used(Top 4 box on 11-point scale)

*Read as: 60% of mobile banking users in 2010 were satisfied with the experience

*Read as: 79% of mobile banking users who used mobile banking apps to connect with their FIs in 2010 were satisfied with the experience

60%*

76%

2010 2011

79%*

70%

57%

88%85%

78%

Mobile banking app Text message Mobile Internet browser

2010 2011

11

70%*

57%

55%

49%

44%

41%

37%

28%

27%

23%

21%

20%

20%

20%

16%

15%

14%

14%

Games

Social Networking (e.g., Facebook, Twitter)

Entertainment / Music / Media & Video / Comics

News & Weather

Navigation

Communication (e.g., Gmail)

Banking

Sports

Photography

Shopping

Books & Reference

PayPal / other person-to-person payment app

Personalization / Live Wallpaper

Health / Fitness / Medical

Lifestyle

Travel

Business & Finance

Education

App proliferation supports mobile banking


Penetration of Banking Apps among Those Who Have Downloaded Apps(base = mobile phone owners who downloaded any apps)

*Read as 70% of mobile phone owners who have downloaded apps have downloaded games

12

Banking apps are relatively popular among those who have downloaded apps, even among older generations


Penetration of Banking Apps among Those Who Have Downloaded Apps(base = mobile phone owners who downloaded any apps)

*Read as 44% of those in Gen Y who have downloaded apps have downloaded banking apps

13

44%*

34%

26% 26%


The top-10 banks have higher awareness and are capturing significantly more than their fair share


Where Mobile Banking Users Have Primary Checking Accounts

*Read as: The Top 10 banks capture 52% of mobile banking users

14

52% of mobile

banking users

vs. 37% of the

sample37%

52%*

13%

12%20%

10%

19%17%

10% 8%

Mobile Phone Owners Mobile Banking Users

Other FIs

Credit Unions

Community and Small Regional Banks

Banks 11 to 50

Top 10 Banks 50%*

29% 31%

13%

13%15%

15%

30%28%

18%24%

24%

4% 5% 2%

Yes No Don't know

Awareness of Whether their FI Offers Mobile

*Read as: 50% of mobile phone owners who are aware their FI offers mobile banking have their checking account with a top 10 bank

Satisfaction with mobile banking is higher among other FI’s and top 10 banks


Satisfaction with Mobile Banking According to Type of Financial Institution(Top 4 box on 11-point scale)

*Read as: 82% of mobile banking who had their primary checking at one of the top 10 banks were satisfied with the experience

15

82%

66%

80%77%

87%

Top 10 Bank Banks 11 to 50 Community and Small Regional Banks

Credit Unions Other FIs

Avg. = 76%

Customer Characteristics

Mobile Deposit Capture

Mobile NFC Payments

The Path to Adoption

100%96%

15%

42%

23%*

99%

3%

13%

Mobile phone Computer / laptop / netbook

Tablet Internet gaming system

Mobile Banking Users Non-users

Mobile banking users are connecting to the Internet with a variety of devices


How Mobile Banking Users vs. Non-users Connect to Internet(Base = total sample)

*Read as 23% of non-users of mobile banking connect to the Internet through their mobile phones

17

90%*

9%5%

99%

1% 1%


Tablet Internet gaming system


Mobile banking users are more likely to connect to banks via computer alternatives


How Mobile Banking Users vs. Non-users Access Financial Services Online


How Mobile Banking Users vs. Non-users Pay Bills Online


*Read as 90% of mobile banking users access financial services online through computers

*Read as 86% of mobile banking users pay bills online through computers18

86%*

42%

8% 7%

80%

1% 1%


Mobile phone Tablet Internet gaming system


Mobile banking users trade paper for plastic


2.8

4.5

3.3

3.2

4.5

12.3

3.2

3.4

3.4

4.3

4.4

15.3*

Direct Deposit

Wrote a paper check

Electronically transferred funds to another FI

Debit card cash back

Preauthorized bill pay

Debit card purchase

Mobile Banking Users

Non-users

Average Number of Transactions with Primary Checking Account in Past 30 Days

*Read as: mobile banking users made an average of 15.3 purchases with their debit cards in the past 30 days

19

Mobile banking users are more oriented toward accessing online financial services outside of conventional FI’s


*Read as: 60% of mobile banking users make P2P payments

47%

1%

2%

4%

3%

3%

6%

45%

25%

7%

8%

11%

11%

16%

17%

60%*

None of these

Person-to-person lending sites (Prosper, Zopa, etc.)

