Of those consumers who had not adopted mobile banking, the primary reason given was that they felt their banking needs were being met through more traditional means. Security concerns were the second most-cited reason for not using mobile banking. Specifically, consumers expressed concerns about hackers gaining access to their phones and exposing their personal financial information. A little more than one-third of all mobile phone users reported that they do not know how secure mobile banking technology is for protecting their personal information, while an additional one-third rated the technology as unsafe. Nevertheless, among those consumers with any type of mobile phone, but who are not currently using mobile banking, one out of ten expects to be using it within the next year.
In addition to mobile banking, we asked about mobile payments, which I described earlier. Mobile payments are not yet as prevalent as mobile banking; one out of eight respondents reported making a mobile payment in the previous 12 months, and usually this involved paying a bill online via their mobile phone. Mobile payments are disproportionately used by consumers under age 45 and by Hispanics. Consumers who are not currently using mobile payments responded that they were concerned about the security of the technology, did not see any benefit from mobile payments, or found it easier to pay in other ways — for example, with cash or with a credit card.
Consumers who are "underbanked" — that is, those who have a bank account but who also use an alternative financial service provider such as a check casher, payday lender, auto-title lender, or payroll card — make significant use of mobile banking and mobile payments. Among this group, nearly three out of ten have used mobile banking, primarily to check their account balances. The underbanked are more likely than the general population to use mobile payments, with one out of six using payment services on their mobile devices. Those consumers who are unbanked also report using mobile financial services, generally in conjunction with a general purpose prepaid card or payroll card.
Let me give you a few examples from the report of how consumers reported using mobile financial services to make financial decisions. I stated earlier that the most frequent use of mobile banking was to check account balances. Of those consumers who use mobile banking, more than two-thirds reported that they checked their account balance or available credit before making a large purchase. Moreover, among the consumers that reported doing this, nearly six out of ten reported that they had decided not to buy an item because of the amount of money available in their account. As another example, some consumers reported setting up a text alert from their bank if their account balance was getting low; among those using this service, five out of six reported taking some action — transferring money into the account with the low balance, reducing spending, or making a deposit into the account--in response to receiving an alert. Consumers also reported using their mobile devices to browse product reviews or get pricing information while shopping.
More details on consumers' use of mobile financial services are available in the report. Staff members in the Division of Consumer and Community Affairs expect to conduct additional analysis of the data in the months ahead. This should round out our understanding of these initial findings. For instance, some of the differences that we see based on ethnic or socioeconomic factors may be better understood when we examine how such factors interact with other characteristics of the respondents. We also anticipate that we may conduct periodic updates of the survey to monitor consumers' experiences as the technology and business practices evolve.
The report is available at www.federalreserve.gov/econresdata/mobile-device-report-201203.pdf.
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