Authentication & Security

Mobile Payment Strategy—the Next Stage for FIs and Credit Unions, Says a 2014 Survey of FIs in Five Federal Reserve Districts

The Federal Reserve Bank of Boston had recently published a report based on the survey on mobile banking and payments practices followed by banks and credit unions in five Federal Reserve Districts: Atlanta, Boston, Dallas, Minneapolis, and Richmond. The survey was conducted in the third quarter of 2014 with the intent to understand the mobile landscape within financial institutions (FIs). Participation in the survey was seen from 433 banks and 192 credit unions, representing a consolidated 11% of total FIs. Some of the key findings of the report are:

1. Of the surveyed banks and credit unions, 78% already offer mobile banking services while 16% plan to offer them in the next 24 months (i.e., Aug. 2014-Aug. 2016) and only 6% do not plan to offer any mobile banking services.

2. Among the three basic ways (an app, website for mobile banking and SMS text messaging) an institution supports its mobile users, more FIs are selecting mobile apps for banking services and are disengaging from SMSs (except for alerts).

3. Fiserv, FIS and Jack Henry were the top mobile banking vendors used by banks while credit unions’ top three vendors were Fiserv, Digital Insight and Access Softek. Also, the survey shows that credit unions have relied more on small and regional providers to provide mobile banking functionality.

4. Common services to be offered by most banks as part of their mobile banking experience: checking balances (DDA, savings), transferring funds between a single owner’s account within the FI, viewing statements and transaction history (DDA, savings), ATM/branch locator and bill payment. The services FIs do not consider to provide: international remittances, access to brokerage services, viewing prepaid account history and checking prepaid account balances.

5. Top barriers to for adoption of mobile banking: lack of customer awareness, security concerns, customers’ banking needs met via other channels, phone screen size, complicated login process, mobile app not user-friendly

6. Mobile banking security and authentication:

Survey 1

Mobile Payments:

With FIs having fully implemented mobile banking, they are now looking at building mobile payment strategies as their priority for 2015 and 2016. Also, the report suggests that the respondents who have said that they do not plan to provide mobile payments in the next two years could alter their strategy with the launch of Apple Pay. (The survey was taken in Jul-Aug 2015, two months before the launch of Apple Pay.)

1. There has been an increased interest in new products, features and capabilities launched around mobile/digital payments. Startups and incumbents from the financial services industry and technology providers are developing new services that are helping shape consumer preferences. The key driver for mobile payment adoption is mobile commerce which was 12.9% of retail e-commerce in Q4 ‘14, compared to 11.6% at the end 2013 (retail e-commerce was 7% and 6.6% of the total retail sales at the end of Q1 ‘15 and Q4 ‘14 respectively)

2. Both banks and credit unions look at partnering with third-party providers as their primary strategy for offering mobile payments.

Survey 2For a complete report regarding the survey and results, please click here.

Kate

Kate is a staff writer at LetsTalkPayments.com., , She likes to write about mobile payments and mobile commerce.

Apply to Become a Contributor