You are on page 1of 17

Mobile Banking: The Second Wave

Global Mobile Banking Survey 2008


Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Table of Contents

Executive summary 3

Research methodology 7

Considering the consumer 8

Mobile user increase 9

Capturing mobile ‘hearts and minds’ 10

Why go mobile? 11

Hunters and farmers 12

Beyond the customer 13

Technical issues 14

Conclusion 15
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Executive Summary

Mobile banking poses many questions for the financial sector and telecoms providers alike. There has
been a generous effort by all interested parties to leverage the potential benefits that mobile banking
can deliver to customers. However, response from the market has been measured at best.

The Sybase 365 Global Mobile Banking Survey 2008 seeks to provide context to many of the conundrums
surrounding the delivery of mobile banking services in an increasingly competitive retail and professional
banking world. This report is relevant reading for any financial service provider evaluating peer opinion on
mobile services before taking the next strategic step.

Using data resulting from interviews with some of the world's largest financial organizations, as well
as representative samples of national and specialist financial institutions, the survey takes a regional
(US, Europe and Asia-Pacific) and international view of mobile banking sentiment and trends.

3
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

A summary of the key findings is as follows:

Enthusiasm for mobile banking services


66% of respondents in the survey considered that mobile banking provides an excellent opportunity
to enhance existing customer service
Figure 1:
Mobile banking provision plans, all respondents
International factors (base: 92)
European and Asia-Pacific regions are considerably ahead of the US in terms of mobile banking
provision – only 10% of US banking organizations taking part in the study currently offer mobile 60%
banking against 57% in Europe 53%
50% 47%
43%
Expected growth 40% 37%
With 34% of banks (globally) currently offering mobile services to customers, an additional 32% of 31% 33%
respondents plan to offer mobile services in the next 12-24 months. 30%
22%
53% of US banks expect to be offering mobile services in the next 12-24 months, giving potential 20%
20%
parity to mobile service provision across the globe by 2010 (see Figure 1)
10%
10%

The suggestion of considerable momentum for mobile banking over the next two years should be received
0%
warmly by mobile providers and bankers alike. The ratio of mobile banking users, i.e. customers adopting Offer mobile Plan to offer No plans
services in next 12-24 to offer
mobile services remains modest, but is predicted to grow over the next two years with 58% of banks currently months
offering mobile banking expecting that at least 1 in 10 customers will be using mobile banking by 2010.
However this growth will not come without modification of existing processes:
Asia Europe US All



Our challenges are all based on standardization measures with regard to browsers,
security demands and operator tariff systems.

(European Banking respondent, Sybase 365 Global Mobile Banking Survey 2008)

4
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Further key points from the survey include:

Raised awareness
A key consideration, mirrored in the Sybase 365 mobile banking consumer study undertaken
in 2007, is the level of awareness that customers have of mobile banking. The 2007 consumer
Figure 2:
study showed that in Asia-Pacific, US and European regions over half of respondents were not How is the delivery of mobile banking services
aware if their bank offered mobile services. It appears that businesses are responding to awareness managed from a technical perspective within
issues with 65% of the banks who currently offer mobile services to customers stating that your organization?

marketing budgets and activity to raise awareness are part of the strategic plan for 2008.

60%
Delivery options
Service sits at the center of the banking philosophy, acting as a measure of quality by customers 50%
and a critical aspect of differentiation by the banks themselves. As shown in Figure 2, the method 48%
of management and delivery for mobile services is biased considerably towards the organic, 40%

in-house approach. It will be interesting to observe how this trend changes over time, especially 30%
with concerns voiced from several corners of the respondent base regarding ‘security’, ‘integration’ 25%
and ‘platform compatibility’ when discussing mobile banking challenges. 20% 19%

10%
3%
0%
All in-house In-house Fully Fully
management mangagement outsourced outsourced
with additional to 3rd party to 3rd party
3rd party single multiple
support supplier supplier

5
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

In summary…

Growth
The research concludes that the next two years will see a second wave of mobile banking provision and
adoption taking the lead from early adopters in Europe and Asia. The number of banks offering mobile
banking is set to double in this time frame and the number of customers using mobile banking services
is also expected to increase significantly from existing levels. If respondent intentions play out, the number
of banks that do not offer mobile banking will be in the minority by 2010, rather than the majority, as is the
case today. This is a significant swing and a clear indication of accelerated mobile provisioning.

