American Banker has launched the Mobile Banking Intensity Index, a monthly gauge of mobile banking deployment and adoption in the U.S. The initial reading of the index confirms what many bankers know from their own experience: adoption of mobile banking is expanding at a fierce clip.
The MBI is a diffusion index, and its initial reading of 70.4 indicates strong expansion of mobile banking activity. For context, readings above 50 in a diffusion index indicate expansion and readings below 50 point to contraction. The further from 50 a reading is, the stronger the indicated change. A reading of 50 suggests that activity was unchanged month to month.
The index is a product of American Banker's regular surveys of banking executives and is published in partnership with Verizon. The composite index is a simple average of readings on a range of indicators including the types of products and services banks offer, the volume of activity among retail customers, transaction values and mobile app downtime. The initial index is based on 302 responses from senior-level bankers at institutions that offer mobile banking.
The survey polled bankers whose institutions offer mobile services on the mobile banking features they offer. Almost all (99%) provide the ability to check account balances or transactions and a vast majority (88%) offer ATM search using location-based services, rates that reflect the relative maturity of these applications. Mobile bill payment also featured prominently among respondents 76% said they offer the service. Sixty-seven percent said they offered mobile check deposit.
Data and verbatim responses from the first survey show that banks rolled out new apps and new features on existing apps at a rapid rate and customers quickly accepted them during the month of April.
"Generally, all our mobile and Internet channels are seeing very high and fast adoption," one banker wrote.
The performance of the index is driven by a set of components that track retail customer usage of various features relative to the month prior. The components that indicated the strongest growth in April were those that track balance transfers, balance inquiries and the downloading of banks' mobile banking applications.
One event that may have triggered the increase in banking app downloads was the release of the Samsung Galaxy S4, which launched on April 26.
A possible reason for the increase in balance and transaction checks could be the many bank website outages of the past few months, some of them due to distributed denial of service attacks. Wells Fargo, Regions Bank and JPMorgan Chase are among those that suffered outages in March and April. When their online banking website is down, consumers naturally gravitate toward mobile banking apps for account updates.
Monthly readings of the MBI index will be presented as a time series that can be used to monitor the prevailing rate of change in mobile banking adoption. Respondents on balance were bullish on the rate of expected growth in activity over the mobile channel.
"Adoption of mobile banking services increments on a monthly basis," one banker noted. "I would not expect to see a leveling off of mobile banking adoption and usage for another 12 months."