Online lending sites (LendingTree, eLoan, etc.)

Online investment advice

Quicken Online

Personal financial management (e.g., Mint.com, Geezeo, Yodlee)

Personal savings (e.g., SmartyPig)

Person-to-person payments (e.g., PayPal)

Mobile Banking User

Non-user

20

Mobile banking users have higher asset balances than non users


Mobile Banking Users Balance Indices vs. Balance Indices for Non Mobile Users (within Each Generation)

*Read as: Indexed as 100 equals average for the segment. Gen Y mobile banking users have 28% more money in their checking accounts that mobile phone owners who have not adopted mobile banking

128*

171

136

158180

196185

130

282

196177

151

Checking accounts Savings / MMDA / CD Brokerage or money market fund

company

Retirement / college savings


21

Mobile banking users typically index above average for most credit and loan balances


*Read as: Indexed as 100 equals average for the segment. Gen Y mobile banking users have 22% more in major credit card balances than Gen Y consumers who have not adopted mobile banking

122*

167

120139 147

158

126

236

167176

155173

5968

150

127

52

17

Majorcredit cards

Store-branded credit cards

Automobileloans

Educationalloans

Home equityloans

Other loans(not including

mortgages)


22

Mobile Banking Users Balance Indices vs. Balance Indices for Non Mobile Users (within Each Generation)



Mobile NFC Payments


Lack of awareness and access impede remote deposit usage, but usage among smartphone owners is significant


Yes 7%

Yes, but not available

for my mobile phone

6%

No22%

I don’t know60%*

No primary checking account

5%

Access to Mobile Remote Deposit Application at Primary Checking Account Provider

(base = all mobile phone owners)

*Read as: 60% of smartphone users don’t know if their bank has an app for remote deposit of checks

24

3%

12%*

59%

Among all mobile phone

owners

Among smartphone

owners

Among smartphone

mobile bankers

Use of Mobile Remote Deposit

*Read as: 12% of smartphone have used mobile remote deposit capture within the past 30 days

Mobile banking users are interested in remote deposit


Reasons for Not Using Remote Deposit(base = have access but don’t use)

57%*

13%


Non-users

Mobile Banking Users Interested in Remote Deposit

(Top 2 box on 7-point scale)

*Read as: 57% of mobile banking users not currently using remote deposit are interested in remote deposit

25

31%*

29%

26%

20%

15%

8%

3%

I don’t think it is secure

Do not deposit enough checks to warrant having the application

Just haven’t gotten around to downloading the application

I want a printed receipt for checks I deposit

Do not have Internet access through my mobile phone

Takes too long for deposits to clear

My financial institution charges a fee for the service

*Read as: 31% of those able to use mobile remote deposit don’t use the service because they think it is not secure



Mobile NFC Payments


Mobile banking users likely on the forefront of NFC adoption


Likelihood of Using Smartphone to Pay for Goods during Next Year if Available(base = smartphone owners)

21%*

26%27%

9%

4% 4%

9%7%

11%

21%

12%

9% 9%

31%

Extremely likely Very likely Somewhat likely Neither likely nor unlikely

Somewhat unlikely

Unlikely Very unlikely

Mobile Banking User Non-user

*Read as: 21% of mobile banking users with smartphones are interested extremely likely to use them to pay for goods in the next year if NFC is available

27

Presence of readers, security concerns and comfort with existing payment methods are the primary NFC obstacles

28Source: FIS Enterprise Strategy, February 2011

Reasons That Would Prevent Smartphone Owners from Using It to Pay for Goods(base = smartphone owners)

