Enabling Technologies
We Live in a Mobile-First World
by 
Elena Mesropyan · October 14, 2016
MEDICIGlobal Head of Content
For a quarter of users, it’s a mobile-only world
A recent study by Google called How People Use Their Devices suggests that more than 1 in 4 users only use a smartphone in an average day – almost twice as many as those who only use a computer. Moreover, the study indicated that smartphones take up the most usage time on an average day – those who use a smartphone spend almost three hours per day on it.
The study also dug into the way devices are used. Findings indicate that nearly 4 in 10 users search only on their smartphones on an average day, as Google found more Google searches happening on smartphones than on computers. In fact, more searches happen on mobile than on computers and tablets for 15 of the 24 hours in a typical day.
In breaking down the usage throughout the day, Google found that mobile leads in the morning, but computers become dominant around 8 AM when people might start their workday. Mobile also takes the lead again in the late afternoon when people might be on the go, and continues to increase into the evening, spiking around primetime viewing hours.
In an average day, 4 in 10 users who watch YouTube do so only on their smartphones. On mobile, YouTube plays a utility role, with do-it-yourself and reviews among the content viewers watch. As for one of the favorite activities – more than 7 in 10 browse the web on their smartphones or computers.
Consumers want to use their smartphones to make payments
Among financial industry professionals, there is a high expectation that smartphones may take over the payments market in the nearest future. In fact, some estimates predict that more than one in three people in the world will be using smartphones within the next two years and, by 2019, almost 200 billion transactions a year will be made via mobile phones and tablets.
Moreover, the report from BI Intelligence indicates that the number of in-store mobile payment users will grow at a 40% five-year CAGR to reach 150 million by the end of 2020, representing 56% of the consumer population during that year.
In addition, making the shift official, Mastercard study suggests that in the region that is expected to be the hottest mobile money market by 2020 – Africa and the Middle East – over 70% of consumers are ready to pay with their smartphones.
As Ann Cairns, President, International Markets at Mastercard, commented on the results, “…not only is there a huge appetite for new ways to pay, but consumers overwhelmingly want to use their smartphones. In fact, many are ready to do so right now. For decades, plastic cards have been the only reasonable alternative to cash – but consumers are saying loud and clear that they want digital innovations in all areas of life.”
More than a third of global online transactions are now mobile
Adyen Mobile Payments Index, which tracked mobile web payment transaction data around the world across select payment methods for Q4 of 2015, has found that for the first time, more than a third (34%) of online payments are now made on a mobile device, compared to just over 30% previous quarter.
The increase is driven particularly by major Asian-based payment methods. As Roelant Prins, Chief Commerce Officer, Adyen, commented, “Mobile payments, both in app and browser-based, are driving the growth of ecommerce, and this trend is particularly noticeable by the acceleration in mobile payments for methods such as JCB and Alipay. As mobile become the primary way for global shoppers to go online, and payment methods such as JCB see over half of online payments on mobile, the era of a mobile-first approach to payments is upon us.”
The Index shows that for the first time, smartphones have overtaken tablets as the preferred device for making online retail purchases, at 17.5% on smartphones against 16% on tablets, compared to 14% and 17% respectively previous quarter. This compares to 29% of digital goods payments on mobile against 7% on tablet, figures that are consistent with the previous quarter.
Disruptive financial technology solutions are mobile-only
Mobile-only challenger banks have created a lot of buzz when they swiftly entered the market and started obtaining banking licenses one by one. There are even groups of population with the majority preferring to bank through mobile – according to Facebook, 49% of millennials prefer banking through mobile.
Not only are challenger banks built on a platform preferred by an increasing number of consumers, but also the financial performance of those companies has been impressive. According to KPMG challenger banking report, the challengers outperform the Big Five (HSBC, Barclays Bank, Lloyds Bank, The Royal Bank of Scotland and the UK subsidiary of Santander) in terms of return on equity (ROE) – Big Five: 4.6%, smaller challengers: 17.0%, larger challengers: 9.5%.
Moreover, for the UK market, the challengers continue to grow in a shrinking market – lending assets have increased by 31.5% compared to a decline of 4.9% for the Big Five. In addition, the challengers’ simple business models provide a cost advantage – cost as a percentage of income for the smaller challengers decreased from 52.1% in 2014 to 48.5% in 2015.
Smartphone manufacturers are gaining control financial and device markets
Mobile phone manufacturers are one of the most disruptive forces in the payments market given that the number of smartphone users worldwide is predicted to be over 2.5 billion by 2019. In the US, 64% or two-thirds of Americans have a smartphone. This is a 35% rise in the past four years. Hence, smartphone manufacturers around the world now have an unprecedented opportunity to win a game they may have not even been interested in just a couple of years ago.
Apple, Xiaomi, Huawei, Samsung, etc. – all major phone manufacturers around the world – are now actively pushing proprietary payments solutions embedded in their smartphones. It is worth mentioning that those are the largest smartphone manufacturers in the world, each with a strong market position that imposes a significant threat to everyone else.
Overall, smartphone vendors shipped a total of 334.9 million smartphones in Q1 2016 with Samsung, Apple and Huawei leading the pack. Samsung shipped 81.9 million units in Q1 2016, followed by Apple and Huawei with 51.2 and 27.5 million, respectively. Oppo sold 18.5 million units in the quarter and Vivo sold 14.3 million.
The most advanced security solutions are mobile-oriented
Biometrics are rapidly gaining popularity in the financial services industry and beyond as they are believed to be the most convenient method of identification/authentication. Seeking to leverage the technology, a range of banks has turned to testing biometrics on limited audiences/particular markets. Moreover, there is also a range of government-powered initiatives with biometric identification.
Given the potential and the interest, the biometrics market is expected to experience a substantial growth over the coming years. Some of the recent estimations suggest that by 2020, global mobile biometric market revenues will reach $34.6 billion annually.
Mobile technology is believed to become a major force in accelerating the adoption of biometrics. Today, there are 750 million biometric smartphones in use, representing more than 30% of the global smartphone installed base. In addition, more that 800 million biometrically enabled transactions will be completed annually on mobile devices by 2020 generating nearly $7 billion in annual biometric authentication revenue.
By 2021, 90% of mobile data traffic will come from smartphones
In the future, mobile will become even more important and completely transform the way business is conducted since. In fact, the total mobile data traffic is expected to rise at a CAGR of around 45% by 2021, according to the mobility report published in June 2016 by Ericsson.
Data suggests that two main factors will play a major role in mobile data traffic growth — the rising number of smartphone subscriptions (in particular for LTE smartphones) and the increasing amount of data consumption per subscriber. Overall, ~90% of mobile data traffic will be from smartphones by the end of 2021.
According to the report, North America is the region in the world with the highest monthly data usage per active smartphone subscription. In fact, by 2021, monthly smartphone data usage per active subscription in North America (22 GB) is expected to be 1.2 times higher than in Western Europe (18 GB) and 3 times that of Asia-Pacific (7 GB).