$
October 2007
%
Many banks and financial firms are
reactivating or rejuvenating their mobile banking offerings. Most stopped or
marginalised mobile banking after the first launches failed to gain traction in the
early 2000s. But now, better technology may warrant a new attempt. Aite Group, a
research firm, reckons that by 2010 close to 35 m US consumers may use mobilebanking features. chart 1
Modern phones offer bigger screens, better usability and increasingly affordable
high-speed data transfer. By 2011, more than 40% of new mobile phones will be
equipped with a 3G broadband connection. Better technology allows smooth and
more enjoyable transactions and thus removes some of the obstacles which foiled
the first attempts. chart 2
More than 60% of
Germans under the age of 29 can’t imagine living without their mobile phone –
mainly because they never did. But while the fascination of mobile phone is the
smaller the older the citizens, it increases with income. 40% of Germans with a
monthly net income of more than EUR 3,000 and 50% of those earning more than
EUR 6,000 can’t do without. Many banks hope to transfer this obsession towards
mobile banking as well. chart 3
!
Few customers
are dying to use their mobile to pay bills, check their balance or trade stocks. Only
around 4% of US online consumers with a mobile phone use a feature of mobile
banking today. Another 5% are interested or very interested but 72% are not
interested at all. However, it is probably difficult for many consumers to imagine
something that is not yet widespread. chart 4
Author
Thomas Meyer
+49 69 910-46830
[email protected]
Editor
Stefan Heng
Technical Assistant
Sabine Kaiser
Deutsche Bank Research
Frankfurt am Main
Germany
Internet: www.dbresearch.com
E-mail: [email protected]
Fax: +49 69 910-31877
Managing Director
Norbert Walter
!
!
If
banks are not heeding the call of their customers, what’s pushing them towards
mobile banking again? Competitive pressures and high uncertainty about future
developments may explain part of the activity: nobody wants to be left behind if
and when the mobile banking train gets up and running. 55% of US financial
institutions say that the lack of a clear business case for mobile banking is a
serious impediment. Accordingly, 43% tend to view the creation of mobile banking
capabilities rather as a defensive move to counter potential competition. chart 5
"
!
People in low-income countries are often the biggest fans of mobile
phones and mobile banking because fixed lines are often nonexistent or expensive. In fact, the share of mobile-phone subscribers in low-income countries
has surpassed the share in rich countries. By the same token, few people in poor
countries have regular current accounts. Hence, mobile phones offer access to
basic financial services where little existed before. chart 6
#
Mobile phones will be loaded
increasingly with mobile payment functionality. Mobiles appeal to payment
system operators because they are taken along most of the time and capable of
aggregating multiple systems. Worldwide payments by mobile phone may reach
USD 22 bn by 2011 – which is still a paltry sum. In any case, if consumers get
used to paying with their phone, mobile banking may become less difficult to sell.
chart 7
E-Banking Snapshot 23
Mobile banking is ringing again
#
US mobile banking users, m
34.9
40
35
30
25
21.1
20
15
9.5
10
1.7
5
Mobile banking is back on the agenda.
Many banks and financial firms are
reactivating or rejuvenating their mobile
banking offerings. Most stopped or
marginalised mobile banking after the
first launches failed to gain traction in
the early 2000s. But now, better
technology may warrant a new attempt.
Aite Group, a research firm, reckons
that by 2010 close to 35 m US
consumers may use mobile-banking
features. back to front page
0
2007
2008
2009
2010
&
Source: Aite Group, 2007
'
(
!
3G mobile phones, % of global shipments
41
37
33
28
21
14
2006
2007
2008
2009
2010
45
40
35
30
25
20
15
10
5
0
2011
Minuscule screens and slow
connections are things of the past.
