Mobile Banking Will Grow 300% Over the Next Four Years: Aite

No matter how you slice it, mobile banking is expanding rapidly. While that's probably not a total shock, what is striking is the pace of maturation — practically every use case for mobile is expected to more than double over the next couple of years alone. Some will grow threefold to fivefold over the next four years.

In new research out Tuesday, Aite projects the number of U.S. consumers using a mobile device to access their bank account will increase from 33 million to 96 million by 2016, a compound annual growth rate of 30%. Smartphone users will account for 96% of the total mobile banking population, suggesting the dilution of feature phones. In just the next two years, mobile banking usage will nearly double to about 64 million. Aite based its research on a survey of 1,115 U.S. consumers along with public mobile device sales information.

Ron Shevlin, a senior analyst at Aite Group, says that while the growth is across the board, form factor does make a difference regarding how specific uses will grow for smartphones and tablets. "Expense categorization will take off because of mobile payments at the point of sale, for example…while using the smartphone to analyze your investment won't be the most popular feature or function used ," he says.

The overall number of smartphone users in the U.S. is expected to increase from 105 million in 2012 to 174 million in 2016. Tablets are growing even faster, creating more pressure on banks, many of which are just now starting to develop plans for tablet applications. The number of tablet users is expected to rise from 65 million to 112 million by 2016, and approach 100 million by 2014. "The penetration of smartphones and tablets is absolutely huge, especially among consumers aged 45 to 50," he says.

When broken down by number of users and percentage of smartphone users, the trends for financial services reveal fast expansion of mobile banking services and deep penetration among phone owners. The number of people who use mobile to check account balances, for example, will increase from 32 million to 92 million in 2016. The percentage of smartphone owners using their phones for that purpose will increase from 36% to 59% during the same interval.

These trends also play out for other uses: receipt of account alerts is expected to expand from about 25 million users to more than 85 million users (or 28% to 54% of owners); paying monthly bills should grow from 14 million to 57 million (or 16% to 36% of owners); and use of remote deposit capture is projected to expand from 12 million to 48 million (or 13% to 30% of owners). One of the fastest growing uses is monthly bill payment — that's expected to more than double over the next two years, from 14 million to 34 million users. Among all U.S. consumers (smartphone and non-smartphone owners), nearly one in five is expected to use smartphones to deposit checks by 2016 (up from one in 20 today), and 38% will use smartphones to check balances by 2016 (up from 13% today).

The growth of tablets for financial services is projected to be even faster than smartphones. People using tablets for balance queries are expected to jump from 14 million to 27 million by 2013 and 55 million by 2016, or an expansion from 25% to 56% of tablet owners. Other uses will experience similar growth. Monthly bill payers are projected to expand from 8 million to 37 million by 2016 and 17 million in 2013. Remote deposit capture is expected to spike from 3 million in 2012 to 7 million in 2013 and 16 million in 2016. And while about 10 million people have used tablets to view banking statements in 2012, that's expected to approach 22 million in 2013 and 48 million by 2016.

Use of personal financial management (PFM) is also growing, suggesting that now is the time to move PFM tools to mobile devices. While only 6 million people use smartphones to categorize expenses now, that's expected to grow to 16 million in 2014 and 38 million by 2016. Budget management is expected to grow from about 6 million to 12 million in 2014 and 25 million in 2016. And use of smartphones for analysis of investment recommendations and ROI calculations is expected to expand from 7 million to 14 million in 2014 and 26 million in 2016.

PFM-related activities are expected to grow very quickly among tablet users. People who use tablets to create and manage budgets are expected to grow from just over 2 million in 2012 to 5 million in 2013, more than 8 million and 20 million in 2016. The number of people who use tablets to access financial educational materials — a frequently cited use case for tablets, is expected to grow from 4 million to 8 million in 2013 and 34 million in 2014. "Tablets are a bit more of a management device versus the smartphone," Shevlin says.

Shevlin says that in a world where everybody has both a smartphone and a tablet, people won't use both devices for all banking functions at all times. "It's more of a situational type thing. What I'm hoping to get across the banks and credit unions is they have to build out certain types of use categories, such as investment analysis and educational materials for the tablet, for example," he says.