Mobile banking is a “twice new” trend in the retail banking industry. It first came onto the banking scene five years ago, but after a few years with slow to no consumer adoption, most institutions abandoned mobile banking efforts.
Reasons for its failure to successfully launch were varied, but industry experts point to consumer hesitation and uncertainty and a lack of full commitment from the banking industry. Consumers simply weren’t ready to trust cell phones with sensitive financial data like money transfers, account balances and bill pay — after all, text messaging hadn’t yet taken off. Fast forward to 2008: the number of cell phone users and text message subscribers has increased exponentially, giving rise to the popularity of mobile platforms — a precursor to mobile banking adoption.
Targeting Gen Y
Another factor partly responsible for the market’s readiness is the maturation of Generation Y, which ranges in age from 14 to 27 — the prime demographic for all things mobile. According to Celent, a research and advisory firm, four in 10 Generation Y-ers say that mobile banking services are a factor in their choice of bank.
Studies show that bank executives are right to target this customer base: The Deloitte Center for Banking Solutions reported that Generation Y has more than 75 million members and a collective annual income of $1.89 trillion. Deloitte predicts Gen Y earnings will increase by 85 percent over the next 10 years to $3.5 trillion, exceeding Baby Boomers’ earnings by some $500 billion.
This segment of the population is accustomed to real-time, self-service transactions and demands instant access to information — all tenants of a mobile banking offering. The uptick of smart phone use, which makes banking via phone easier, has also contributed to its increased adoption and rising popularity.
Experts at the Mercator Advisory Group predict that 33.1…