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Mike Strange, Mitek
Mike Strange, Mitek
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Is 2014 the Year of Mobile Banking?

Mobile banking grew rapidly in 2013, and new services and customer segments will further that growth in 2014.

As we gear up for a new year, I always find it interesting to look back on the growth and trends of the previous year to see what has changed and to get better insight on where we are headed.

To say 2013 was good for mobile would be quite an understatement. For example: from 2012 to 2013 smartphone ownership in the U.S. increased more than 25 percent while tablet ownership increased by nearly 60 percent. But what does this growth mean for the new year, and more specifically how does this this mobile proliferation translate to the banking industry?

Here are my top three predictions on what to expect in mobile banking 2014.

Mobile Deposit Will Move Beyond the Consumer to Commercial

In a recent paper entitled 2012 U.S. Mobile Banking Functionality Rankings Forrester analyst, Peter Wannemacher notes that “No mobile feature has made as big an impact as quickly as mobile remote deposit capture (RDC). [With] virtually every bank in the country [either] currently considering or building mobile RDC functionality.”

This tremendous growth and interest in mobile deposit technology is driving consumer demand which in turn will drive financial institutions to offer more comprehensive mobile deposit features to small and medium size business owners, putting the financial tools they need right at their fingertips. One need look no further than a recent BBVA Compass announcement for evidence that this is already starting to happen.

Photo Bill Pay Adoption Wiill Be Steeper and Faster than Mobile Deposit

According to Forrester, less than five years ago fewer than one in 20 U.S. adults actively banked via a mobile device. However, given the tremendous rise in smartphone/tablet ownership, that proportion has more than quadrupled.

Services like mobile deposit have acted as a sort of an ice-breaker to help customers become more accustomed to using their mobile devices for more than just checking balances and transferring funds. And now that these customers are comfortable snapping a picture of a check to make a deposit, other tools and applications like mobile bill bay, (taking a picture of a paper bill and automatically paying it from a connected account), that make use of the device camera will enjoy a much faster and steeper adoption curve than mobile deposit.

In fact, according to a recent Celent survey only a handful of financial institutions offer mobile bill pay, yet as many as 46 percent placed high value on the service. While there are already more than 12.5 million Americans using mobile bill pay, Javelin research estimates that Americans pay nearly $2 trillion annually to just a handful of bills meaning there are more than 140 million Americans ripe for mobile payments; expect mobile bill pay adoption to be overwhelming.

Mobile Banking Adoption Will Catch Up to Smart Phone Adoption

In its latest survey of American consumers, Nielson estimated that smartphones now account for around 64 percent of all mobile phones used in the U.S. and that 80 percent of Americans who recently bought a new phone, bought a smartphone.

The federal reserve reports that 48 percent of smartphone owners have used mobile banking in the past 12 months (up from 42 percent the previous year) and that 21 percent of mobile bankers have deposited a check using their mobile device (double the number from the previous year). A quick look at these numbers tells us that while the growth of smartphones will slow, the adoption of mobile banking is about to really take off.

Conclusion

While there are always a number of outside factors that play into any type of prediction, and nobody can say with certainty what the coming year will bring, I think it’s safe to say that 2014 is going to be a big year for mobile banking. It is looking like 2014 will be the year that the human element of mobile banking finally catches up with the technology.

Mike Strange is the CTO of Mitek Systems.

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Kelly22
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Kelly22,
User Rank: Author
1/22/2014 | 7:20:00 PM
re: Is 2014 the Year of Mobile Banking?
Wow, one in five? Pretty impressed myself - I knew mobile had undergone great growth but didn't realize mobile payments had become that popular!
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
1/22/2014 | 6:41:47 PM
re: Is 2014 the Year of Mobile Banking?
Wow. Those are impressive numbers. I had no idea that 1 in 5 made a mobile payment in 2013.

I agree, that mobile is THE channel now.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
1/21/2014 | 10:18:54 PM
re: Is 2014 the Year of Mobile Banking?
Interesting points. I agree that mobile banking has gone mainstream, but it's more about what customers are using it for. Banks are investing in adding more capabilities to their mobile channel, and that has paid off with mobile RDC, but will it pay off in other areas, like mobile bill pay, mobile P2P, or mobile account opening? I'm sure all of those will gain wide adoption at some point, but it's hard to know when. That makes it difficult for banks with tight-budgets to invest in differentiated mobile capabilities.

As an aside, very surprised by that number for mobile payments. That must be a huge increase form last year.
jvd@javelinstrategy.com
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jvd@javelinstrategy.com,
User Rank: Apprentice
1/21/2014 | 5:56:36 PM
re: Is 2014 the Year of Mobile Banking?
2014 was not the year of mobile banking, but perhaps 2012 or 2013 was. One in five consumers made a mobile *payment* in 2013 (yes, that is in fact a correct number), and mobile payments builds on mobile banking. Our figures on the proportion of banks having mobile banking are much higher than Celent's and we have data from a survey representative of 15,000 US consumers showing that end-user adoption is now in the mainstream. The mobile banking horse has left the barn and is in another county. Mobile is not just another interaction channel, it increasingly is the channel that controls all other channels, in always-on and real time mode.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
12/27/2013 | 4:09:31 PM
re: Is 2014 the Year of Mobile Banking?
That could change though if banks find a quick and easy way to streamline their online and mobile account opening and make that process more user friendly.
Byurcan
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Byurcan,
User Rank: Author
12/27/2013 | 2:27:20 PM
re: Is 2014 the Year of Mobile Banking?
Also, as many reports have found, mobile customers are very "sticky", often they use RDC and have some kind of auto bill pay feature that generally makes them reluctant to switch banks, as its annoying to set all that up again at a different bank.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
12/26/2013 | 7:05:44 PM
re: Is 2014 the Year of Mobile Banking?
And younger customers are increasingly willing to switch banks for better mobile banking products and services. That's why so many banks - even smaller ones - are trying to offer more advanced mobile banking features like mobile check deposit and mobile bill pay.
qadevtest@test.com
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qadevtest@test.com,
User Rank: Apprentice
12/26/2013 | 7:44:26 AM
re: Is 2014 the Year of Mobile Banking?
Excellent article
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
12/23/2013 | 2:35:59 PM
re: Is 2014 the Year of Mobile Banking?
Everyone acknowledges that mobile deposit has gone pretty much as far as it will go. Nearly every bank has it or is planning on offering it in the near future. So the question over the next year is what will be the next big thing after mobile deposit. I've heard mobile P2P payments and mobile bill pay talked about in that context a lot recently.
Byurcan
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Byurcan,
User Rank: Author
12/22/2013 | 1:20:33 AM
re: Is 2014 the Year of Mobile Banking?
Yeah I'd say it's definitely already here to stay, how much mobile banking services will expand by next year will be interesting to see.
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