Download - My phone is still smarter than yours
Actionable intelligence that drives Revenue & Profit in the eChannel…
© 2010. All rights reserved www.ecomadvisors.com
Paul McAdam
April 27, 2010
Presented at
NACHA PAYMENTS 2010
My Phone is Still Smarter than Yours
© 2010. All rights reserved Page 2
85% of U.S. adults own a mobile phone, as do 75% of teenagers
45%
63%
71%75%65%
73%77%
85%
2004 2006 2008 2009
% of Adults and Teens Who Own Cell Phones
Teens (age 12 - 17)
Adults18%
34%
43%48%
59%64%
58%
73%76%
79%82% 83%
12 13 14 15 16 17
% of Teen Cell Phones Owners (by Age, 2004 & 2009)
2004 2009
AgeSource: Pew Internet & American Life Project
© 2010. All rights reserved Page 3
The era of mobile financial services started 3 years ago
iPhone introduced June 29, 2007
Over 51 million iPhones sold to date
App store launched in July 2008. Over 187,000 apps currently available
Already 2 billion+ apps downloaded…
1.4
11.6
20.7 17.5
2007 2008 2009 2Q 2010
Apple iPhone Unit Sales(millions)
Source: Apple website, 10-K’s & 10-Q’s
On pace to
sell 35+
million in
2010
© 2010. All rights reserved Page 4
Research objectives and methodology
NACHA and eCom Advisors partnered with FIS to:
Repeat eCom Advisors consumer research fielded in March 2009
Track the pace of consumer use of mobile devices to access online
banking, pay bills and make online purchases
Deep dive on the impact of Internet-enabled smartphones on mobile
financial services adoption and the customer experience
Research methodology
54 question, online survey
1,236 completed surveys
March 23 – 26, 2010
Sample obtained from Survey Sampling
International
© 2010. All rights reserved Page 5
100%
71%66%
55%
42%
Own and Usea Mobile Phone
ActiveOnline Bankingvia Computer
ActiveOnline Bill Payvia Computer
Own an Internet-capable Mobile
Phone
Own a Smartphone
The survey focused on consumers who own and use a mobile phone
―Active‖ defined as use
within the past 30 days
© 2010. All rights reserved Page 6
The survey sample was relatively balanced by gender, age and income …
Female49%
Male51%
Gen Y (1976-1992)
34%
Gen X(1960-1975)
30%
Baby Boomer
(1946-1959)23%
Mature (1930-1945)
13%
Under $25,000
24%
$25,000 -$49,999
33%
$50,000 -$74,999
21%
$75,000 -$99,999
10%
$100,000 -$124,999
6%
$125,000 -$149,999
3%
$150,000 or more3%
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… In addition to mobile carriers
Other12%
AllTel2%
AT&T28%
Cellular One1%
Cricket1%Quest
0%
Sprint Nextel11%
T-Mobile10%U.S. Cellular
2%
Verizon31%
Virgin Mobile2%
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Detailed classification of the types of mobile phones owned by survey respondents
iPhone, Motorola Droid, Google Nexus,
BlackBerry Storm
BlackBerry Curve, BlackBerry 8800 Series,
Samsung Gravity, Palm Treo
Motorola Surf, Samsung Impression, LG
Dare, LG Xenon
Newest Touchscreen Smartphones Touchscreen Smartphones
Older or More-basic PhonesSmartphone (Non-touchscreen w/
QWERTY Keyboard)
Motorola RAZR, Verizon Escapade,
Nokia 2680 Slide, Nokia 1680 Classic
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Newest Touchscreen Smartphones
Touchscreen Smartphone
Smartphone (non-
touchscreen/QWERTY …
Older phones
2%
20%
32%
61%
4%
21%
19%
25%
93%
59%
49%
14%
Internet usage compared to cell phone type
I don't have Internet access I have Internet access and DON'T use it I have Internet access and use it
Those that use mobile web predominantly have newer technology
© 2010. All rights reserved Page 10
4%
15%15%
44%
Older phonesSmartphones (non-touchscreen /
QWERTY keyboard)
Touchscreensmartphones
Newesttouchscreensmartphones
I use the Internet on my computer less now because I use the Internet on my mobile phone
(% that agree)
The newer the technology, the more consumers rely on their mobile phones instead of their computers to access the Internet
© 2010. All rights reserved Page 11
42% of the sample owned a smartphone, including 67% of Gen Y consumers
Newest touchscreen smartphones
