Consumers and Mobile Financial Services 

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Consumers and Mobile Financial Services 2015 March 2015 BOARD OF GOVERNOR S O F THE F EDERAL R E S ERV E SY S T EM Consumers and Mobile Financial Services 2015 March 2015 BOARD OF GOVERNOR S O F THE F EDERAL R E S ERV E SY S T EM This and other Federal Reserve Board reports and publications are available online at www.federalreserve.gov/publications/default.htm. To order copies of Federal Reserve Board publications offered in print, see the Board’s Publication Order Form (www.federalreserve.gov/pubs/orderform.pdf) or contact: Publications Fulfillment Mail Stop N-127 Board of Governors of the Federal Reserve System Washington, DC 20551 (ph) 202-452-3245 (fax) 202-728-5886 (e-mail) Publications-BOG@frb.gov Preface The survey and report were prepared by the Con- sumer and Community Development Research Sec- tion of the Federal Reserve Board’s Division of Con- sumer and Community Affairs (DCCA). DCCA directs consumer- and community-related functions performed by the Board, including con- ducting research on financial services policies and practices and their implications for consumer finan- cial stability, community development, and neighbor- hood stabilization. DCCA staff members Alexandra Brown, Sam Dodini, Arturo Gonzalez, Ellen Merry, and Logan Thomas prepared this report. Valuable comments and feedback on the design of the survey and draft- ing of this report were provided by DCCA staff members Mario Arthur-Bentil, Anna Alvarez Boyd, David Buchholz, Allen Fishbein, Jeff Larrimore, Alejandra Lopez-Fernandini, Barbara Robles, and Jenny Schuetz, as well as by Federal Reserve System staff members Andrea Brachtesende, Marianne Crowe, Susan Pandy, and Maximilian D. Schmeiser. Mention or display of a trademark, proprietary product, or firm in the report does not constitute an endorsement or criticism by the Federal Reserve System and does not imply approval to the exclusion of other suitable products or firms. iii Executive Summary ................................................................................................................. 1 Key Findings .............................................................................................................................. 1 Introduction ............................................................................................................................... 3 Survey Background .................................................................................................................... 3 Consumer Access to Mobile Phones ........................................................................................... 4 Trends in the Utilization of Mobile Banking and Payments ............................................................. 5 Accessing Financial Services ................................................................................................ 9 Mobile Banking ......................................................................................................................... 10 Mobile Payments ...................................................................................................................... 14 Mobile Security ......................................................................................................................... 19 HowMobile Phones Affect Shopping Behavior .......................................................... 23 Interest in Mobile Services ......................................................................................................... 23 In-Store Product Research and Price Comparison ...................................................................... 24 Use of Mobile Phones in Financial Decisionmaking ................................................ 25 Conclusion ................................................................................................................................ 27 Appendix 1: Technical Appendix on Survey Methodology ..................................... 29 Appendix 2: Survey of Consumers’ Use of Mobile Financial Services 2014—Questionnaire ............................................................................................................ 33 Banking Section ........................................................................................................................ 34 Mobile Banking Users ............................................................................................................... 39 Mobile Payments Users ............................................................................................................. 41 Non-Mobile Banking Users ........................................................................................................ 44 Non-Mobile Payments Users ..................................................................................................... 45 Mobile Financial Services Security Questions ............................................................................. 47 Shopping Behavior Questions ................................................................................................... 49 Financial Management (Saving, Budgeting) Questions ................................................................ 50 Appendix 3: Consumer Responses to Survey Questionnaire .................................. 53 v Contents Executive Summary Mobile phones have increasingly become tools that consumers use for banking, payments, budgeting, and shopping. Given the rapid pace of developments in the area of mobile finance, the Federal Reserve Board began conducting annual surveys of consum- ers’ use of mobile financial services in 2011. The sur- vey examines trends in the adoption and use of mobile banking, payments, and shopping behavior and how the emergence of mobile financial services affects consumers’ interaction with financial institutions. This report presents findings from the 2014 survey, fielded in December, which focused on consumers’ use of mobile technology to access financial services and make financial decisions. Where applicable, the findings from the current survey are also compared with the findings from the 2011, 2012, and 2013 sur- veys. Topics include consumer access to bank services using mobile phones (“mobile banking”), consumer payment for goods and services