Thursday, November 3, 2011

Consumers Are Increasingly Using Multiple Devices to Support Banking Needs

Traditional bricks and mortar facilities are being visited less as the use and importance of online and mobile devices continues to increase according to Intuit Financial Services' 4th Annual Financial Management Survey released yesterday. According to the survey, while a large percentage of consumers still manage their finances offline (45%), the percentage of consumers using online services from their financial institution has continued to increase annually; increasing 11% since 2009 to 38% in 2011.

The main reason consumers said that they don't visit their bank branch as often as they used to is because they are visiting their FI's website and use their online banking tools (76%). These online banking tools are so important that one-third (33%) said they would switch their relationship to another institution if there were better online tools offered elsewhere.

Source: Intuit Financial Services' 4th Annual Financial Management Survey

The importance of online tools was reinforced by Brett King, author of the bestseller Bank 2.0 and founder of direct mobile banking start-up Movenbank at this year's BAI Retail Delivery Conference in Chicago. "Banking is quickly changing from a place you go to something you do everyday," stated King. He provided a chart from the American Bankers Association and Nielsen Research that illustrated the channel migration occurring today and projected in the future.

Source: ABA, Nielsen Research

It appears that the growth of mobile banking is only limited by the growth of ownership of a smartphone according to the Intuit study. Forty-one percent of all respondents indicated ownership of a smartphone, 23% said they used a mobile banking solution, and an additional 17% intend to try mobile banking in 2012. The primary reason consumers indicated that they do not use mobile banking was because they do not own a smartphone (25%) followed by the fact that they prefer to bank online (22%).

Source: Intuit Financial Services' 4th Annual Financial Management Survey

These findings are similar to the findings last week from comScore that drew a correlation between mobile banking and smartphone adoption. "The investments in mobile made by financial service institutions, along with the continued growth in smartphone adoption, have had a positive effect on the use of mobile financial services," states Sarah Lenart comScore vice president for marketing solutions.

As expected, the adoption rate of mobile banking is demographically skewed. Young adults (aged 18-32) are three times more likely to carry their bank in their pocket, compared to Gen X, baby boomers or seniors. And while 65% of mobile banking users access their accounts through the internet/Web, 28% use a mobile application. "Regardless of age, each customer expects to connect to their financial institution in their own way," said CeCe Morken, president and general manager of Intuit Financial Services.

In another Intuit study of more than 50,000 mobile banking customers, it was found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate.

"While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future," said Intuit spokesperson Tobin Lee in a conversation yesterday. "Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer's needs. If they don't, someone else will . . . probably displacing a bank's relationship."

The desire for 'anywhere app access' is also supported by a just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications - Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This is important to prepare for since the same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months. These findings were also reinforced in last April's, Intuit 2020 Report: The Future of Financial Services.

As customers continue to use multiple channels to connect with their bank, it will be increasingly important to have a 360-degree view of customer device touch points and to leverage the advantages of each device to provide an optimum customer experience. The current anxiety over online and mobile security needs to be addressed at the same time as innovations such as near field communication (NFC) and location based services get integrated into online and mobile solutions. Bankers will need to get ahead of the payments innovation curve and prepare for major distribution channel disruption. In short, banks will need to do a paradigm shift by becoming nimble at a time of increased regulation and consumer scrutiny.

Are today's banks prepared for the massive changes ahead? Or will new online organizations such as Ally, BankSimple, Movenbank and others steal the hearts and wallets of Gen Y and device savvy consumers?

I would love to hear from you.


  1. I'm not as familiar with the situation in the US, but here in NZ it seems banks are very reluctant to change anything.

    I recently had an experience with a local bank who were running a big online campaign about switching to them. They exude a very modern, very tech savvy image, and I was impressed. So naturally I had to try it out for myself. I gave my details online, and then was rung the next day and asked to come into my local branch. I didn't really like to do this, but could understand them needing to identify me.

    When I went in there I was very surprised by the process. I was still made to fill out forms, sign this, sign that, give drivers licence etc... It seems the whole new campaign was just a face for their normal sign up process designed 20-30 years ago (in the age of forms and brochures). Just shows you that they are not REALLY willing to adopt new technology in a way to change their business.

    But I guess you could argue that they achieved their goal of getting me as a customer... but my experience was such that it left me doubting anything I see from them in the future as just smoke and mirrors

  2. The process of opening an account at most banks is both cumbersome and antiquated. there is no regulation specifying that signature cards be completed, yet virtually all banks require these to open an account. At a time when online, mobile and tablet banking is beginning to skyrocket, banks are falling far short of expectations around the new account opening (and onboarding) experience. The experience at many banks overseas is far more advanced than in the U.S.

    Hopefully, banks will begin to realize that the customer wants a far easier way of banking from the start. If not, other institutions will quickly fill the customer experience void and gain market share.

  3. In the US, there are approximately 15% of banks that have truly online account opening processes. It is correct that having physical identification is no longer a necessity thanks to advanced identity verification systems that protect the banks from fraud. Still, the challenge of getting your new customer to truly "anchor" themselves with your institution is a challenge. My company developed and launched the first completely automated account switch service, SwitchAgent which solves this problem. Our response has been amazing!

  4. While the response has been 'amazing', how about results? The reason I ask is that history has shown that 'aided' switch programs like SwitchAgent can work, but rely a great deal on referrals and interaction that is still difficult to generate. If you can share specifics I am sure readers would be interested.