Mobile banking is gaining more popularity with the underbanked than it is with conventional bank customers.
For the underbanked, who use the service with prepaid cards, the attraction of mobile banking lies in its price, ease-of-access and portability, compared to other means of going online.
Red Gillen, a senior banking analyst at the Boston market research firm Celent, said that, for prepaid users, "I can see that mobile would be very, very important … a lot of the people do not have online access" through a computer, but "it's fair to say that the underbanked or unbanked have mobile phones."
Gwenn Bezard, a research director at Aite Group LLC in Boston, said the underbanked have more frequent need to gain access to their balances while on the go because, "when you have a prepaid debit card, there is no easy way to know the balance."
At one such prepaid card company, Plastyc Inc., Chief Executive Patrice Peyret said that, even without knowing conventional bank customers' rate of use of mobile services, his sense is that his prepaid customers' use is higher. "When we checked where people were logging in from, we noticed that quite a fair number of them were actually using their phone."
This is supported by data from Javelin Strategy and Research in Pleasanton, Calif., which found that 22.4% of underbanked consumers had used a mobile banking service in the previous 30 days, compared to 14.1% of people with a checking account who used mobile banking in the same time frame.
Plastyc, other prepaid card companies and banks do not appear content, however, to simply offer basic mobile banking services, preferring instead to explore newer and more sophisticated mobile banking features.
Plastyc said it began rolling out a modern mobile account-access system only after it noticed that about 30% of its users were gaining access to their accounts from Internet-connected mobile phones within a given month.
In an update this month, Plastyc began offering some services to which even banking customers lack access, such as a browser-based tool for locating sellers of Green Dot Corp.'s MoneyPak products. Using this tool, which is based on technology Green Dot provides to its partners, Plastyc customers can add funds to their cards by purchasing a MoneyPak from a store and linking it to their Plastyc card account.
Peyret said that many customers probably know where to buy MoneyPaks to top up their cards but that the locator tool might be useful in emergency situations — the equivalent for the underbanked of the automated teller machine locator that many bank customers use. Plastyc also offers access to Visa Inc.'s browser-based ATM locator for mobile phone users who want to retrieve cash from their cards.
Peyret said the MoneyPak locator could also be used to let people make cash gifts by buying a MoneyPak and funding a remote card, such as a prepaid card belonging to a student. With its new services, "we've tried to do something that focuses on people who may not have any other banking service … and try to give them full access to their money," Peyret said.
Today, Plastyc's customers cannot apply MoneyPaks to an existing prepaid card account directly from a phone's browser, but Peyret said that feature is planned for a later release once Green Dot enables it.
Green Dot did not make an executive available for this story. Green Dot offers mobile account access through text messaging and said this month it plans to improve its mobile experience by developing a dedicated application. For example, it may offer a remote deposit capture feature to let users fund its prepaid cards by snapping photos of checks with a mobile phone's built-in camera.
Some analysts question whether prepaid's users really want a flashier mobile experience.
James Van Dyke, Javelin's principal and founder, said that rather than play catch-up with the flashier mobile account access features banks are starting to offer, Plastyc could serve as an example for banks that may overlook the need for a simpler mobile system.
"In mobile … you need to think about people who are less affluent, who skipped the online channel altogether," he said.
Before they start thinking about sophisticated features like mobile remote deposit capture, "you just need to do a great job with just the basics," he said.
And Jim Jones, the CEO of the San Ramon, Calif., prepaid provider AccountNow Inc., said that, though mobile account access is bigger among the underbanked, a subset of conventional banking customers may exhibit the same preferences.
"As you get to a younger, college-educated group of checking account customers, I think you will find them to be heavier mobile users," Jones said.
AccountNow still plans to upgrade its features, however; the company anticipates a larger number of underbanked people will get access to smart phones, he said.