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As Consumer Banking Behavior Continues to Evolve, Mobile Is Now Mainstream, Says AlixPartners Study

Mobile continues to play a critical role in bank-switching decisions, with 60 percent of smartphone/tablet users reporting mobile banking capabilities as “important” or “extremely important” in the decision to switch

March 12, 2014

In a sign that U.S. consumers are continuing their growing embrace of mobile banking, a recent survey shows that 60 percent of smartphone or tablet owners who switched primary banks reported mobile banking capabilities as “important” or “extremely important” in their decision to switch, up dramatically from 48 percent in a similar survey in the first half of 2013. That’s according to the latest AlixPartners Mobile Financial Services Tracking Study, by global business-advisory firm AlixPartners.

The study also shows strong growth in the adoption of mobile banking services overall, with mobile banking now being used by 28 percent of U.S. banking consumers, up four percentage points from the survey in the first half of 2013, and up nine percentage points from AlixPartners’ fourth quarter survey of 2012. The AlixPartners research also suggests that this trend will likely continue as smartphone, tablet and other digital device sales increase and as U.S. consumers spend more time using mobile devices for banking transactions, including for checking bank balances, looking at monthly statements, making account transfers, and paying bills.

“The availability of mobile banking features plays an increasingly critical role in the consumer’s decision to switch primary banks,” according to Bob Hedges, managing director in AlixPartners’ Financial Services practice. “Consumers are demanding, expecting, and shopping for mobile capabilities. Banks who fail to innovate run the risk of losing customers and face real challenges in attracting new customers.”

As Consumers Increasingly Adopt Mobile Banking, Clear Benefits Can Accrue to Banks

In parallel, as consumer adoption of mobile banking grows, the consumer’s use of higher-cost banking channels, such as traditional branch service and live customer-service call centers, appears to be declining. According to the recent study, mobile-banking users reported visiting a bank branch 39 percent fewer times per month after adopting mobile banking services.

“The behavior and decision making of consumers who have adopted mobile is making the business case for mobile innovation and promotion by financial-services institutions,” added Hedges.

Consumer engagement with smartphones and other digital channels cannot be ignored, and appears to be fundamentally altering the U.S. financial services sales and servicing paradigms, says the study. Development of new mobile capabilities will likely help attract new digitally-oriented consumers to financial services companies, and a commitment to innovation on behalf of the consumer’s needs and preferences will be required to build the financial services franchises of the future, the study says.

“Mobile is now mainstream. It is table stakes for being relevant to consumers,” said Teresa Epperson, managing director in the Financial Services Practice at AlixPartners.

Mobile Innovation Key to Capturing Customer Engagement

Spotlighting the importance of innovation, mobile remote deposit capture (RDC) adoption is growing steadily among the banked population as more banks roll out mobile deposit-taking capabilities. Across smartphone or tablet owners of all ages, according to the study, RDC adoption is growing fast, now up to 22 percent, from 18 percent in AlixPartners’ survey in early 2013. According to the recent study, the largest group of RDC adopters tend to be younger and wealthier, and to use more of the products available at their primary bank than non-adopters.

“We will increasingly see banks developing and rolling out capabilities aimed at addressing specific consumer pain points and opportunities to add value. If mobile RDC is viewed as the current ‘big attraction’ in the ongoing wave of industry innovations on behalf of consumers, mobile photo bill pay could be the next big thing,” added Epperson. “In the fourth quarter of 2013, 28 percent of consumers in our survey between the ages of 26 and 34 reported themselves to be likely to change banks to gain access to mobile photo bill pay.”

About the Study

The AlixPartners Mobile Financial Services Tracking Study is based on data collected in the fourth quarter of 2013, and is the latest edition in AlixPartners' semi-annual Franchise Health Survey, which has been conducted in the second and fourth quarters annually since 2008 and includes an online panel of nationally representative samples of U.S. consumers of at least 18 years of age.