Security is always one of the main issues that worry consumers. This distress is especially seen in the niche of mobile banking.
Mobile banking has persistently been on the rise over the past decade, but the increase has taken a vertical trajectory over the past two years. This, of course, is largely due to the COVID-19 pandemic.
This shift in banking has left many Americans concerned for their overall personal and financial security. But this concern doesn’t change one primary factor: mobile banking is here to stay.
Mobile Banking on the Rise
In today’s modern, tech-fueled era, the use of mobile banking is on the rise. Consumer and Mobile Financial Services 2015 survey reports that 52% of mobile phone users with a bank account have used mobile banking in the past 12 months. According to the survey, there are several reasons consumers go the online route:
- Checking account balances and recent transactions (94%)
- Transferring money from one account to another (61%)
- Receiving notifications from their bank (57%)
- Depositing checks (51%)
And that survey is from 2015. The increase in online banking has skyrocketed since then. According to the Ipsos-Forbes Advisor U.S. Weekly Consumer Confidence Survey, 76% of Americans now use their bank’s mobile app for everyday banking tasks. How many don’t use mobile banking at all? 21 percent.
Multiple factors contribute to this spike, most notably, COVID-19.
The Pandemic and Online Banking
COVID-19 closed the door on normal life and deadbolted it. Americans were forced inside, saying goodbye to their social lives and hello to Netflix binges. But the inability to go to a restaurant wasn’t the only outcome of COVID-19 – it also changed the way Americans bank.
The Boston Consulting Group (BCG) reports that online banking has risen 23%, from where it was pre-pandemic, and mobile banking saw a 30% spike. BCG also states that three years is the amount of time it will take for global retail-banking revenues to return to 2019 levels.
“Although, without question, the pandemic accelerated the adoption of digital banking across all segments of customers,” says Matthew Williamson, global vice president, financial services, for digital consultancy Mobiquity. “The foundation had already been set, and the journey had begun in various guises.”
And it doesn’t look like this shift is going anywhere. 90 percent of consumers said they will stick with the ease of online banking once the pandemic is over, according to a Mobiquity survey from November 2020.
Banks – with their backs against the proverbial wall – needed to handle the COVID-19 crisis with speed, and agility, while staying in line with their overall mission.
According to J.D. Power managing director, Amit Aggarwal, “banks have been investing in these platforms for a long time, so they were generally well poised to take advantage of the accelerated shift to digital that came in 2020.” In layman’s terms, banks needed to adapt to the mobile banking demand basically overnight, and they did.
Though this transition has been smooth and optimal for many, it still poses a threat to some in terms of their personal data and financial security.
Mobile Banking Security Concerns
Many Americans don’t know a society that doesn’t have technology at its core, i.e., millennials. But for others, this rapid transition to computer screens and touch phones is a worrisome habit to adopt. The transfer of financial information from pen and paper to digital channels raises concerns about protection and privacy.
A 2020 KPMG study reports that 87% of consumers say data privacy is a basic human right. In the same study, 68% say they don’t trust companies to handle their personal information ethically.
So what is it about this shift to the digital age that the 21% of Americans don’t trust? The Consumer and Mobile Financial Services Survey found seven main reasons for this and, not surprisingly, they all seem to be a security issue:
- All of the stated reasons (43%)
- Someone intercepting my data (22%)
- Phone getting hacked (17%)
- Losing or having their phone stolen (9%)
- Someone accessing my account without permission (4%)
- Companies and banks misusing my personal and financial information (2%)
- Viruses being installed on my phone (2%)
There are also reasons that consumers with mobile phones and bank accounts choose not to use mobile banking. Many believe their banking needs are already being met (86%); some who do not see any reason to switch (73%); and a few who were concerned about security (62%).
Security plays a large role in the hesitation to switch to mobile banking for many consumers. But post-pandemic, and with technology showing no signs of slowing down, it seems as though this is the new method of banking.
Additional Resources on Mobile Banking: