Mobile Banking Is The Future
Posted by Andrea Baker on
The way we make payments, access our finances and use our banks is altering as mobile banking takes hold, with analysts predicting 2 billion people globally will access their banks via mobile device and apps by 2021.
This figure indicates a staggering 800 million people will join the mobile banking trend within the next five years as mobile technology continues to improve.
It's an astonishing prediction that not only has implications for the banks and their consumers, but the businesses accepting payments in an increasingly cashless world. This is the state of play and what business can expect as a result of the rapid rise of mobile banking.
The state of play
According to a recent report by fintech analysts Jupiter Research, mobile device users accessing mobile banking will reach 2 billion globally by 2021, that's up from 1.2bn this year. The awe-inspiring figure means one in three adults will soon access their bank accounts via mobile device.
Driven by the consumer adoption of mobile banking apps and smartphone access, it means logins from mobile devices now exceed the number of internet logins in many markets, with 65% of customers in the US and UK using an app for their banking needs.
These statistics are echoed by the US Federal Reserve which has studied mobile financial services for five consecutive years. They found 67% of millennials utilized mobile banking while the wider population averaged 43% in 2015. That figure was up from 39% the previous year, and the rapid rise is only set to continue.
According to the Federal Reserve research the most common uses for mobile banking were:
1. Checking account balances (94%)
2. Transferring money between an individual’s own accounts (58%)
3. Receiving alerts from banks via text, email or push alert (56%)
So far US consumers have been more hesitant than other western countries to embrace contactless payments via mobile device, with only 24% indicating they had made a mobile payment in the 12 months prior. Of those payments the most common uses were:
1. Paying bills through a mobile phone, web browser or app (65%)
2. Purchasing an item or digital content remotely by phone (42%)
3. Paying for something in a store by mobile phone (33%)
But with further smartphone adoption, recent security changes and innovative payment processing technology, that reticence looks likely to be reversed in the very near future.
Not just about banks
While the figures regarding banking alone may be astounding, in reality the mobile finance industry as a whole is making massive ground. Not only are banks keen to introduce their own apps and cashless payment systems, but fintech disrupters such as PayPal, Apple Pay and Android Pay, are also clamoring to get in on the action and have made huge headway in the US.
For banks this presents a challenge of staying one step ahead of the game to ensure they retain customers and the lucrative transaction fees they provide.
For business and retail
Mobile banking offers business and retail innovative solutions and streamlined processes on a number of fronts. From the way they manage their own finances to how they take customer payments, mobile banking take-up affects business as a whole.
1. Account management
The first implication for business is the way business owners can now track expenditure, pay bills and automatically deduct expenses, all from the palm of their hand, anywhere in the world.
Mobile banking apps allow better cash management in the form of record management, immediate alerts and account updates which can be accessed readily and in real time.
2. Customer payments
The second and perhaps more profound impact is on customer payments. The days of a quick cash job could soon be gone, with customers becoming increasingly comfortable with the idea of paying for a coffee, grocery shopping or making a major purchases simply using their mobile phone.
As a result the mobile point of sale systems and payment processing solutions that can accept contactless payments are the way forward for retailers and service businesses alike. Payment processing and POS providers like Square and PayPal have all recognized the mobile banking cashless trend, rolling out new technology that accepts contactless payments in recent years.
Easier setup/ lower overheads
While payment processing tech co's like PayPal and Square have been at the global forefront of the cashless and contactless push, banks have also jumped on board enabling small retailers, startups and stall holders access to the latest payment technology and ultimate customer convenience.
The last word
With mobile banking on the increase, and cashless payment methods to probably follow that trend, the future of financial transactions is likely to reach a tipping point in the coming years.
It's now down to retailers and business to ensure they're cashing in on the mobile finance game.