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Mobile Banking: Putting Control of Your Finances in the Palm of Your Hand
Wednesday, March 26, 2014 7:00 AM

The use of mobile phones to access a checking account, credit card, or other financial account continued to increase in prevalence among adults in the United States last year, according to the Federal Reserve Board's latest report on the use of mobile financial services. As of December 2013, 33 percent of all mobile phone users and 51 percent of smartphone users had used mobile banking in the past 12 months. This is an increase from 28 percent in December 2012 for mobile phone users and 48 percent for smartphone users.  

According to Stephen Lark, vice president of marketing and corporate development with Communication FCU, mobile banking is a must have in today's mobile-centric world. The nearly $921 million in assets credit union rolled out mobile banking in April 2013. In the initial roll out, members could check their balances, review their account history, transfer funds, locate credit union branches and ATMs, and set customizable alerts.

In August of last year, Kara Barrett, marketing manager with the Oklahoma City-based credit union, says they added the remote deposit functionality on their app. Since then, Barrett says they seen almost 8,000 deposits and it has steadily increased each month. As the credit union continues to promote the app and educate members about it, Barrett says they expect that number to rise.

“Adoption of this new tool has been extremely positive,” says Barrett. “In trying to balance personal and professional lives, more and more consumers are embracing the convenience of mobile banking.”

According to Barrett, the percentage of users with checking accounts that have adopted the mobile app is approximately 19 percent and growing. Barrett says the credit union recently ran a report that showed more than 52,000 transfers completed from the app and more than 722,000 balance requests since its launch.

While more members are taking advantage of mobile banking, Barrett points out that offering a mobile app has not resulted in a decline in branch traffic. “Consumers want options, and mobile banking compliments the other points of service we provide our members,” she adds.  

The Fed reports that the use of mobile phones to make payments at the point-of-sale has experienced substantial growth over the past several years, increasing threefold between the 2011 and 2012 surveys, and again between 2012 and 2013. In 2013, 17 percent of smartphone owners, representing 9 percent of the U.S. adult population, reported having used their phone to make a purchase at a retail store in the past 12 months.

Mobile phones are also increasingly used to help make decisions while shopping. Among smartphone owners, 44 percent had used their phone to compare prices while shopping and 42 percent had used their phones to browse product reviews in store. Over two-thirds of those who had used their phone to do price comparisons had changed where they made their purchase based on that information.

The Federal Reserve Board completed its first Survey of Consumers' Use of Mobile Financial Services in December 2011, and released a summary report in March 2012. The Board has continued to conduct the survey and release a report annually to monitor trends in the use of mobile financial services, and to understand how the rapidly expanding use of this technology affects consumer decisionmaking and the overall economy.

The Board's report looks at how consumers access their bank's services using mobile phones ("mobile banking"), at their payment for goods and services using mobile phones ("mobile payments"), as well as their use of mobile phones to inform their shopping decisions.

The most common mobile banking activities continue to be reviewing account balances, monitoring recent transactions, or transferring money between accounts. The use of mobile phones to deposit checks by taking pictures of them using the phone's camera again increased substantially between surveys, with 38 percent of mobile banking users having deposited a check with their phone in 2013.

The use of mobile financial services is particularly prevalent among the 17 percent of the population that is underbanked (people with bank accounts but who also use check cashers, payday lenders, auto title loans, pawn shops, or payroll cards). Among the 88 percent of underbanked consumers with mobile phones, 39 percent had used mobile banking in 2013. Mobile phones may also allow for the extension of financial services to an additional 10 percent of the population that is unbanked (those without a bank account), as 69 percent of this group has a mobile phone, 64 percent of which are smartphones.

While the use of mobile banking continues to increase, the report indicates that those consumers who do not use mobile banking are becoming more skeptical of the benefit of mobile banking and the level of security associated with the technology. Well over half of mobile phone owners who do not currently use mobile banking say they have no interest in using this technology. Consumers are similarly skeptical of the benefits and security of mobile point-of-sale payments, or believe it is simply easier to use another method of payment. Almost three quarters of all mobile phone owners said that they were "unlikely" or "very unlikely" to use their mobile phones to buy things at the point-of-sale if given the option.