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Why mobile banking doesn’t work … yet

I was looking at mobile finance this week, as we had a meeting to discuss this at the Financial Services Club last night.  In the meeting, Samee Zafur of Edgar, Dunn and Company
outlined results of research he has led into mobile finance.  The
research was conducted amongst nearly 500 payments professionals, and
was a repeat of a survey conducted the year before.   

The results provided some interesting views:

  • a large majority of payments professionals are optimistic about the future of  mobile payments;
  • 29%
    of 2007 respondents believe mobile will take off within 2-5 years –
    nearly double the percentage of respondents from the last survey in
    2006;
  • payment professionals are optimistic about mobile
    banking, but with less optimism than for mobile payments (71% vs. 83%,
    respectively);
  • of those who believe mobile banking will reach critical mass, one third believe it will happen within the next 5 years;
  • respondents
    from Asia are most optimistic about fast adoption of mobile payments
    and mobile banking, while respondents from the Americas and EMEA are a
    bit more cautious in their views; and
  • technology providers are the most optimistic.

What
intrigues me is that I’ve spent my life in IT and yet I’m pessimistic
about mobile.  I’m not pessimistic about mobile payments using
contactless chips, as that’s darned convenient, but I am pessimistic
about mobile banking.

Why?

Because customers don’t want it. 

For
example, the Japanese have had mobile payments for years, thanks to the
endeavours of NTT DoCoMo.  Then, in 2004, DoCoMo introduced the FeliCa
phone with a built-in chip from Sony for contactless payments.  By
summer 2007, over 21.5 million FeliCa phones had been sold in Japan,
all with the extended EDY (Euro, Dolllar, Yen) payments functionality
in the form of a fully functional mobile wallet called "Osaifu Keitai".  Osaifu Keitai – "Osaifu" is Japanese for "Wallet", and "Keitai" for "Mobile" – and was launched in April 2006. 

So I was surprised to find this intriguing research
the other day, from a website called "What Japan Thinks".  "What Japan
Thinks" found that, by the summer of 2007, 4 out of 5 Japanese knew
what Osaifu Keitai is.  Not that surprising as over 21 million phones
have it.  But what was surprising is that only 1 in 7 people are using
it! 

Mmmmm.

Last year, I reported
a similar reaction in the USA, and the mobile carriers tariffs and
costs structures don’t help there.  According to US research, under 1 in 10 Americans want mobile finance.

Meantime, I have also found surveys that indicate Europeans feel the same way, such as this study
from TNS in November which states that 65% of consumers want online
access and only 5% would use mobile as their preferred channel.

All of this is against a backdrop of analysts such as TowerGroup and IDC, who think we should be using mobile big time by now … but we aren’t.

Why?

Psychology.

It is this pyschology of a mobile device being insecure. 

For example, the osaifu keitai is not taking off because only 7% of Japanese consumers believe the wallet is secure.

For example, I recently started to use the Monilink service, which HSBC and Royal Bank of Scotland have adopted.  Barclays
and other banks have similar services.   So mobile banking is here and
now.  However, I didn’t even know this was available today until I
stumbled across the Monilink website.  The bank has never advertised
the fact that this is available, or sent an email or letter about it. 

So
I downloaded Monilink and started using the service.  Great, I can now
check balances and pay bills on the hoof … but I started to think
"what if I lose my mobile?  What if someone sees my password or account
number?  Why am I trying to do this here?  Wait until you get home."

To
be honest, the bank reassures me that all of the above is not a problem
as it’s all PIN and password protected.  In some ways, it’s more secure
than online banking as you have multi-layered security over and above
the usual online access.  And the banks all offer guarantees that
mobile banking is as safe as online banking and so on and so forth. 

But
the take-up is not that great because the customer doesn’t feel it’s as
safe as online banking. This is because they are using their mobile in
full public view in the open air.  al fresco banking may be a better description than mobile banking.

It’s
this open air aspect that creates the customer insecurity.  A bit like
entering PINs in public, it’s that feeling of shoulder surfers and ease
of loss.  After all, online banking is something you probably do on
your own in private … along with a few other things I could mention.
You don’t want people seeing your online details.  And that’s the
problem with mobile banking.

