It was serendipity. We were deep into the production of our annual antivirus, browser and mobile security report. This year's report included considerably more data than previous editions on mobile banking security.
During the vetting process we came across an interesting piece of data. Despite marked year-over-year increases in smartphone adoption, we were not seeing an increase in the consumer adoption of either smartphone banking or smartphone e-commerce. This finding seemed counterintuitive.
As researchers we had to ask ourselves, "Could the data be wrong?" Our research bases on these questions were fairly large: two surveys each of 5,000 consumers and one survey of 3,000 consumers specifically focused on mobile. 15,000 in all. By statistical standards and commonly accepted practices, these numbers are considered solid.
But could the finding be true? All the PR machines have told us for years about how great mobile banking is and how everyone is (or should be) doing it. Many of us researchers are avid mobile banking enthusiasts. Combine that with the ads on TV, vendors' full-page ads in the trade press and the potential of the next wave of mobile payments, and you get a picture of hordes of consumers running headlong into this brave new mobile world.
There was just one little problem with this view — the data didn't support it. In fact, despite a significant increase in smartphone penetration, online banking remained nearly the same from 2010 to 2011. (It actually increased by just 1% — not even close to keeping track with smartphone growth, which was over 25% a year.) We then decided to look at purchases made by smartphone users. In looking at year-over-year data, we saw the same trend — either no increase or a slight decline in use. To quote from the researchers' handbook, we wondered, "What the heck?"
We decided to go back to the base research data and see if we could detect any patterns. Being that this was a "security" report, we thought that we would look at the question of how consumers viewed the safety of mobile banking while using a smartphone. When we saw the results, we were blown away and realized that they provided an important key to understanding the findings.
Part of the trend is based on the perception of the security of the phone s themselves. Year over year, more consumers felt that their smartphones were either unsafe or very unsafe. The percentage of consumers who felt that their smartphones were either safe or very safe actually fell from year-over-year data. And finally, the "undecideds" dropped precipitously when looking at the same data. What does this mean? Consumers were sending a very clear message: We are buying smartphones in droves, but we are not yet comfortable enough to use them for mobile banking or online purchases and we perceive these devices to be either unsafe or very unsafe.
As if one controversial finding wasn't enough, we had another—this one impacting the app vs. browser debate. Consumers believed that using the mobile phone browser was more secure than using a downloaded application by almost a 2-to-1 margin. Given the publicity that malware has recently received, the consumer may have this one right — at least in the short term. And remember, these surveys were taken before a series of fake applications were removed from the Android Market.
We first presented these findings to the internal management team at Javelin. After the jaws were lifted from the table, we held yet another review of the data. Are we sure? What will be the impact of publishing this finding? What kind of backlash will we get? Is there any more Advil?
We had been in this position before. Many times vendors, clients, or prospective clients take grave exception to what we say — especially when it is a contrary notion (such as the fraud rate being inversely proportional to GNP, which is now supported by over seven years of longitudinal data).
We knew that this finding would be controversial. We are not saying that vendors are not selling a lot of these applications or that financial institutions are not rolling them out in record number — we're just saying that consumers have not yet adopted them. The amount of money being poured into mobile initiatives is feeding a very large machine. To get in the way of that machine could be problematic. However, as researchers we knew that publishing these results was the right thing to do and reflected the consumer sentiment.
We publish these reports not to create controversy but to help the industry. As independent, fact-driven researchers, we believe that publishing reports such as these will actually improve the speed of smartphone adoption. Our report makes specific recommendations along these lines. By listening to consumers, involving them in their own security, and being responsive to their needs, it will actually increase the speed and velocity of both mobile banking and mobile e-commerce — we just all have to listen. ?
P.S. The above report was written in June and published in early July. In early August we received the results of a June survey that had been conducted before this report was written. We have not yet completed our analysis of the banners, but when we asked people who owned smartphones but did not do online banking why not, the No. 1 reason given was "security of online banking."
