A new consumer discovery panel study has found that 76% of 'Generation Y' consumers (18-26 year olds) would be willing to use mobile banking services.
Those that said they would be interested in using a mobile banking service also said they would consider a monthly fee of £5.00 a fair price to pay.
The study is the first to demonstrate how mobile banking could provide a new revenue source for banks by charging for a monthly service plan rather than providing the service for free as they do currently.
The study by Simon-Kucher & Partners, the global strategy and marketing consultancy, focused on the 'Generation Y' demographic and reveals that this segment believes there is a fair price for mobile banking. This group, equating 12 percent of the UK population, represents an untapped revenue opportunity.
Most banks see mobile banking as a means of reducing costs by migrating expensive branch and call centre transactions to mobile devices. Consequently, mobile banking is offered to customers for free.
Georg Wuebker, global head of banking at Simon-Kucher & Partners, commented: “This demographic represents an untapped market opportunity; this group identified a fair price for mobile banking and over three quarters of respondents are willing to use it.”
The study investigated respondents’ preferences for services across three categories, each increasing in functional richness: Informational (flat, presentation of information);
Transactional (operational and unidirectional events); Interactive (personalised and multidirectional) mobile banking services.
Balance checking (60%) was the most important informational service; blocking lost/stolen cards (94%) was the most essential transactional service and fraud monitoring (87%) was the most important interactive mobile banking service. The latter two point to the fact that customers see security as a priority.
Payment-related services were important to 57% (peer-to-peer) and 59% (purchases) of respondents. This is interesting given the industry developments around mobile-based contactless payments, mobile wallets and the emergence of financial services offerings from major telecommunications groups.
Notably, respondents’ preferences for service declined with the increasing richness of functionality. Informational services were considered the most important (81%), followed by transactional (69%) then interactive (53%). This suggests that functional richness is not the deciding factor for placing a price on mobile banking. In fact, respondents said that the main benefits of mobile banking were flexibility, time savings, and accessibility.
The results of this study also have deeper implications for banks. Ben Snowman, the study author, observed: “Paid-for mobile banking can also play a long term strategic role in customer succession planning. If banks launch fee-carrying mobile banking services, they will see consecutive generations of customers moving towards paid-for services and an increasingly lower portion of the customer base will use free banking.”