True, researchers are predicting that one out of every two adults in the world will be using a smartphone, tablet or smartwatch to access financial services by 2021. However, those rosy projections fail to reflect the current U.S. environment: Mobile banking growth has hit a ceiling.
Three of the largest U.S. banks — Bank of America, JPMorgan Chase and Wells Fargo — have seen a gradual decline in growth of active mobile banking users since 2012, according to data from BI Intelligence. The banks’ third-quarter 2017 reports show the slowdown continues.
JPMorgan Chase saw active mobile usage growth slip to just 3% annually, while Well Fargo’s active mobile usage dropped 2%. Bank of America did slightly better — the bank’s active mobile customers grew in number by 11% at the end of the third quarter; however, that progress is still a 6% drop from last year. The picture becomes even clearer when considering that Chase, Wells and B of A were growing at 51%, 29% and 30% respectively just five years ago, according to BI Intelligence.
To get back to double-digit mobile banking growth, banks must tap into the almost half of smartphone owners who have never conducted a mobile transaction. To do that, banks will have to help them overcome the reason why they haven’t: fear.
Fear of technology, fear of banks, fear of loss of privacy, fear of complexity and even fear of revealing one’s technological ignorance are factors that have slammed the lid on mobile growth.
Until banks mount an aggressive educational program to address customer fears, mobile banking growth will remain stifled.
In a 2016 Federal Reserve survey of nonmobile users, 73% of respondents say security concerns are a key reason they have not jumped on the mobile banking wagon. That concern parallels a similar fear unearthed in a recent study from FICO, which found that 44% of U.S. consumers rate identity theft and banking fraud as their biggest concern in life. In fact, fear of having their identity stolen ranked twice as high as their fear of being the victim of a terrorist attack.
While identity theft is among the hang-ups keeping people from using mobile banking, technology as a broad category is another reason. Indeed, technology only trailed natural disasters in a study of 1,500 adults who ranked their fear of 88 different items. Because some consumers are not excited about technology taking control of their lives and making their decisions for them, there is an inherent reluctance to embrace technology, mobile banking included.
Consumers also hate complexity. For many customers, mobile banking seems too complicated; they want simple experiences. Driving to a branch to make a deposit might take more time than firing up an app, but it’s a familiar journey that baby boomers have been doing for years. Now, instead of the familiar, mobile banking apps require them to double authenticate their identity and to perfectly photograph both sides of a check to make a deposit.
To respond to these consumer apprehensions, the first step is for banks to recognize they exist and are inhibiting mobile banking growth. Next, bankers must reassure customers that mobile banking can be simple, perhaps, literally taking branch visitors by the hand for a show-and-tell of a mobile banking app. This can be done by staff members intercepting customers in lobbies and offering them a $10 account deposit for sitting through a mobile banking demonstration, for instance. Some banks conduct mobile banking classes, other banks put videos in lobbies and on websites, and some even emulate Apple’s Genius bar to train in-branch visitors on digital banking.
Regardless of approach, conquering consumer fears requires the same commitment to education that banks have given to acquiring technology. In fact, educating consumers on digital banking is likely the only way banks will get to the next level of growth.