The rise of mobile banking among American consumers to deposit money and pay bills has led many banks to offer new technologies that will reduce visits to local branches and costly customer service resources.
First Financial Bank, a community banks with 55 branches throughout Texas, recently unveiled a new technology that allows customers to pay bills using their phones to take a photo of their monthly payment voucher. U.S. Bancorp, America’s fifth-largest bank by assets, also plans to launch a similar technology in March, and the service will be free to bank customers, The Wall Street Journal reports.
The trend has become especially popular among younger customers who increasingly rely on their mobile devices for everyday uses, but it is unclear whether the technology will become popular among older adults, who were slower to embrace online banking technology.
Banks across the country have sought new ways to attract customers and increase revenue during a time of record-low interest rates, mediocre loan demand and reduced profit margins. In 2012, more than 1,100 bank branches were closed on a net basis.
The move to transform mobile devices to mobile banking centers has outpaced the industry’s attempts to turn mobile devices into payment devices. Robert Hedges, the managing director at the Boston-based consulting firm AlixPartners, said, however, that consumers’ “readiness to manage their personal finances and banking via a mobile device has caught the industry off guard,” according to The Wall Street Journal.
Mobile banking comprises approximately eight percent of transactions, while online banking comprises 53 percent, branches represent 14 percent and the remainder is comprised of ATM transactions.
Many institutions do not charge consumers to use the new applications but instead use the technology to attract new customers who could eventually ask the bank for a credit card, wealth-management or mortgage services. Almost 50 percent, seven percent more than in 2010, of smartphone users who recently switched banks said that mobile banking played an important role in their decision, The Wall Street Journal reports.
JPMorgan Chase, which began offering mobile banking in 2009, said that 13 million of its customers use mobile devices.
“We have gone from mobile as an experiment to mobile banking being a core experience that is just as important as the branches, call centers and the Internet,” Ryan McInerney, the CEO of consumer banking at Chase, said, according to The Wall Street Journal.
Mobile banking was first offered by banks five or six years ago via messaging and web browsers, and its popularity has been driven by the increased use of smartphone devices, which are used by nearly half of all Americans with mobile phones.