The smartphone market is maturing rapidly, but banks risk getting left behind because a growing number of users consider the channel to be unsafe for financial transactions.
Javelin says that between 2009 and 2011, smartphone ownership increased to 34 percent from 15 percent, based on a survey of about 5,000 U.S. customers conducted in March of this year.
However, smartphone mobile banking has stagnated—the number of smartphone users who used the devices for banking within a seven-day span grew to only 19 percent from 18 percent, and the number who never use smartphones for banking decreased only slightly to 59 percent from 63 percent.
There's a connection between security and the low numbers. The percentage of people who find mobile banking "unsafe" or "very unsafe" expanded to 40 percent from 26 percent between 2009 and 2010—before some of the high profile breaches of this spring.
"If FIs wish to reap the benefits of attracting a broad range of customers to the mobile banking realm, they must quickly and aggressively deal with mobile banking security," write the report's authors.
While most banks are turning their focus from browser-based mobile banking to the more advanced functionality of native aps that can be accessed via smartphone, Javelin suggests institutions maintain a strong browser-based system, since the perception of security is stronger for browser-mobile banking.
Consumer preference for mobile browsers increased to 47 percent from 34 percent between 2009 and 2010, while a preference for a downloaded app decreased to 23 percent from 32 percent. "If there intent is to drive their consumers to a downloaded application, the security, privacy and safety of that application will have to be a key message along with a clear statement of its advantages over a browser based system."
The research firm also recommends that banking access via mobile apps be introduced at a slower pace, allowing smartphone owners to acclimate themselves to the technology without stemming mobile banking adoption.