Touchscreen smartphones
Smartphone (non-
touchscreen/QWERTY keyboard
Older phones
34%
59%
79% 81%16%
10%
5% 3%
33%
23%
12% 11%18%8% 4% 5%
Gen Y Gen X Baby Boomer Mature
Types of mobile phones owned by
survey respondents
Types of phones owned by generation
10%
10%
22%
58%
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Among owners of Internet-capable phones, 27% use them to access online banking
22%
27%
2009 2010
% of consumers with Internet-
capable mobile phones who used
them to access online banking
within the past 30 daysOnly once,
28%
Once every 2 weeks,
25%
Once a week, 21%
2 - 4 times per week,
19%
Daily, 7%
Frequency of mobile online banking use
within the past 30 days(2010 data)
47% at least
weekly
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But only 60% of active mobile banking users are satisfied with the experience
28%
32%
27%
13%
Overall satisfaction when their bank account was accessed via their
mobile phone
Very Satisfied Satisfied Neutral Dissatisfied
= 60% satisfied (7 or higher)
Very Satisfied
AVERAGE SATISFACTION
0
1
2
3
4
5
6
7
8
9
10
Satisfied
Dissatisfied
Neutral
© 2010. All rights reserved Page 14
10%
39%44%30%
30%
30%35%
28%
I don't knowSMS / Text message
Mobile banking app
Mobile Internet browser
Customer satisfaction with mobile banking
Satisfied Very Satisfied
Most use the mobile browser to access online banking, but satisfaction with that method lags
11%
25%
34%
54%
I don't knowSMS / Text message
Mobile banking app
Mobile Internet browser
Methods used to access online banking*
* Note: Respondents allowed to select all methods that applied
within the past 30 days
40%
58%
69%
79%
© 2010. All rights reserved Page 15
20%27%
34%37%
28%23%
32%27%
Older phonesSmartphones (non-touchscreen
/ QWERTY keyboard)
Touchscreen smartphones
Newest touchscreen smartphones
Customer satisfaction with mobile banking, by phone type
Satisfied Very Satisfied
86% of active mobile banking users are smartphone owners
43%
16%
27%
14%48%50%
66%64%
Phone ownership of active mobile
banking users
Newest
touchscreen
smartphones
Touchscreen
smartphones
Older
phones
Smartphone
(non-touchscreen
QWERTY
keyboard)
© 2010. All rights reserved Page 16
20%
40%28%
20%
27%
31%
Baby BoomerGen XGen Y
Customer satisfaction with mobile banking, by generation
Satisfied Very Satisfied
88% of active mobile banking users are Gen Y and X
Gen Y, 63%
Gen X, 25%
Baby Boomer,
8%
Mature, 4%
40%
67%
59%
Active mobile banking users,
by generation
© 2010. All rights reserved Page 17
63% of mobile banking users have owned their device for less than 1 year
Less than 6 months,
34%
6 months - 1 year, 29%
1 - 2 years,23%
More than 2 years,
14%
Mobile banking adopters -- length of time owned their current mobile device
© 2010. All rights reserved Page 18
“Inertia / don’t see the need” and “costs too much” are key factors that hinder mobile adoption
1%
2%
4%
7%
12%
14%
14%
16%
18%
35%
My FI charges a fee for mobile banking
I’ve tried it in the past, but was dissatisfied
My FI does not offer mobile banking
My mobile phone screen is too small
It costs too much to use the data plan on my mobile phone
I don’t think it is secure
There is no value to banking with my mobile phone
There is no charge to use my computer
I just haven't bothered to try mobile banking yet
I would rather access my accounts online with my computer
Why you did not access your bank account with your mobile phone
Inertia or don’t see
the need
Costs too much
Security
Technical issues
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10% of mobile phone owners are receiving banking alerts on their mobile phones
23%
23%
28%
30%
31%
33%
33%
34%
47%
51%
Credit card balance approaching limit
Irregular credit card activity
Changes to your online banking profile
Irregular debit card activity
Payment due(mortgage,credit card, …
Transaction alert for debit, ATM, or …
Direct Deposit posted
Account has insufficient funds
Available balance
