Javelin Research has an illuminating new report out this week on the state of mobile banking and its prospects for catching on with the general public. The biggest finding in the report was probably the massive growth in mobile banking in the past year:

In the past 12 months, the number of consumers conducting mobile banking rose dramatically, increasing from 19 percent of mobile consumers to 30 percent. This is positive news for mobile banking vendors as it means mobile banking is crossing the tipping point from a nice‐to‐have to a must‐have investment for the typical financial institution. The largest boost is seen in those conducting mobile banking in the past seven days, which increased 50 percent, from 12 percent in 2010 to 18 percent in 2011.

That pickup in customer adoption is pushing banks large and small to beef up their mobile banking offerings. I spoke with one of the authors of the Javelin report, Mary Monahan, managing partner and director of research, about what this means for consumers. Here’s what she had to say.

  • Mobile banking apps are quickly becoming a standard banking offering. “Hundreds of new banks are now live (with mobile banking). Along with that, consumer adoption, which had taken a pause last year, has just soared, taken off, gone crazy. Among the mobile banking vendors, last year when we interviewed them, they only had a few of banks live. This year, the average is 173 live. That’s a big, big change.”

    My take: This should mean you won’t have to bank with one of the bigs to get a suite of decent mobile banking tools, which is good news for all the folks switching to community banks and credit unions to avoid new checking account fees.
  • More smartphones in consumers’ hands mean more banking going mobile. “There’s a smartphone crossover happening. Crossovers are really key points, and when we talk about a crossover, that’s when more Americans will own smartphones than will own regular phones. Right now we’re at 45 percent (smartphone adoption), so we’re just about at that crossover point. The reason that’s important for mobile banking is that half of smartphone owners conducted mobile banking last year.”

    My take: Smartphone adoption and the rise of mobile banking tools should help community banks and credit unions compete with banks that have a large number of ATMs and branches. If a customer can deposit a check by taking a picture of it with their smartphone or check their balance with the touch of a button, a bank’s physical presence nearby won’t be as important.
  • Mobile banking offers a number of different channels depending on a consumer’s equipment and comfort level with technology. “There’s three modes of (mobile) banking: SMS banking, application banking and browser-based banking. If you look at consumers, not everybody has a phone that can accept applications, so (banks) have to offer SMS text. And not everyone knows how to download applications.”

    My take: It’s smart for banks to offer multiple channels for mobile banking, but consumers who can download applications should go with their bank’s official app for their mobile banking needs, because that’s most secure.
  • Mobile banking security is still an issue. “Security is the No. 1 reason consumers fear using mobile banking. That’s been the case all along. It’s a great inhibitor of mobile banking, and two out of three consumers believe that transacting on a mobile phone is ‘much less secure’ than on a computer or laptop.”

    My take: Banks are going to have to lock down their mobile apps and aggressively sell customers on their safety to overcome consumer fears, but just as with online banking, I think only time and a relatively clean safety record will settle some consumers’ fears.

Overall, the report suggests mobile banking is on its way to becoming a mainstream way to bank, and that’s ultimately a good thing, in my opinion. Not only does it help take care of consumers’ banking business without having to drive to a branch, but it also help customers keep closer tabs on their finances.

What do you think? Do you bank on your phone? If not, why not?

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