Financial Institutions Report Increase in Mobile Banking Customers and Mobile Payments

A 2015 research report on the smartphone industry in the US states that 64% or two-thirds of Americans have a smartphone. This is indeed a 35% rise in the past 4 years. What does this indicate? It not only indicates the increased usage and reliability on smartphones for internet browsing and online connectivity but also brings to light the use of smartphones for mobile payments. Remember Tim Cook’s speech on Apple’s annual earnings in January 2015? He said, 2015 will be the year of Apple Pay. During the earnings calls, Tim Cook discussed some of the success stories related to Apple Pay. According to Cook, Panera Bread reported that 80 percent of its online payments came through Apple Pay and Whole Foods saw an 80 percent increase in contactless payments use. But as the industry watched, Apple Pay didn’t really gain the momentum it was expected to. A study by Infoscout states that only 9.1% of US iPhone 6 and iPhone 6 plus users have used Apple Pay. However, we won’t be talking specifically about the success of Apple Pay here. In general the mobile payments industry is rising, irrespective of Apple Pay’s success. With the rise of mobile-first banks like Simple, NFC contactless payments apps like Android Pay and Apple Pay, HCE technology for NFC disabled smartphones and the resulting ease of use, mobile payments industry will never take a U-turn it seems.

In May 2015, Let’s Talk Payments created an infographic on mobile payments in the US and found interesting results. A mobile payments industry research report by Forrester in 2014 predicts that mobile payments will reach $142 billion by 2019 from $52 billion in 2014 in the US. To validate this data point and update our own figures, we looked at mobile payments transactions and mobile active users at big banks and various financial institutions. Big banks in the US like Bank of America, JPMorgan Chase and Wells Fargo are seeing a constant rise in the number of mobile banking customers. In the past one year, from Q3 2014 to Q3 2015, both Bank of America and Chase have seen an increase from 34% to 37% in the share of mobile banking customers as a percentage of all banking customers. In the past year, mobile banking customers at Bank of America increased by 13.5%. Wells Fargo announced a similar increase in percent of mobile banking customers from 36% to 38% from Q2 2014 to Q2 2015. With big banks in the US, we also analyzed the trend of decreasing number of branches at big banks with the increasing number of their mobile banking customers. The number of JPMorgan Chase branches declined by 132 in the preceding year. But its mobile banking users increased by a little more than 22%.

Apart from banks, we also analyzed the other institutions providing financial services. International remittance was one of the segments we looked at. Xoom, a leading digital money transfer and international remittance provider stated a whopping 41% increase in volume of mobile transactions in one year. It processed 1 billion mobile transactions in Q2 2014 as compared to 1.4 billion in Q2 2015. In Q2 2014, mobile transactions made up 47% of the total transaction volume at Xoom as compared to 62% in Q2 2015. Xoom had also announced that approximately $2.3 billion of their gross sending volume during 2014 was sent from mobile devices which represented growth of approximately 90% compared to 2013.

According to data from a leading credit card processor, the global count of active credit- and debit-card accounts is 1.3 billion compared with nearly 7.3 billion active mobile phone accounts, according to the International Telecommunications Union, of which some two billion are smartphones. In a global setting, mobile payments are undoubtedly on an upswing. According to a mobile money research report conducted by Visa in six European countries, consumer adoption of mobile payments will grow faster than ever in the next five years, with six in ten Britons (60%) expecting to use their mobile devices for payments at least once a week by 2020. Currently one in 12 Britons use mobile devices for payments according to the same report. Adyen, the leading global payments technology company releases quarterly reports on mobile payments data across its customer base. The global mobile payments made up 27.2% of the total transactions in Q1 2015 and 28.7% in Q2 2015. You can see some more interesting insights for global mobile payments here.

In the US, data from leading retailers also speak a lot about the growth in mobile payments. Macy’s was chosen as the Mobile Retailer of the Year 2014. In 2014, 70% of its Thanksgiving traffic came from mobile. In the same year, Citibank won the Mobile Bank of the Year 2014. Coffee chain Starbucks processes nine million mobile transactions every week in its US locations. This nine million represents 20% of its total in-store transactions, which means one in five Starbucks customers pays via mobile.