KPMG's fifth annual Consumers and Convergence survey discloses that 33 percent of U.S. consumers have conducted banking transactions on a mobile device, compared with 19 percent a year ago and 9 percent in KPMG's 2008 survey. Among age groups, 41 percent of U.S. consumers age 16-34 conducted mobile banking, compared with 25 percent for older adults.
While most respondents (57 percent) said they still prefer to use a computer or bank in a branch, another 39 percent cited security and privacy concerns as blocking their adoption of mobile banking.
In addition, banks apparently need to do a better of job of educating consumers as to their capabilities. Fifty-four percent of respondents thought that their current bank either does not offer banking through a mobile device, or that they did not know if their bank offered this service.
"Consumers are clearly open to using their mobile devices to conduct everyday transactions and will steadily move in this direction for years to come," said Mitch Siegel, a principal in KPMG LLP's Financial Services practice. "With mobile banking now gaining widespread acceptance, the challenge for banks will be to develop a mobile payment solution that effectively allays security and privacy concerns."
Consumers expressed a high level of specific privacy and security concerns over conducting financial transactions on a mobile device, including the potential for credit card information to be intercepted, the threat of unauthorized parties accessing personally identifiable information and even receiving unsolicited promotional material.
Siegel said that banks have enjoyed a significant edge in ensuring trust, but the trust factor is growing more vulnerable in the digital age. "Consumers are increasingly willing to adopt new technologies and digital business models, and that spells big opportunities and risks for service providers, retailers, media companies, banks and the host of other players vying for a piece of the digital value chain," Siegel said.
In fact, when asked who they trusted the most with their data, 53 percent of respondents identified their banks, but 29 percent said they put their trust in secure payment systems, such as PayPal. "Whoever will master the privacy challenge will gain a significant competitive edge," said Siegel.
In the KPMG survey, 72 percent rated the "brand/reputation of the service provider" as very important in gaining trust with respect to data privacy and security, followed by 60 percent who said better disclosure of privacy/security measures implemented by the service provider, and 59 percent who felt privacy and security audits by an independent third party or a trust mark.
"Mobile commerce is evolving, and telcos, media companies, retailers, financial institutions and other service providers cannot assume that their previous reputation is enough to gain the consumer's trust when handling financial and personal data," said KPMG's Siegel. "There will be new winners and new losers, but the winners will be those who get the trust element right."
The KPMG study also found 23 percent of consumers very willing to use their mobile phones as a wallet, with 30 percent of younger adults, those ages 16-34, much more willing to do so.
"U.S. consumers are warming up to the 'mobile wallet' concept in which the mobile device will function as a payment and financial transaction instrument," said Siegel. "Banks are actively engaged in developing platforms and interfaces that will make this concept seamless and familiar for the consumer, while also developing business relationships with players involved in developing the end-to-end eco-system."
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