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The Key to Making Mobile Banking Profitable? Marketing, Aite Says

Although the obsessive balance checking mobile banking customers do doesn't benefit banks in and of itself, there are ways banks can gain from consumers' accelerating mobile banking and payment habits, research shows

Bank Technology News  |  April, 2011

Aite's latest survey of mobile banking usage, for which it polled more than 1,000 U.S. consumers, turned up five new facts.

1. Other than being younger, mobile banking users are not different from general banking customers. "That’s important,” said senior analyst Ron Shevlin in an interview yesterday. "In the evolution of online banking and bill pay, the early adopters were affluent consumers. That's not the case with mobile banking, that's been mainstream right from the start." Mobile banking early adopters have a similar average income as the non-adopters ($52,952 versus $52,821). "In the past banks have rationalized their investment in online banking and bill payment using with retention, assuming they were reaching their most important, affluent customers," Shevlin says. "That’s out the window with mobile banking because these are mainstream consumers. The way to justify the investment in mobile banking will be through marketing -- driving up-selling and cross-selling."

2. Mobile banking users frequently check their account balances. All mobile banking users surveyed had checked account balances once in the fourth quarter of 2010; 32% had checked them more than ten times. This is not surprising to anyone who knows a twenty-something living on the edge of their means and constantly wondering whether they have enough in their account to cover a purchase; banks’ own debit card commercials often portray balance checks as a key reason to use mobile banking. These customers aren’t using the feature because it's cool but to become more disciplined about managing their finances and make sure they don't overdraw. Aite Group believes this behavior, in addition to the FDIC restrictions on overdraft fees, will drive down banks' overdraft fee revenue.

3. Mobile banking users are using electronic coupons. The survey found 38% of mobile banking customers use electronic coupons more than they did two years ago, and 28% of non-mobile customers are also ramping up their use of the coupons. This is not surprising as mobile coupons themselves have only become prominent in the past two years. "We believe the right delivery mechanism for those offers will be through the mobile device," Shevlin says. In a couple of years, when mobile payment is more mainstream, the customer at Best Buy ready to buy a high-definition TV will use his mobile device to determine which card to use, the impact on his account balance, and whether or not there are any coupons or better deals to consider.

4. Bank customers have begun making purchases on their mobile phones. Aite's research found that overall about 40% of mobile banking customers made a purchase using their mobile device in the fourth quarter of 2010. Among Gen Y and Gen X mobile banking users, the number is 45% and 43%, respectively. Aite analysts say this means banks can steer mobile purchases toward bank cards.

5. Mobile banking customers are using checks less. Among mobile banking users, 61% have been using checks less than they did two years ago. They're using debit cards more: 43% of Gen Y and Baby Boomer mobile banking users are ramping up their debit card use; 35% of Gen Xers. As the Aite report indicates, banks that apply savvy marketing skills can turn all this debit and mobile banking activity in their favor.