US Mobile Banking: Beyond the Buzz

May 17, 2007

Abstract

San Francisco, CA, USA May 17, 2007

Mobile banking will be a significant financial services channel that will be used by 35% of online banking households by 2010.

The relevance of mobile banking and the likelihood of its success have been in question. But mobile banking is here to stay and will grow significantly faster than online banking, according to a new report from Celent, . By 2010, 35% of online banking households will be using mobile banking, up from less than 1% today. New functionalities will make mobile banking distinct from online banking and attract users. For instance, mobile banking will eventually allow users to make payments at the physical point of sale. These "mobile contactless payments" will make up 10% of the contactless market by 2010.

Mobile banking initiatives are of particular interest to 18- to 25-year-olds, also known as Generation Y. They will gravitate to mobile banking faster than the general population. According to the report, 40% of Generation Y indicate that mobile financial services will be a factor in their choice of bank. Five years from now, a significant percentage of this demographic will be in cell-phone only households, retrieving information and conductions transactions from their handheld devices frequently.

Celent estimates that by 2010, upwards of 70% of bank center call volume will come from mobile phones. Half of those calls will be related to basic balance inquiry information. This information will be readily available on a phone and will take less time than a phone call. A customer service inquiry via mobile banking (as opposed to a call center) will cost less and be an impetus for banks to embrace this new channel. Mobile subscribers of data services will cut across income levels, age, and ethnicity and are very good leading indicators of mobile content usage, including mobile financial services.

"The mobile banking end game will not be about checking balances and paying bills. It will evolve into a mobile wallet, allowing banks to generate greater electronic payment volume through the combination of electronic loyalty programs, mobile marketing, and contactless payments," says Dan Schatt, author of the report and senior analyst at Celent. "While loyalty and marketing applications are still largely confined to product roadmaps, they will make their debut in late 2008, and by 2010 we will see the fusion of mobile banking and mobile contactless payments."

The 38-page report has 16 figures and six tables. A table of contents is available online.

Members of Celent's Retail Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

San Francisco, CA, USA May 17, 2007

 

Executive Summary 3
Why Mobile Matters This Time 4
Definition of Mobile Banking 8
  Online Banking or New Breed? 8
  Mobile Payments vs. Mobile Banking 9
  What the Data Is Saying 10
Generation Y and Mobile Banking 13
Features That Matter Today 18
Mobile Banking Learnings 21
  Navigating the WAP Trap 21
  Serving Up SMS Without an SOS 23
  A Bright Future for Client Apps 27
Pricing Mobile Banking Content 31
Conclusion 34
Objectivity and Methodology 35
 

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