Risk
There are risks along the way for financial institutions when expanding or introducing mobile services.
Mobile internet can sometimes be viewed as an afterthought, or ‘add on’ to existing internet services.
The good news is that this creates a channel for mobile banking use, the bad news is it suggests an absence
of specific mobile strategy – evidenced both by the desire expressed by the sample for improvement on
the status quo and the level of challenges currently experienced in delivering mobile services.

Evolution
Mobile banking is evolving. This is not a simple case of better technology and better handsets, as
technology is always evolving along this latitude. The more important developments are taking place
with service providers. Findings show that different types of banking organizations are pursuing mobile
banking with different goals in mind, which will undoubtedly lead to a wider array of more sophisticated
services. The ‘second wave’ of mobile banking providers will also have learnt a great deal from internet
service provision and current mobile banking usage.

The enrichment of mobile services, combined with the cost benefits and customer intelligence gleaned
from mobile data, looks set to change the way mobile provision is delivered and utilised towards the end
of the decade.
6
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Research methodology

The field research for the Sybase 365 Global Mobile Banking survey was undertaken using a Computer
Assisted Telephone Interviewing (CATI) system, targeting decision makers within the financial sector
responsible for the delivery of mobile and/or internet banking. The sample comprised of the top 1000
banking institutions in the world from which 92 interviews were conducted in total.

The sample included 32 European banks, 30 US banks and 30 banks from the Asia-Pacific region.
A representative distribution of tier 1, 2, and 3 banks was also achieved. The research was completed in
February 2008 and managed by Loudhouse research, an independent research consultancy based in the UK.

7
31%

Agree
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008
Disagree / Neutral

Considering the consumer Figure 3:


I would like to be able to deal with my bank
on the move
As customer-driven organizations, it is important to ascertain what banking customers think of mobile
services in order to set the context for further discussion within the report. In 2007 Sybase 365 undertook
a survey of over 7,000 consumers worldwide to understand the drivers for mobile banking usage across
the globe. As Figure 3 shows, a surprising number of mobile users acknowledge the appeal of dealing
with financial matters ‘on the move’. Almost one in three mobile users (globally) agreed that this aspect 69% 31%

of bank interaction was favorable.

As Figure 4 shows, when looking at the type of services that consumers would be interested in when
adopting mobile banking services, two thirds (67%) expressed a preference for standard transactional
Agree Disagree/Neutral
information, such as receiving balance enquiries via the mobile.

With the evident enthusiasm for personal financial information via the mobile expressed by the consumer
survey, there would appear to be a clear opportunity for retails banks to capitalize on this position.
However, current mobile banking provision and usage fail to reflect the positive sentiment expressed in Figure 4:
What type of services would you like to receive
Figures 3 & 4. This leads one to wonder: what’s missing in the mobile banking equation? via your mobile phone?

33 %

6 7%

Would like to receive balance enquiries


Would not like to receive balance enquirues

8
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Mobile user increase Figure 5:


Current estimate levels of customers using
mobile banking from respondents offering
One of the sticking points in the mobile banking equation is that, as shown in Figure 5, existing levels of mobile services (34%)
mobile adoption remain modest. Looking ahead, the outlook is more positive. Figure 6 shows that
estimated mobile banking user numbers within the next two years will increase to an average of 16%.
6%
In other words, the user base per bank is set to more than double. This increase of users per bank also needs
to be considered within the context of the number of additional banks planning to offer services, as shown
in Figure 1. If plans hold true, the actual number of banks offering mobile services is also set to double,
meaning that the overall number of people engaging with their banks via mobile data could increase by a
factor of 4 to 5 times over the next 12-24 months. 94%

