Global Mobile Banking Survey 2008

8/14/2019 Global Mobile Banking Survey 2008

1/17

Mobile Banking: The Second WaveGlobal Mobile Banking Survey 2008


2/17

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


3/17



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 onmobile 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


4/17



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

International factors

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

banking against 57% in Europe

Expected growth

With 34% of banks (globally) currently offering mobile services to customers, an additional 32% of

respondents plan to offer mobile services in the next 12-24 months.

53% of US banks expect to be offering mobile services in the next 12-24 months, giving potential

parity to mobile service provision across the globe by 2010 (see Figure 1)

The suggestion of considerable momentum for mobile banking over the next two years should be received

warmly by mobile providers and bankers alike. The ratio of mobile banking users, i.e. customers adoptingmobile services remains modest, but is predicted to grow over the next two years with 58% of banks currently

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:

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

43%

20%

37%

47%

22%

31%

10%

53%

33%

0%

10%

20%

30%

40%

50%

60%

Plan to offerin next 12-24months

No plansto offer

Offer mobileservices

Asia Europe US All

Figure 1:

Mobile banking provision plans, all respondents

(base: 92)


5/17


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

study showed that in Asia-Pacific, US and European regions over half of respondents were not

aware if their bank offered mobile services. It appears that businesses are responding to awareness

issues with 65% of the banks who currently offer mobile services to customers stating that

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

Delivery options

Service sits at the center of the banking philosophy, acting as a measure of quality by customers

and a critical aspect of differentiation by the banks themselves. As shown in Figure 2, the method

of management and delivery for mobile services is biased considerably towards the organic,

in-house approach. It will be interesting to observe how this trend changes over time, especially

with concerns voiced from several corners of the respondent base regarding security, integration

and platform compatibility when discussing mobile banking challenges.

5

48%

25%

0%

10%

20%

30%

40%

50%

60%

In-housemangagement

with additional

3rd party

support

Fully

outsourced

to 3rd party

single

supplier

All in-house

management

Figure 2:

How is the delivery of mobile banking services

managed from a technical perspective within

your organization?

19%

3%

Fully

outsourced

to 3rd party

multiple

supplier


6/17



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, astechnology 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


7/17



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


8/17



Considering the consumer

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

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

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

Figures 3 & 4. This leads one to wonder: whats missing in the mobile banking equation?

8

Figure 3:I would like to be able to deal with my bank

on the move

31%69%

Agree Disagree/Neutral

67 %

33 %

Would like to receive balance enquiries

Would not like to receive balance enquirues

Figure 4:

What type of services would you like to receive

via your mobile phone?


9/17


Mobile user increase

One of the sticking points in the mobile banking equation is that, as shown in Figure 5, existing levels of

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%.

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.

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

factors: existing mobile banking providers anticipated increase in service usage and a larger percentage of

banks globally offering mobile services.

These figures should be of particular interest for the Americas region where, not only US consumers express

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).

9

Figure 5:

Current estimate levels of customers using

mobile banking from respondents offering

mobile services (34%)

Current users Other

Potential use by 2010

Other

Figure 6:

Predicted levels of customers using mobile

banking by 2010

94%

6%

84%

16%


10/17


Capturing mobile hearts and minds

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,

there are some interesting differences of opinion.

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.

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

provided in Figure 5, the respondents in Figure 8 consider that only around 5% of customers would

potentially move banks.

Clearly, end user enthusiasm for new ways to interface with their banks (such as mobile banking) iscountered 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.

10

Figure 7:I would consider switching to a bank if I was

offered free mobile banking (Consumers 2007)

Figure 8:

Do you think that offering mobile services is a

way to encourage potential customers to switch

banking providers?

Agree Disagree/Neutral

76% 24%

45%

Yes No/dont know

55%Respondents believedthat on average only

5% of customer wouldmove banks


11/17


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

services to improve customer experience, to extend internet banking, or to achieve competitive advantage.

This seems a common sense approach. The harder commercial rationale of reducing customer service cost

and/or generating revenue are less well represented in the chart, though cost reduction is clearly a more

compelling driver than revenue generation.

The chart has also been split into hunters and farmers to point out some notable differences. In the

survey, respondents were asked if their predominant strategy was a) to increase revenue from existing

customers (farmers) or b) to grow their customer numbers overall (hunters). Each group represents around

40% of the sample, with the final 20% preferring a balance between the two options. It is interesting to

observe the difference between the hunter and farmer groups when looking at drivers such as customer

demand, reaction to competitors and the need to generate new revenues.

It goes with type that the farmer group are more interested in satisfying an existing customer demand

having already established a competitive advantage, whilst the hunters are in a more reactive and revenue

focused mindset. However, what this also demonstrates is that, even with a minority of banks providingmobile services today, the drivers for doing so can be very different.

11

Figure 9:

From the following, what would you say were

the reasons that your organization introduced

mobile banking services?

39%48%

55%65%

71%81%

87%

54%62%

46%69%

62%77%

85%

30%35%

65%65%

77%82%

88%

Farmers Hunters All

Additional service to

improve customerexperience

Logical extension to

internet banking

Generate new revenuestrems

Competitive

advantage

Customerdemand

Reduce existing

customerservice costs

Reaction to competitor

mobile services


12/17



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

farmers that undertook mobile banking to achieve competitive advantage, rather than as a reaction to

competitors, there is the suggestion that our farmer group has a more mature and, potentially, more

informed view of mobile service provision.