using mobile phones (“mobile payments”), and consumer shopping deci- sions facilitated by use of mobile phones. Details about the survey, its methodology, and limitations can be found in the body of the report and in a meth- odological appendix. Key Findings Key findings of the 2014 survey include: • Mobile phones are in widespread use. —Eighty-seven percent of the U.S. adult popula- tion has a mobile phone, consistent with 2013. —Seventy-one percent of mobile phones are smart- phones (Internet-enabled), up from 61 percent a year earlier. • The ubiquity of mobile phones is changing the way consumers access financial services. —Thirty-nine percent of all mobile phone owners with a bank account have used mobile banking in the 12 months prior to the survey, up from 33 percent in 2013 and 29 percent in 2012. —Fifty-two percent of smartphone owners with a bank account have used mobile banking in the 12 months prior to the survey, up from 51 per- cent a year earlier. —Among those mobile phone users with bank accounts who do not currently use mobile bank- ing, 11 percent think that they will probably or definitely use it within the next 12 months, down from 12 percent a year earlier. —The most common use of mobile banking is to check account balances or recent transactions (94 percent of mobile banking users). —Among mobile banking users, transferring money between an individual’s own accounts (61 percent) and receiving an alert (e.g., a text message, push notification, or e-mail) from their bank (57 percent) are the second- and third-most common uses of mobile banking. —Fifty-one percent of mobile banking users have deposited a check using their mobile phone in the 12 months prior to the survey, up from 38 percent in 2013. —Among mobile banking users, the frequency of use has increased slightly, from a median of four times per month in 2013 to five times per month in 2014. This frequency was five times per month in 2012. —Residents of more rural areas have a lower inci- dence of mobile banking use than residents of more urban areas. • Mobile phones are also changing the way consumers make payments. —Twenty-two percent of all mobile phone owners reported having made a mobile payment in the 12 months prior to the survey, up from 17 per- cent in 2013 and 15 percent in 2012. 1 —The share of smartphone users who reported having made a mobile payment in the 12 months prior to the survey has increased to 28 percent, up from 24 percent in both 2013 and 2012. —Among mobile payment users with smartphones, the most common type of mobile payment was bill payment through an online system or mobile app (68 percent, up from 66 percent in 2013). —Thirty-nine percent of all mobile payment users with smartphones have made a point-of-sale pay- ment using their mobile phone in the 12 months prior to the survey, in line with the 39 percent reporting such payments in 2013. —Of mobile payment users with smartphones who made point-of-sale mobile payments, 31 percent did so by scanning a barcode or QR code dis- played on their phone’s screen at check out (down from 39 percent in 2013), while 22 percent used an app that did not require tapping their mobile phone or scanning a barcode (up from 17 percent in 2013). —Residents of more rural areas have a lower inci- dence of mobile payments use than residents of more urban areas. • A preference for other methods of banking and mak- ing payments, as well as concerns about security, continue to be the main impediments to the adoption of mobile financial services cited by some consumers. —Of those not using mobile banking, the primary reason respondents cited was a belief that their banking needs were being met without the use of mobile banking (86 percent). —The primary reason non-mobile payment users gave for not using mobile payments was that they believe it is easier to pay with cash or credit/ debit cards (75 percent). —Concern about the security of the technology was a common reason given for not using mobile banking or mobile payments (62 percent and 59 percent, respectively, of non-users). • Smartphones are changing the way people shop and make financial decisions. —Forty-seven percent of smartphone users have comparison shopped with their phone while at a retail store, and 33 percent have used their phone to scan a product’s barcode to find the best price for the item. —Of those consumers who used their phones to comparison shop in a retail store, 69 percent have changed where they purchased a product as a result of the information they found. —Forty-two percent of smartphone users have used their phone to browse product reviews or get product information while shopping at a retail store, and 79 percent of them changed the item they purchased based on this information. —Sixty-three percent of mobile banking users have checked their account balance on their phone before making a large purchase in the previous 12 months leading up to the survey, and over half (53 percent) of them decided not to pur- chase an item as a result of their account balance or credit limit. —Twenty-nine percent of all mobile phone users and 38 percent of smartphone users have used their phone to track purchases and expenses. • Mobile phones are prevalent among unbanked and underbanked consumers. —The share of consumers who are unbanked is 13 percent, and the share who are underbanked is 14 percent. —Sixty-seven percent of the unbanked have access to a mobile phone, 65 percent of which are smartphones. —Ninety percent of the underbanked have access to a mobile phone, 73 percent of which are smartphones. —Forty-eight percent of underbanked consumers had used mobile banking in the 12 months prior to the survey. 