Until banks and mobile carriers
allay these concerns, and create confidence in mobile banking, all of
the investments being made in these services will result in an
additional channel that’s good for the fun of it, but generates few
real results.

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • Pablo Schor

    Your statement “Why am I trying to do this here? Wait until you get home.” is spot on. Mobile Banking is about having access to your bank accounts “anytime, anywhere”, however how often does a regular customer need to check their accounts on the road?
    Mobile Banking will (finally) launch in ’08 not because it’s a well-thought customer-centric service, simply because a massive number of users will have browsers on their phones, and Mobile Banking will be just another application.
    Pablo

  • Pablo Schor

    Your statement “Why am I trying to do this here? Wait until you get home.” is spot on. Mobile Banking is about having access to your bank accounts “anytime, anywhere”, however how often does a regular customer need to check their accounts on the road?
    Mobile Banking will (finally) launch in ’08 not because it’s a well-thought customer-centric service, simply because a massive number of users will have browsers on their phones, and Mobile Banking will be just another application.
    Pablo

  • Pablo Schor

    Your statement “Why am I trying to do this here? Wait until you get home.” is spot on. Mobile Banking is about having access to your bank accounts “anytime, anywhere”, however how often does a regular customer need to check their accounts on the road?
    Mobile Banking will (finally) launch in ’08 not because it’s a well-thought customer-centric service, simply because a massive number of users will have browsers on their phones, and Mobile Banking will be just another application.
    Pablo

  • Thanks Pablo. Interesting that I got a letter with a code that allows me to activate MONILINK this morning. More security layers you see.
    So I went in to start the mobile banking service and a message came up “Account unknown – text BANK to 82428 to download an updated MONILINK application”, which was a surprise as I only downloaded it the other day to start mobile banking.
    Anyway, I did the download again, as I’m tenacious and persevering, and got that same message again: “Account unknown – text BANK to 82428 to download an updated MONILINK application”. In fact, it came up every time I tried to access my account.
    Therefore, I can’t use the mobile bank service or MONILINK, without starting all over again.
    To be honest, I can’t be bothered.

  • Thanks Pablo. Interesting that I got a letter with a code that allows me to activate MONILINK this morning. More security layers you see.
    So I went in to start the mobile banking service and a message came up “Account unknown – text BANK to 82428 to download an updated MONILINK application”, which was a surprise as I only downloaded it the other day to start mobile banking.
    Anyway, I did the download again, as I’m tenacious and persevering, and got that same message again: “Account unknown – text BANK to 82428 to download an updated MONILINK application”. In fact, it came up every time I tried to access my account.
    Therefore, I can’t use the mobile bank service or MONILINK, without starting all over again.
    To be honest, I can’t be bothered.

  • Thanks Pablo. Interesting that I got a letter with a code that allows me to activate MONILINK this morning. More security layers you see.
    So I went in to start the mobile banking service and a message came up “Account unknown – text BANK to 82428 to download an updated MONILINK application”, which was a surprise as I only downloaded it the other day to start mobile banking.
    Anyway, I did the download again, as I’m tenacious and persevering, and got that same message again: “Account unknown – text BANK to 82428 to download an updated MONILINK application”. In fact, it came up every time I tried to access my account.
    Therefore, I can’t use the mobile bank service or MONILINK, without starting all over again.
    To be honest, I can’t be bothered.

  • sushant

    hello,
    its really nice article… but i hve one doubt mobile banking is not only for those who doesnt need to check their account on road i mean to say here in united kingdom most of office timmings are morning 9 to evening 5. and all the banks timmings are same. so in that case, its always hard to make a physical contact with bank.
    in some offices internet is restricted because of misuse so, i think according to that situation mobile banking is best solution however, i agree with article report that we have to use it in public space but i think you should think about this feature of mobile banking as well.

  • sushant

    hello,
    its really nice article… but i hve one doubt mobile banking is not only for those who doesnt need to check their account on road i mean to say here in united kingdom most of office timmings are morning 9 to evening 5. and all the banks timmings are same. so in that case, its always hard to make a physical contact with bank.
    in some offices internet is restricted because of misuse so, i think according to that situation mobile banking is best solution however, i agree with article report that we have to use it in public space but i think you should think about this feature of mobile banking as well.