Modern phones offer bigger screens,
better usability and increasingly
affordable high-speed data transfer. By
2011, more than 40% of new mobile
phones will be equipped with a 3G
broadband connection – according to
projections by IDC, a technology
consultancy. Better technology allows
smooth and more enjoyable transactions and thus removes some of the
obstacles which foiled the first
attempts. back to front page
3G = CDMA 2000 1xEVDO, HSDPA, TD-SCDMA, WCDMA. Source: IDC, 2007
"
"I can't imagine living without my mobile phone", % of German consumers
who agree
64.4
63.4
70
60
45.0
50
35.2
40
30
23.1
16.3
20
10
0
14-19
20-29
30-39
40-49
50-59
60-64
Mobiles are an indispensable part of
modern life. More than 60% of
Germans under the age of 29 can’t
imagine living without their mobile
phone – mainly because they never
did. But while the fascination of mobile
phones is the smaller the older the
citizens, it increases with income. 40%
of Germans with a monthly net income
of more than EUR 3,000 and 50% of
those earning more than EUR 6,000
can’t do without. Many banks hope to
transfer this obsession towards mobile
banking as well. back to front page
Source: ACTA, 2006
October 2007
2
E-Banking Snapshot 23
"
Mobile banking is ringing again
!
How interested are you in accessing financial information through a
wireless device? % of US online consumers with a mobile phone
1 (not interested)
72
2
10
3
9
4 or 5 (interested or very interested)
5
Use already
4
0
10
20
30
40
50
60
70
80
)
Source: Forrester Research Inc, 2007
*
% of US financial institutions that give high importance to the following
issues
Provide more convenience to
customers
90
Provide defensive response to
competitors' mobile banking service
43
Using mobile banking to serve
customers who resist online banking
38
Using mobile banking as a replacement
for the call centre
10
0
20
40
60
80
100
+
N=22. Source: Aite Group, 2007
,
Mobile-phone subscribers as % of total phone subscribers
80
70
60
50
40
High-income countries
30
20
Low-income countries
10
0
1990
1992
1994
1996
1998
2000
2002
2004
Sources: DB Research, World Bank, 2007
October 2007
Still, customers give mobile banking a
cold reception. Few customers are
dying to use their mobile to pay bills,
check their balance or trade stocks. In
a survey by Forrester Research, a
technology consultancy, only around
4% of US online consumers with a
mobile phone use a feature of mobile
banking today. Another 5% are
interested or very interested but 72%
are not interested at all. However, it is
probably difficult for many consumers
to imagine something that is not yet
widespread. back to front page
-
Muted consumer enthusiasm points to
supply-driven development. If banks
are not heeding the call of their
customers, what’s pushing them
towards mobile banking again?
Competitive pressures and high
uncertainty about future developments
may explain part of the activity: nobody
wants to be left behind if and when the
mobile banking train gets up and
running. In a survey by the Aito Group,
55% of US financial institutions say that
the lack of a clear business case for
mobile banking is a serious impediment. Accordingly, 43% tend to view
the creation of mobile banking
capabilities as a defensive move to
counter potential competition. back to
front page
Customer adoption is not a problem if
tangible advantages are being offered.
People in low-income countries are
often the biggest fans of mobile phones
and mobile banking because fixed lines
are often nonexistent or expensive. In
fact, the share of mobile-phone
subscribers in low-income countries
has surpassed the share in rich
countries. By the same token, few
people in poor countries have regular
current accounts. Hence, mobile
phones offer access to basic financial
services where little existed before.
back to front page
3
E-Banking Snapshot 23
Mobile banking is ringing again
%
Global m-payment transaction value, USD bn
22
25
20
15
CAGR 82%
10
5
2
0
2007
2011
Source: Jupiter Research, 2007
.
The phone may also become a wallet.
Mobile phones will be loaded increasingly with mobile payment
functionality. Mobiles appeal to
payment system operators because
they are taken along most of the time
and are capable of aggregating multiple
systems. Jupiter Research reckons that
worldwide payments by mobile phone
may reach USD 22 bn by 2011 – which
is still a paltry sum. In any case, if
consumers get used to paying with
their phone, mobile banking may
become less difficult to sell. back to
front page
© Copyright 2007. Deutsche Bank AG, DB Research, D-60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite “Deutsche Bank
Research”.
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ISSN Internet: 1619-4829 / ISSN e-mail: 1619-6465