Developing the slickest mobile-tablet applications that enable consumers to manage routine credit and debit card spending through their larger touchscreens will be essential for large banks looking to hold on to younger, more affluent consumers over the next year, new research suggests.
As distribution of tablet devices such as Apple Inc.’s iPad surges, the race is on among banks to develop the most feature-rich applications for diverse banking products for the newest generation of devices, Mary Monahan, executive vice president and research director, Javelin Strategy & Research, tells PaymentsSource.
And the banks that do it best likely will keep sought-after younger consumers that prize mobility and who are enamored with downloadable tablet apps that offer brighter, more colorful touchscreen account-management features, she predicts.
“In discussions with consumers, we learned that one of the top reasons younger consumers stay with a bank is the quality of its mobile-banking programs, and tablet apps are the next frontier,” Monahan says. “Banks that offer the best mobile account-management apps across all types of devices and banking products are going to be in a position win younger, more affluent consumers.”
In its “Mobile Banking, Smartphone and Tablet Forecast 2011-2016,” which Javelin released Feb. 6, the firm gathered data primarily from among 3,180 consumers surveyed online in June; the report also included data from two similar surveys conducted in March and October last year.
Some 48% of U.S. banks provide credit card account access through mobile-banking channels such as smartphones, Monahan estimates, based on Javelin’s latest research.
A growing number of banks provide downloadable mobile-banking apps for tablets, but so far only Citigroup Inc. claims to have a downloadable online-banking app for tablets that includes both credit and debit card account management (see story).
Other banks likely have such products in the pipeline, Monahan says, although she could not cite examples.
“Many banks have mobile apps for credit cards, too, and porting them over to tablets should not be hard to do,” she says. “We are likely to see more development along these lines soon.”
Even as banks introduce snazzy new mobile-banking apps for tablets, consumers continue to use diverse channels to access mobile-banking services “from their computers to their smartphones to their tablets to calling customer service,” Monahan notes. “Consumers want it all, and they want a consistent, simple experience in mobile banking.”
Keeping up with the complexity of supporting multiple approaches to mobile banking may prove to be a challenge for certain banks.
Javelin’s latest research suggests large banks so far have the edge in getting consumers to embrace mobile banking.
The largest banks, which Javelin defines as those with at least $750 billion in assets, have the highest penetration of mobile-banking users among their customers. Thirty-seven percent of consumers surveyed who are customers of large banks, including JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citi, reported using their bank’s online-banking applications within the previous 90 days.
But the number of consumers using mobile applications drops steeply along with bank-asset size. Only 21% of customers of banks will less than $30 billion in assets reported using their financial institution’s mobile-banking services within the previous 90 days. And only 15% of customers of credit unions, regardless of asset size, reported using their financial institution’s mobile-banking services over the same time period.
While mobile-banking applications for smartphones are relatively ubiquitous, availability of downloadable mobile-banking apps specifically for tablets is relatively new, Monahan says.
Some 16 million, or 8%, of U.S. consumers owned mobile devices at the end of 2011, the report found. And Javelin expects that figure to grow to 34 million, or 17% of consumers, by the end of this year. By 2016, Javelin expects the total number of U.S. tablet owners to reach 87 million, or 40% of consumers.
For banks, the tablet market’s momentum is significant because tablet users tend to be younger and more tech-savvy than the general population, Monahan suggests.
“Young adults want to use tablet computers for all types of applications, particularly banking, because the screen’s real estate is bigger, and it provides a whole lot more options for interacting with the device,” Monahan says.
Given the choice, 70% of those Javelin surveyed who were customers of the largest banks said their first preference is text message-based mobile banking, followed by 62% who preferred a using a downloadable mobile-banking application and 46% who preferred using mobile Web browser-based mobile-banking services.
Among customers of smaller banks with less than $30 billion in assets, 19% of respondents said they preferred using a mobile Web browser, while 10% favored text message-based mobile banking and 9% preferred a downloadable mobile app, according to Javelin.
And the trend among consumers is moving toward using downloadable apps, such as those designed for tablets and other mobile devices.
Consumers who said they routinely access mobile banking services through a downloadable application rose to 31% in 2011 compared with 20% who said so in a similar survey in 2009, Javelin says.
“Where consumers have the choice in using various types of mobile-banking channels, they gravitate first toward downloadable apps for their greater functionality,” Monahan says. “It is becoming clear that if banks want to hold on to customers that are moving to tablets, they will need to support these devices with rich applications, and soon.”
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