WASHINGTON (4/20/12)--Mobile phones and mobile Internet access are in widespread use, and the ubiquity of the devices is changing the way consumers access their financial services, according to a report commissioned by the Federal Reserve. However, two issues continue to hold back others from adopting mobile financial services.
About 87% of the U.S. population has cell phones, said the Fed's report, entitled "Consumers and Mobile Financial Services March 2012."
Roughly 21% of those with cell phones used them for mobile banking in the past 12 months, and others plan to--11% of the rest said they probably will do so in the next 12 months.
Those who used their phones for mobile banking indicated that the most common use was to check their account balances (90% of mobile banking users did this). The second most common activity: transferring money between accounts, (42% of mobile banking users).
Mobile phones also are changing the way consumers make payments, said the Fed's report. About 12% of mobile phone users making a mobile payment in the past 23 months, with 47% of those making an online bill payment with their phones and 21% transferring money directly to another person's bank, credit card, or Paypal account.
Two issues, however, continue to plague adoption of mobile banking services: security and a perception of limited usefulness, said the Fed.
Fifty-eight percent of mobile phone users who have not adopted mobile banking yet said that their banking needs were already being met without the use of mobile banking. Later in the report, however, it was noted that consumers who employ mobile phones to timely financial incentives and emotional appeals about saving time and convenience.
Security was cited as the main reason for not mobile banking by 42% and the second main reason by another 48% . They expressed concerns about hackers gaining access to their phones and their personal financial information and about the costs related to security.
More than one-third of mobile phone users who don't engage mobile banking said they didn't see any benefit from using mobile payments. They also said they found it easier to pay with another method.
Another key finding: The "underbanked" make significant use of mobile financial services, with 29% using mobile banking and 17% using mobile payments in the past 12 months. Of the 17% who made mobile payments, 62% did so to pay bills.
Mobile phone use is high among the younger generations, minorities and those with low levels of income--groups that are prone to be underbanked or unbanked, said the Fed.
A lesson for credit unions from this report: Offering mobile banking to these groups might be the ticket to developing relationships with new members, especially those in two areas targeted for growth by many credit unions: serving Gen Y and serving Hispanics. But credit unions will have to have the technology to ensure their mobile banking services are more secure.
The survey was administered by Knowledge Networks, an online consumer research company commissioned by the Fed. It took samples of adults ages 18 and 0ver. There were 2,290 respondents who completed the survey. To see the report, use the link.