Low balance alert
Types of alerts currently received on mobile phone
Account
balance
Payments
Security /
Fraud
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“Inertia / don’t see the need” are the primary factors hindering mobile alerts adoption
1%
3%
4%
6%
7%
7%
8%
21%
39%
I’ve tried them before, but was dissatisfied
My FI charges a fee for mobile banking alerts
My mobile phone screen is too small
Alerts are not secure
I don’t have text messaging capability on my mobile phone
My FI does not offer mobile banking alerts
The text messaging capability on my mobile phone costs too much
I just haven't bothered to try mobile banking alerts
I don’t see any value or don’t have any need to receive alerts
Reasons why respondents do not use mobile alerts
Inertia or don’t see
the need
Costs too much
Security
Technical issues
© 2010. All rights reserved Page 21
11%
20%
2009 2010
All of my bills, 14%
Almost all of my bills,
19%
Half of my bills, 18%
A small portion of my bills,
19%
At least one of my bills,
31%
Among owners of phones with Internet access, 20% have used them to pay bills
% of consumers with Internet-
capable mobile phones who used
them to pay bills online within the
past 30 days
Portion of bills paid using mobile bill pay
within the past 30 days(2010 data)
50% at least
half of bills
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62% of respondents prefer to pay bills at merchant websites
49%
13%
31%
7%
When paying bills with mobile phone, website used most often
I went directly to each biller's website to pay my bills
I did a combination of the above, with more at biller website
I went to my financial institution's bill payment website to
I did a combination of the above, with more at my financial
© 2010. All rights reserved Page 23
The more sophisticated the mobile phone technology, the more likely consumers are to use mobile banking and bill pay
13%
22%
16%
40%
9%
27%
30%
65%
Older phones
Smartphones (non-touchsreen / QWERTY keyboard
Touchscreen smartphones
Newest touchscreen smartphones
Mobile online banking
Mobile bill pay
Consumers that accessed online banking and bill payment using
mobile phones within the past 30 days, by type of phone owned
* Note: Among consumers who own Internet–capable mobile phones.
© 2010. All rights reserved Page 24
The younger the consumer, the more likely they are to use mobile banking and bill pay
10%
20%
27%
11%
21%
39%
Mature
Baby Boomer
Gen X
Gen Y
Mobile online banking
Mobile bill pay
Consumers that accessed online banking and bill payment using
mobile phones within the past 30 days, by generation*
* Note: Among consumers who own Internet–capable mobile phones.
Only 4% of adopters in the mature segment.
Sample size too small to report.
© 2010. All rights reserved Page 25
Mobile banking adopters use branch and telephone channels significantly less
21%
20%
43%
12%
14%
18%
Spoke with a representative at the bank's customer service center by
phone
Used the automated telephone system to check account balance, see if check cleared, transfer money, etc.
Went inside a bank branch to transfer money, make deposits, cash a check,
withdraw money, etc.
Active mobile banking consumers
Consumers that are not active mobile banking
Consumers that conducted these interactions within the past 30 days
© 2010. All rights reserved Page 26
Those with the newest Smartphone's are more likely to make purchases via their mobile phones
App Audio/song Game Ringtone Online store purchase
Picture/image Food Movie ticket Video/movie
3% 4% 3%7%
2% 4% 4%1% 2%
11% 11%8%
14%
2%
11%5%
3%5%
8% 5%
5%
25%
7%
9%
8%
5%3%
52%
38%
34%
28%
27%
21%
20%
20% 18%
Items purchased on respondents mobile phone compared with phone type
Older or more basic phones
Touchscreen Smartphone
Smartphone (non-touch screen w/QWERTY keyboard)
Newest touchscreen Smartphones
© 2010. All rights reserved Page 27
Consumers with newer mobile devices are more likely to pay for apps they like and….