Admittedly, by starting with a low base figure, the multiples can easily sound attractive, but the fact of the
matter stands that there will be a measurable upswing in mobile banking usage, driven by two encouraging Current users Other
factors: existing mobile banking providers anticipated increase in service usage and a larger percentage of
banks globally offering mobile services.
Figure 6:
Predicted levels of customers using mobile
These figures should be of particular interest for the Americas region where, not only US consumers express banking by 2010
a higher than average enthusiasm for banking on the move (49% US to 33% global average), but this region
also has the most significant growth potential (as shown in Figure 1).
16%

84%

Potential use by 2010


Other

9
24%

Mobile Banking: The Second Wave


Global Mobile Banking Survey 2008

Capturing mobile ‘hearts and minds’ Figure 7:


I would consider switching to a bank if I was
offered free mobile banking (Consumers 2007)
As an interesting further dimension to the rationale for offering mobile banking services sooner rather
than later, a question was posed to the consumer group in the 2007 study regarding the ‘draw’ of mobile
banking as a stimulus for changing banking providers. The banks themselves in the 2008 study were
also questioned on this issue. As with the previous charts comparing consumer and banking sentiment,
24%
there are some interesting differences of opinion.
76%

When the 2007 consumer panel was asked if they would consider switching banks if free mobile banking
was offered, 24% stated that they would consider moving. This is quite a considerable number, especially
when set in context of other marketing lures at the disposal of the banking industry and their relative
success rates.
Agree Disagree/Neutral

Furthermore, as shown in Figure 8, 45% of the banking sample considers that mobile banking is a way to
encourage potential customers to switch banking providers. However, in line with existing user figures
Figure 8:
provided in Figure 5, the respondents in Figure 8 consider that only around 5% of customers would Do you think that offering mobile services is a
potentially move banks. way to encourage potential customers to switch
banking providers?

Clearly, end user enthusiasm for new ways to interface with their banks (such as mobile banking) is
countered by banking provider caution in providing the services, creating something of a frustrating hiatus.
More alarmingly, there is a suggestion that mobile banking could be a greater contributor to customer
attrition than bankers predict.
55% 45%

Respondents believed
that on average only
5% of customer would
move banks
Yes No/don’t know

10
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Why go mobile?

Figure 9 provides a priority list of mobile triggers that have encouraged the mobile provider section of the
sample to offer services in the first place. The top three criteria tell a simple story: banks provide mobile Figure 9:
From the following, what would you say were
services to improve customer experience, to extend internet banking, or to achieve competitive advantage. the reasons that your organization introduced
This seems a common sense approach. The harder commercial rationale of reducing customer service cost mobile banking services?
and/or generating revenue are less well represented in the chart, though cost reduction is clearly a more
compelling driver than revenue generation.
Additional service to 88%
improve customer 85%
The chart has also been split into ‘hunters’ and ‘farmers’ to point out some notable differences. In the experience 87%

survey, respondents were asked if their predominant strategy was a) to increase revenue from existing Competitive 82%
advantage 77%
customers (farmers) or b) to grow their customer numbers overall (hunters). Each group represents around 81%

40% of the sample, with the final 20% preferring a balance between the two options. It is interesting to Logical extension to 77%
internet banking 62%
observe the difference between the hunter and farmer groups when looking at drivers such as customer 71%
demand, reaction to competitors and the need to generate new revenues. Customer 65%
demand 69%
65%
It goes with ‘type’ that the farmer group are more interested in satisfying an existing customer demand Reduce existing 65%
having already established a competitive advantage, whilst the hunters are in a more reactive and revenue customer 46%
service costs 55%
focused mindset. However, what this also demonstrates is that, even with a minority of banks providing 35%
Reaction to competitor
mobile services today, the drivers for doing so can be very different. 62%
mobile services 48%

30%
Generate new revenue 54%
strems 39%

Farmers Hunters All

11
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Hunters and farmers

Continuing the hunter/farmer theme, Figure 10 shows that the farmer group also associates a greater level
of importance with mobile banking than their hunter counterparts. 44% of the farmer respondents consider
mobile banking to be important against 32% of the hunter sample. Coupled with the increased number of Figure 10:
farmers that undertook mobile banking to achieve competitive advantage, rather than as a reaction to On a scale of 1 to 5, where 1 is not very
important and 5 is very important, how would
competitors, there is the suggestion that our farmer group has a more mature and, potentially, more you rate the importance of mobile banking to
informed view of mobile service provision. your organization?

