The growing popularity of such smartphones as Apple Inc.'s iPhone and Research in Motion Ltd.'s BlackBerry, combined with the increased use of SMS text-messages, have contributed to the rise of mobile banking and mobile payments, says Bob Hedges, managing partner of Mercatus LLC, a Boston-based consulting group. Mobile-banking adoption increased to 21% of America's young adults in 2009 compared with 7% the previous year, according to a survey Mercatus released last week. In a June survey of 1,166 U.S. consumers, 21% of respondents ages 18 to 25 said they had accessed account balances, paid bills or transferred funds using a mobile phone, up from 7% who said so in a May 2008 survey. In the 25-to-34 age group, 16% said they used their phones for banking compared with 7% who did a year earlier. Adoption grew by 2 percentage points among the next three age groups, to 12% among those ages 35 to 44, to 6% among for those 45 to 54 years old and to 7% among those ages 55 to 64. For respondents 65 or older, use was unchanged at 3%. The 18-to-25 age group historically has led the adoption of banking and payments innovations, including the use of ATMs and debit cards, Hedges says. Adoption by those in other age groups resulted over time. "When we look at what's going on with mobile, we forecast the same things because that's how innovation in financial services really occurs," Hedges says.

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