13%

21%

10%

13%

12%

37%

16%

37%

35%

10%

13%

18%

21%

22%

24%

26%

39%

50%*

I only use my phone or other mobile device for calls and / or email

I don’t see the value in using it for payments

Would still have to carry loyalty cards

Would be too easy to lose track of how much I spend

Would still have to carry identification

I would rather use other payment methods I’m more comfortable with

Might not get points for using certain credit / debit cards

Would be less secure than other payment methods

Stores where I like to shop might not have readers


Non-Users

*Read as: 50% of mobile banking users with smartphones perceive that the lack of readers in stores where they like to shop could prevent them from using NFC

NFC—advantages outweigh obstacles, especially among mobile banking users


Benefits of Using Smartphones to Pay for Goods(base = smartphone owners)

32%

7%

11%

19%

20%

30%

27%

41%

10%

16%

21%

21%

34%

38%

39%

53%*

No benefits

Would be more secure than other payment methods

Would help me to better control my spending

Would not have to carry checkbook

Would help me keep track of my purchases

Would not have to carry cash

Would shorten time spent checking out at the register

Would not have to carry credit / debit cards


Non-users

*Read as: 53% of mobile banking users with smartphones perceive that not having to carry credit/debit cards is a benefit of NFC

29



Mobile NFC Payments


Plenty of runway ahead

31

• Continued smartphone and tablet

adoption will fuel growth

• Creating awareness of

accessibility to the financial

institution via mobile phone

• Persuading customers who are

connected to their FIs online to try

mobile banking

• Providing a satisfying user

experience for early and late

majority customers, to encourage

move from trial to adoption

Smartphone and tablet growth will continue to fuel mobile banking adoption

Source: The Nielsen Company Q2 Mobile Media Marketplace, 2010

U.S. Smartphone Penetration Projection(All Subscribers)

Mo

bile

Su

bsc

rib

ers

(M)

Percentage o

f Mo

bile Su

bscrib

ers (%)

26 33 37 41 45 49 52 58 63 70 76 83 91

17%19%

21%22%

24%27%

29%

32%35%

38%41%

45%

49%

0%

10%

20%

30%

40%

50%

60%

0

20

40

60

80

100

Q2 2009 Q2 2010 Q2 2011 Q2 2012

Smartphone Subscribers

U.S. Smartphone Penetration

32

24.1

35.139.8

42.3 44.0

10.3

26.0

50.7

67.7

76.1

82.1

2010 2011 2012 2013 2014 2015

Projected U.S. Tablet PC Sales and Users(All numbers in millions of US adults)

— Total Table PC Users (US)

Tablet PC Sales (US)

Source: Forrester Research eReader Forecast, 2010 – 2015 (US), January 2011

33

Lack of awareness impedes mobile banking penetration


Yes49%

No7%

Don't know44%*

Primary Checking Account Providers Offering Mobile Banking(base = total sample)

*Read as: 44% of mobile phone users don’t know if their bank offers mobile banking

Disinterest among non-users continues due to a wide range of preferences and concerns


Reasons for Not Using Mobile Banking(base = non-users)

*Read as: 38% of non-users would rather access their accounts online with their computers

38%*

28%

19%

19%

19%

16%

15%

3%

18%

I would rather access my accounts online with my computer

I don’t think it is secure

My mobile phone screen is too small

There is no charge to use my computer

I just haven't bothered to try mobile banking yet

There is no value to banking with my mobile phone

It costs too much to use the data plan on my mobile phone

I’ve tried accessing my bank account online with my mobile phone in the past, but was dissatisfied

No reason

34

Mobile banking opportunity

• Moving quickly from early adopters to early majority

• Adoption will continue to grow as smartphone and tablet ownership expands

• Gen Y and X are the primary adopters today

• Mobile is vital to secure their relationships as they move into nesting lifestage

– Mobile apps the price of entry for attracting younger customers

– Higher deposit and loan balances than their non-adopter generational counterparts

– More likely us use debit card, less likely to write checks

– Accessing financial services online via other Internet devices

– Most aggressive users of non-traditional financial services (P2P, PFM, etc.)

– Most likely to use mobile remote deposit and mobile NFC payments

• Easy-to-use mobile banking apps key to increasing penetration among desirable Baby Boomer segments

35

Thank You Paul McAdam

[email protected]

Economy & Finance

Mobile Banking & Payments: Consumer Behavior in 2011