The U.S. banking system has reached an important crossover point in which the number of weekly mobile bankers now equal those who use the branch, according to a report from the San Francisco-based Javelin Strategy & Research.
The shift to mobile is happening faster than anticipated, but not without some annoyance from users, and profound, fundamental changes in banking, Javelin reported. "The Rise of the Mobile First Consumer – and What that Means for Banking," revealed that as a result of the adoption of smartphones and tablets, almost one in every four primary bank customers currently claim to be "mobile first," that is, they primarily use a mobile device to access their checking account. This represents a shift of almost 53 million consumers in just four years.
Mobile-first bankers include those who primarily bank by smartphone or tablet using a mobile app or mobile website. In terms of numbers, 56 million American adults now consider themselves to be mobile first.
Of the three main types of banking, the largest customer group banks online first at 39%, or 77 million customers, and the smallest segment uses the branch first at 17%, or 34 million customers.
"Currently, mobile bankers are not able to finish transactions on mobile devices and are purposefully shifted to online or branch channels for completion, causing frustration," Mary Monahan, executive vice president and research director at Javelin Strategy & Research, said. "Financial institutions should aim to create a unified view of the customer and offer a more seamless, easily navigated banking experience, to appeal to the broader user community."
As of July 2014, 68% of U.S. mobile phone owners use smartphones and 48% own tablets. Apple drove the market twice, first with the introduction of the iPhone in 2007 and then the iPad in 2010. Smartwatches and the Internet of Things are next on the horizon. Current consumer adoption of smartwatches is at 6%, with 11% likely to adopt in the next 12 months.
Mobile-first customers account for 23% of customers and are more likely than online-first or branch-first customers to be younger, female and have children in the household. Apple iOS is their first choice in mobile technology. They are fee-sensitive, newer bank customers, use alerting at high rates and are more likely to switch banks over the next 12 months.
Imparting information quickly will be essential to mobile monitoring. For example, Citi provides color-coded warnings to its smart watch app, which visually tells consumers how close they are to reaching their credit card limits.
Online-first customers comprise the biggest group at 39%. They hold equivalent amounts of mean investible assets but average 30% lower primary bank deposits at $84,000 compared to the branch-first customers. Their household incomes at $80,000 are slightly higher than their mobile-first and branch-first counterparts. Android is their mobile operating system of choice. They are most likely to maintain multiple bank relationships.
Branch-first customers, at just 17%, are more likely to be male, older and wealthier than their online-first and mobile-first counterparts. The largest proportion of branch-first customers bank at giant financial institutions. Their tendency is still to use paper and pen to monitor their accounts, and they are most likely to meet face-to-face to resolve bank problems.
One of the reasons mobile-first customers go to the branch is to resolve issues and seek information about products and services. In fact, 45% of the mobile-first customers have entered a branch in the past 90 days for customer service questions.
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Roy Urrico
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).