In shaping a view on best practice, it appears certain fundamental aspects of commercial strategy will

influence the approach to mobile service provision, and therefore the types of services that are being

offered. To date, it is difficult to speculate on which approach is more successful, as both hunters and

farmers have their merits, but it may help other businesses considering an appropriate mobile strategy

to observe the following:

Hunter Farmer

Customer growth driven Customer value driven

React to competition Competitive first mover (mobile)

Mobile revenue focus Cost reduction focusCreating customer need Reaction to customer demand

12

Figure 10:

On a scale of 1 to 5, where 1 is not very

important and 5 is very important, how would

you rate the importance of mobile banking to

your organization?

srevirdeli

boM

Hunters Farmers All

0%

5%

10%

15%

20%

25%

30%

35%

40%

10%

21%

36%

28%

5%7%

15%

34%

24%

20%

10%

16%

33%

27%

14%

Not at allimportant

Not important Neutral Important Veryimportant


13/17


Beyond the customer

Mobile data and banking is not solely the domain of custom information services. Mobile communication is

also present within financial sector organizations, used as a support tool for call center services as well as for

internal communication, as shown in Figure 11. There is room for growth within both these areas in terms of

general take up of services, but also the sophistication of services involved. Many bank customer call centers

are burdened with rudimentary account enquiries that can easily be alleviated with SMS-based services.

It is also easier for a business with existing knowledge of text and WAP-based internal communications services

to channel that learning and experience into customer facing tools.

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

at the level of need identified in getting more from the data generated by mobile users. With those financial

institutions currently offering mobile banking services seen as somewhat ahead of the curve in terms of

provision, it is unfortunate that 58% of them agree that the CRM potential created by mobile data is not

best utilized at present.

13

Figure 11:

Does your organization use mobile/SMS technology

in any of the following ways beyond customer facing,

or internet-orientated services? (Base 92)

Figure 12:

Our organization could do more to capitalize on the

data generated from mobile users to improve/refine

mobile services.

15%

25%

60%

0%

10%

20%

30%

40%

50%

60%

SMS statement

sent from

telephone/call

center enquiries

Corporate SMS

application/system

for internal

communication

None

23%

3%

48%

10%

16%

0%

10%

20%

30%

40%

50%

Stronglyagree

Agree Neutral Disagree Stronglydisagree


14/17


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

efforts to end users (65% of the sample stated that they were to increase marketing focus on mobile services),

education is also a key theme. However, there is also a notable desire to overcome perennial technology

challenges surrounding integration, security and CRM.

Some of these sentiments are echoed in the responses below regarding challenges in the delivery of

mobile services:

What do you see as the main reasons for customers not undertaking mobile banking?

Only available on certain devices by certain networks; we are an early adopter of mobile

banking so we are ahead of customer demands.

Compatibility issues with the different handsets out there. Our system requires WAPbrowser 2.0; if the hand held device does not meet that, the customer cant use mobile banking.

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

Figure 13:

In what ways do you think that mobile banking

services could be improved within your organization?

10%26%

29%29%29%

39%48%Wide rangeof services

Improvedsecurity

Bettereducation

Better integrationof mobile and

online services

Improved CRMusing mobile data

More marketingsupport

Cheapersubscription


15/17



Conclusion

Mobility in banking is not a new term. In fact, some businesses in the sample have been supplying a

form of mobile information services to customers for four years or more. However, there are several factors,

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:

Standardization of mobile internet platforms

Increased handset functionality

Second wave of mobile adoption by banks

Consumer confidence in technology

Consumer familiarity with digital service delivery

The first wave of mobile banking services has undergone a steep learning curve in mobile banking delivery.

However, the second wave is comprised of a more informed provider community and a more enthusiastic

customer base, both of which suggest a promising two years ahead.

Evidently, mobile banking is not for every customer today, but the range of potential services on offer

means that it can become a very flexible customer tool. Some customers will thrive on location independentminute-to-minute financial information; others may simply want to check a bank balance with a simple text

message on occasion. As Figure 14 shows, most mobile banking activity currently focuses on information

alerts, though there is a wide array of more sophisticated services offered in general.

15

Figure 14:

What services, if any, do you currently offer your

customers in terms of mobile banking?

Balance ondemand

Money transfers

Transactionalerts

Balance alerts

Request a call backfrom customer services

16%16%19%23%26%29%

36%36%

42%45%

71%74%77%

87%

OTP (one time pin)or 2FA or mTAN

Check interest ratesand/or share prices

Bill payment

Make a deposit or

withdrawal

Being able tofreeze card

Request a statementor mini statement

Call to action inmarketing campaign

Reports of potentiallyfraudulent transactions

Set up regularwithdrawals or

deposits


16/17



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 industryappear keen to explore.

16


17/17



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.

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 sophisticatedservices. The second wave of mobile banking providers will also have learnt a great deal from internet

service provision and current mobile banking usage.

17

For more information, please contact:

[email protected]

To download a free copy of the Sybase 365

2007 consumer study Nano-economics:

Mobile Opportunities for the Financial Sector,

go to www.sybase.com/365

Global Mobile Banking Survey 2008

Documents

Transcript of Global Mobile Banking Survey 2008