In shaping a view on best practice, it appears certain fundamental aspects of commercial strategy will
40%
influence the approach to mobile service provision, and therefore the types of services that are being 36%
offered. To date, it is difficult to speculate on which approach is more successful, as both hunters and 35% 34%
33%
farmers have their merits, but it may help other businesses considering an appropriate mobile strategy 30% 28%
27%
to observe the following: 25% 24%
21%
20%
20% 16%
Hunter Farmer
Mobile drivers

15% 14%
15%
Customer growth driven Customer value driven
10%10%
React to competition Competitive first mover (mobile) 10%
7%
Mobile revenue focus Cost reduction focus 5%
5%
Creating customer need Reaction to customer demand 0%
Not at all Not important Neutral Important Very
important important

Hunters Farmers All

12
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Beyond the customer Figure 11:


Does your organization use mobile/SMS technology
in any of the following ways beyond customer facing,
Mobile data and banking is not solely the domain of custom information services. Mobile communication is or internet-orientated services? (Base 92)
also present within financial sector organizations, used as a support tool for call center services as well as for
60%
internal communication, as shown in Figure 11. There is room for growth within both these areas in terms of 60%

general take up of services, but also the sophistication of services involved. Many bank customer call centers 50%
are burdened with rudimentary account enquiries that can easily be alleviated with SMS-based services. 40%
It is also easier for a business with existing knowledge of text and WAP-based internal communications services
30%
25%
to channel that learning and experience into customer facing tools.
20%
15%
10%
Figure 11, in line with the rest of the survey, describes a sector that is still very much ‘coming to grips’ with
mobile technology at a coordinated corporate level. This is also acknowledged in Figure 12 when looking 0%
SMS statement Corporate SMS None
at the level of need identified in getting more from the data generated by mobile users. With those financial sent from application/system
telephone/call for internal
institutions currently offering mobile banking services seen as somewhat ahead of the curve in terms of center enquiries communication
provision, it is unfortunate that 58% of them agree that the CRM potential created by mobile data is not
best utilized at present.
Figure 12:
Our organization could do more to capitalize on the
data generated from mobile users to improve/refine
mobile services.

50% 48%

40%

30%
23%
20% 16%
10%
10%
3%
0%
Strongly Agree Neutral Disagree Strongly
agree disagree

13
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Technical issues

Mobile service delivery does not come without technical challenges, though as shown in Figure 2,
most banks are happy to overcome these challenges with in-house resources alone. Figure 13 describes
the most common methods that mobile banking providers consider will improve current offerings.
The overriding issue is one of delivering a wider range of services. Consistent with increased marketing
Figure 13:
efforts to end users (65% of the sample stated that they were to increase marketing focus on mobile services), In what ways do you think that mobile banking
education is also a key theme. However, there is also a notable desire to overcome perennial technology services could be improved within your organization?
challenges surrounding integration, security and CRM.

Wide range
Some of these sentiments are echoed in the responses below regarding challenges in the delivery of of services 48%

mobile services:
Better
education 39%

What do you see as the main reasons for customers not undertaking mobile banking? Improved
security 29%



Only available on certain devices by certain networks; we are an early adopter of mobile
Better integration
of mobile and
online services
29%
banking so we are ahead of customer demands.
Improved CRM

“ Compatibility issues with the different handsets out there. Our system requires WAP
“ using mobile data

More marketing
29%

26%
browser 2.0; if the hand held device does not meet that, the customer can’t use mobile banking. support

Cheaper
10%
subscription

On a positive note, most of the technological obstacles referred to are becoming much less of an issue as
the mobile industry overcomes interoperability and standardization challenges. More importantly, a strategy
that correctly accounts for these issues at the outset is less likely to encounter them once mobile services
are live.