Gen Y
Gen X
Baby Boomer
Mature
35%
45%
55%
62%
19%
23%
30%
21%
47%
32%
15%
17%
Willingness to pay for apps and generation
Disagree Neutral Agree
…the younger the consumer the more willing they are to purchase apps they like
Newest touchscreen Smartphones
Touchscreen Smartphone
Smartphone (non-touch w/QWERTY keyboard)
Older more basic phones
17%
40%
37%
55%
11%
16%
25%
26%
72%
44%
38%
19%
Willingness to pay for apps compared with phone type
Disagree Neutral Agree
© 2010. All rights reserved Page 28
Consumers use different mix of payment methods for purchases made from mobile phones
N/A
57%
48%
39%
15%
7% 5%
29%
35%
16%
7%4%
13%
28%
Credit card Debit card PayPal Gift card Electronic check
App store account
Mobile phone account
Payment methods used for mobile and computer purchases online
Computer Mobile28 pct.
point gap13 pct.
point gap
Note: Respondents were allowed to select multiple payment types
Purchases made
with App store and
mobile phone
account contribute to
fewer card and
PayPal purchases
made with mobile
phone
23 pct.
point gap
© 2010. All rights reserved Page 29
Mobile is accelerating the migration of banking and payments to eChannels
Latest ―touch screen smart phones‖ and mobile web browsers are an
―enabling technology‖ for banking, payments and shopping
iPhone web interface and connectivity makes mobile web (mobile browser +
Apps + SMS) nearly equivalent to functionality of wired web – but with full
portability
We’re in midst of an inflection point in U.S. banking delivery channels,
much like the introduction of ATMs and the widespread availability of
broadband in homes…
— ATMs extended the bank beyond the branch and ―banker’s hours‖
— Web banking and broadband connectivity extended the bank into the
consumer’s home, in batch
— Mobile web/app/sms and fast mobile wireless connectivity extends the
bank onto the consumer’s person, in real-time
© 2010. All rights reserved Page 30
Survivors
Students &
Gen Y
Upwardly Mobile
Gen X & Y
Borrowing Families
Mature Bank
Loyalists
Self Directed Mass Affluent
Saving Families
Mobile functionality must be aligned with the next generation of DDA packages
Prepaid Debit Account
~ 10% of population
Young, Tech Savvy
Account
~ 25% of population
Retirement Income
Account
~ 10% of population
Tech Savvy, Emerging
Affluent Account
~ 15% of population
Mass Market, Loyalty
Account
~ 40% of population
Age
Inc
om
e / W
ea
lth
© 2010. All rights reserved Page 31
The table stakes requirements to compete in mobile will evolve very quickly
Transactions
mPayments
Information
mBanking
Engagement
mCommerce
Mobile P2P transfers
ATM withdrawals
Inter-bank funds transfers
Mobile wallet
NFC transactions
Home deposit capture
Top ups
Text receipts for mobile
payments
Notifications
Alerts
Check balances
Push SMS
Mini-statement
ATM & branch finder
ATM receipts
Intra-bank funds transfer
Bill pay
Loyalty programs with
affiliate merchants
Time dependant offers
Location-based
marketing
Couponing
Generate awareness and
adoption. Cost savings
Enhanced customer loyalty
and payments revenue
―Always with me‖ for better
control of personal
finances
2010 – 2011 2011 - 2012 2013 +
© 2010. All rights reserved Page 32
Contact information
eCom Advisors provides executive consulting services to banks, billers, vendors and investors in
financial services technology and online banking, billing and payments. Our consultants possess
175+ years of direct operating experience, and are considered leading experts in the industry. We
help executives make their most crucial ecommerce management decisions.
Paul McAdameComAdvisors
One Westbrook Corporate Center, Suite 300
Westchester, IL 60154
708.449.7743(office)
630.865.3135 (cell)
Atlanta office
Columbus office
Boston officeChicago office
3340 Peachtree Rd. NE
Atlanta, GA 30326
404.848.7709
5650 Blazer Parkway
Dublin, Ohio 43017
614.734.8372
95 Washington St.
Canton, MA 02021
781.784.1663
1 Westbrook Corp. Cntr.
Westchester, IL 60154630.865.3135