Three Things You Need to Know About Mobile Deposit
Raddon Financial Group has tracked the changes in consumer banking behavior for 30 years. In those 30 years there has never been a service that has followed a steeper growth curve than mobile banking. As shown in the chart below, mobile banking penetration has now reached 35%, up from 10% in 2011.
Mobile deposit capture is currently used by 7% of households. Mobile deposit is used by 21% of Gen Y households and 30% of Gen Y members that earn over $50,000 (also known as RFG’s Credit Driven Segment).
We now have enough mobile deposit users to give us a solid look at their demographic profile and other banking behaviors. We see that the mobile segment is taking advantage of many other financial technology applications in addition to mobile deposit. We expect that mobile deposit may be the first online service that profoundly affects the brick-and-mortar business strategy.
Here are three things we now know about mobile deposit users:
1. Demographics – Mobile Deposit Adopters are Younger and Have Higher Income Levels
Demographics in the table above compare online bankers, tablet bankers, mobile bankers, and mobile deposit users. The mobile deposit averages are indexed to the total in the chart with 100 being equal to the total market. The columns are not mutually exclusive, and some consumers are represented in all four columns.
Mobile deposit users are 14 years younger than the average consumer and four years younger than the mobile bankers in general.
Mobile deposit users report a household income of $96,246, ahead of online bankers and mobile bankers but lower than those who use their tablets to bank. Mobile deposit users report maintaining $1,627 in their checking accounts and do 32.5 signature debit transactions totaling $306 each month. Interchange income is a significant part of the revenue stream realized from mobile consumers.
Mobile deposit demographics would argue that mobile deposit users are good candidates for credit. Consumer loan balances held by the group of $21,073 are 23% higher than average. Not shown in the table and chart is that mobile deposit users also have above average mortgage and home equity credit balances, but have only average credit card balances.
2. Service Use – Mobile Depositors Use the Lobby Less than Other Online and Mobile Consumers
The chart and table above show that 76% of all consumers report conducting an average of 2.51 transactions with tellers at the lobby or drive-up of their financial institutions each month. The addition of online, tablet or mobile banking to the service mix did not result in a decrease in lobby usage as 70% of more of these three groups report monthly use of the lobby. Things change with the addition of mobile deposit. Just 50% of mobile deposit users say they transact with tellers in the lobby or drive-up each month, and their transaction count is just below two per month.
It can be argued that a reduction in basic lobby transactions such as deposits and check cashing leaves more staff availability for higher quality interactions that result in additional sales. The third row in the table shows that 13% percent of consumers say one of their three most recent lobby visits qualified as a “Quality Branch Interaction,” defined as opening a new checking or other deposit account, applying for a loan, discussing a new service, or resolving a service issue. The Quality Branch Interaction figure for mobile deposit users is slightly higher than average at 17%. This supports the notion that the role of the brick-and-mortar branch is fundamentally changing.
3. Mobile Deposit Users are Also Online Account Openers and Mobile Payment Candidates
One-fifth of current mobile deposit users say that they have opened a new checking account online, almost four times the national average of 5%. Forty-three percent of the segment say that they are somewhat to extremely likely to use their smart phone to make in-store payments and 44% of the mobile deposit group use social (P2P) payments, nearly twice the national norm.
Online lending is robust with the mobile deposit segment, with 24% reporting that they have at some point applied for a loan online. This figure is 10% among all consumers.
Mobile depositors are 2½ times more likely than average to use a prepaid card at 8%, but when asked, just 9% of mobile depositors and 10% of consumers overall say that a prepaid card could replace their regular checking account. This comes as the industry sizes up the strength of new online and nontraditional financial institutions that are betting on the prepaid card appeal as the new consumer primary household spending account.
Much of our research confirms our expectations of mobile user characteristics. What was not known until now is the magnitude of the differences between mobile deposit users and the general public and the new services the mobile population is most inclined to adopt. In the 30 years that we have been tracking consumer financial behavior, we have never seen such rapid adoption of a new service (mobile banking) or a game-changing service like mobile deposit, both of which may significantly impact the longstanding brick and mortar business model.| Comments (RSS) |