14
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Conclusion

Mobility in banking is not a new term. In fact, some businesses in the sample have been supplying a Figure 14:
What services, if any, do you currently offer your
form of mobile information services to customers for four years or more. However, there are several factors,
customers in terms of mobile banking?
in addition to the findings discussed in this report, that suggest the next two years will witness a step
change in mobile adoption and delivery within the financial sector, including:
Balance on
demand 87%

Standardization of mobile internet platforms Transaction 77%


alerts
Increased handset functionality
Money transfers 74%
Second wave of mobile adoption by banks
Balance alerts 71%
Consumer confidence in technology
Consumer familiarity with ‘digital’ service delivery Request a call back
45%
from customer services
Request a statement
or mini statement 42%
The first wave of mobile banking services has undergone a steep learning curve in mobile banking delivery.
OTP (one time pin) 36%
However, the second wave is comprised of a more informed provider community and a more enthusiastic or 2FA or mTAN
customer base, both of which suggest a promising two years ahead. Check interest rates
36%
and/or share prices

Bill payment 29%


Evidently, mobile banking is not for every customer today, but the range of potential services on offer
Make a deposit or 26%
means that it can become a very flexible customer tool. Some customers will thrive on location independent withdrawal
minute-to-minute financial information; others may simply want to check a bank balance with a simple text Call to action in 23%
marketing campaign
message on occasion. As Figure 14 shows, most mobile banking activity currently focuses on information Reports of potentially
19%
alerts, though there is a wide array of more sophisticated services offered in general. fraudulent transactions
Being able to 16%
freeze card
Set up regular
16%
withdrawals or
deposits

15
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

There is still a considerable amount of work to do in getting the financial sector up to speed with
the potential of mobile banking. It is fair to say that a lot of mobile services today suffer the challenges
common to many early adopter infrastructures: siloed data resources, lack of standardization and
mixed service delivery methods. Therefore, current mobile solutions are rarely optimal for either
customer or service provider. However, that trend is changing. Internet banking has created the
delivery channel for many mobile internet possibilities and delivery obstacles are being ironed out.

The future challenge is to think about mobile strategically. SMS balance alerts may prove to be a good
starting point for mobile banking strategy, but the industry now requires a greater understanding of how
to establish a mobile relationship with customers, one that new customers increasingly demand and new
technology provides. The findings in the survey also suggest that mobile strategy is driven more by
implication than planning, as demonstrated by the ‘hunter/ farmer’ approaches. It is encouraging that
the market is beginning to differentiate service provision, but questionable as to how aware banking
organizations are of this behavior.

As stated in the executive summary, the ‘second wave’ of mobile banking activity will be defined by
three factors (see page 17). Arguably, the success of mobile banking adoption will be decided by how
effectively banking organizations can acknowledge, adapt and respond to these points. Mobile banking
provides unique opportunities for customer engagement that the majority of the banking industry
appear keen to explore.

16
Mobile Banking: The Second Wave
Global Mobile Banking Survey 2008

Growth
The number of banks offering mobile banking is set to double in this time frame and the number of customers
using mobile banking services is also expected to increase significantly from existing levels. If respondent
intentions play out, the number of banks that do not offer mobile banking will be in the minority by 2010,
rather than the majority, as is the case today. This is a significant swing and a clear indication of accelerated
mobile provisioning.

Risk
There are risks along the way for banking organizations when expanding or introducing mobile services.
Mobile services can sometimes be viewed as an afterthought, or ‘add on’ to existing internet services.
The good news is that this creates a channel for mobile banking use, the bad news is it suggests an absence
of specific mobile strategy – evidenced both by the desire expressed by the sample for improvement on
the status quo and the level of challenges currently experienced in delivering mobile services en masse.
For more information, please contact:
info365@sybase.com
Evolution
Mobile banking is evolving. This is not a simple case of better technology and better handsets, To download a free copy of the Sybase 365
as technology is always evolving along this latitude. The more important developments are taking place 2007 consumer study ‘Nano-economics:
with service providers. Findings show that different types of banking organizations are pursuing mobile Mobile Opportunities for the Financial Sector’,
banking with different goals in mind, which will undoubtedly lead to a wider array of more sophisticated go to www.sybase.com/365
services. The ‘second wave’ of mobile banking providers will also have learnt a great deal from internet
service provision and current mobile banking usage.

17