The smartphone market is maturing rapidly, but financial institutions risk getting left behind because a growing number of users consider the channel unsafe for financial transactions.
Javelin says that between 2009 and 2011, smartphone ownership increased to 34% from 15%, based on a survey of about 5,000 U.S. customers conducted in March of this year (see chart).
However, smartphone mobile banking has stagnated—the number of smartphone users who used the devices for banking within a seven-day span grew to only 19% from 18%, and the number who never use smartphones for banking decreased only slightly to 59% from 63%.
The low numbers are connected to security. The percentage of people who consider mobile banking "unsafe" or "very unsafe" expanded to 40% from 26% between 2009 and 2010—before some of the high profile breaches of this spring.
"If FIs wish to reap the benefits of attracting a broad range of customers to the mobile banking realm, they must quickly and aggressively deal with mobile banking security," write the report's authors.
While most banks are turning their focus from browser-based mobile banking to the more advanced functions of native apps accessed via smartphone, Javelin suggests institutions maintain a strong browser-based system, because the perception of security is stronger for browser-mobile banking.
Consumer preference for mobile browsers increased to 47% from 34% between 2009 and 2010, while a preference for a downloaded app decreased to 23% from 32%. "If there intent is to drive their consumers to a downloaded application, the security, privacy and safety of that application will have to be a key message along with a clear statement of its advantages over a browser based system."
The research firm also recommends introducing banking access via mobile apps at a slower pace, allowing smartphone owners to acclimate themselves to the technology without stemming mobile banking adoption.