2 Consumers and Mobile Financial Services 2015 Introduction In 2011, the Federal Reserve Board’s Division of Consumer and Community Affairs conducted its first Survey of Consumers’ Use of Mobile Financial Services. Since that time, the adoption of mobile financial services has continued to increase, along with the range of services offered. As part of its ongoing efforts to monitor developments in the mobile financial services arena and to gain insights into consumers’ usage of, and attitudes toward, mobile financial services, the Board has continued to conduct the survey annually.1 The fourth survey, con- ducted in December 2014, included a random sample of respondents to the previous survey in 2013, as well as a random sample of new respondents. The sub- sample of respondents who voluntarily completed both the 2013 and 2014 waves of the survey allows for the analysis of changes in behavior over the past year among these individuals. Survey Background The original survey instrument and subsequent waves of the survey were designed in consultation with a mobile financial services advisory group made up of key Federal Reserve System staff with relevant con- sumer research and payments backgrounds. The 2012, 2013, and 2014 survey samples were all com- posed of a mix of a randomly selected respondents to the previous year’s survey and new survey respondents. The 2014 survey was again administered by GfK, an online consumer research company, on behalf of the Board. The survey was conducted using a sample of adults ages 18 and over from KnowledgePanel®, a proprietary, probability-based web panel of more than 50,000 individuals from randomly sampled households; the sample was designed to be represen- tative of the U.S. population. After pretesting, the data collection for the survey began on December 5, 2014, and concluded on December 21, 2014. For the results presented in the main body of this report, the sample was drawn following the method used for the 2012 and 2013 surveys. As shown in table 1, e-mails were sent to 2,308 randomly selected respondents to the 2013 survey and 2,657 randomly selected respondents from the remaining members of KnowledgePanel®. The respondents completed the survey in approximately 12 minutes (median time). Of the 2,925 respondents, 1,489 had responded to the 2013 survey one year before, while 1,436 were new survey respondents drawn from the general popula- tion.2 Further details on the survey methodology are included in appendix 1. As with any survey method, Internet panels can be subject to biases resulting from undercoverage or nonresponse and, in this case, potential underrepre- sentation of adults who may be uncomfortable with technology. Not everyone in the United States has access to the Internet, and there are demographic (income, education, age) and geographic (urban and rural) differences between those who do have access and those who do not. These concerns are addressed by GfK providing Internet access to respondents who 1 See the “Consumers and Mobile Financial Services” reports series for previous years’ survey findings. Results of the 2011, 2012, and 2013 surveys (published in March 2012, 2013, and 2014, respectively) are available at www.federalreserve.gov/ communitydev/mobile_finance_publications.htm. 2 The 2014 survey also included an oversample of respondents from rural areas. For comparability with prior years of the sur- vey, the oversample was not used in computing the results in the main body of this report; therefore, respondents from the over- sample are not included in table 1. However, selected statistics based on the oversample are included in box 1. Additional information on the sample is provided in appendix 1. Table 1. Key survey response statistics: Main interview Number sampled for main survey Qualified completes Completion rate 2013 re-interviews 2,308 1,489 64.5% Fresh cases 2,657 1,436 54.0% Total primary sample 4,965 2,925 58.9% 3 do not have it in order to include the portion of the population that does not have Internet access in KnowledgePanel®, and using sample weights to ensure that the Internet usage and key demographics of the sample population matches the adult U.S. population. See appendix 1 for a more detailed dis- cussion. While care has been taken to ensure the sur- vey results are generalizable to the adult U.S. popula- tion, the usual caveats regarding surveys nevertheless apply. The full survey questionnaire is presented in appen- dix 2 and the responses to all the categorical survey questions are presented in appendix 3 in the order that the questions were asked of respondents. Tables of summary statistics for the respondent demograph- ics by mobile phone usage are also included as tables C.66 to C.69. Beginning at table C.70, cross- tabulations are presented of consumers’ use of mobile phones, mobile banking, and mobile pay- ments by age, race, gender, education, and income. The following sections of this report summarize key findings from the Federal Reserve Board’s survey of consumers conducted by GfK, with a focus on how consumers use mobile phones to conduct their bank- ing, make payments, enhance information gathering while shopping, and manage their finances. The num- bers cited in this report are derived from the Board survey unless otherwise noted. All data were weighted to yield estimates for the U.S. adult popula- tion. Only questions pertaining to these topics are discussed in the report; however, the complete survey questionnaire and the results of the entire survey are summarized in appendix 2 and appendix 3. Consumer Access to Mobile Phones As of December 2014, 87 percent of the U.S. popula- tion ages 18 and above owned or had regular access to a mobile phone. While the percent of the adult population with mobile phones has remained con- stant over the previous two years, an increasing pro- portion of those own smartphones: this survey’s 71 percent smartphone ownership rate among those with mobile phones is a substantial increase over the 61 percent rate reported in 2013,3 52 percent rate in 2012, and 44 percent rate in 2011. Rates of mobile phone usage remain high and consis- tent across demographic and socioeconomic groups. The prevalence of mobile phones demonstrates the extent to which they have become engrained in mod- ern culture. Mobile phone usage is approximately 91 percent for persons ages 18 to 44, and declines only slightly to 87 percent for persons ages 45 to 59 and to 80 percent for persons ages 60 and over. Smartphone adoption is also higher among younger generations, with the differences being more pro- nounced among age groups: 84 percent of those ages 18 to 29 and 86 percent of those ages 30 to 44 who own a mobile phone have a smartphone, while 67 percent of mobile phone owners ages 45 to 59 and 47 percent of mobile phone owners ages 60 and over have a smartphone. Mobile phone ownership varies slightly by race and ethnicity, with non-Hispanic whites, Hispanics, and non-Hispanic blacks having rates of 88 percent, 85 percent, and 83 percent, respectively. However, adoption of smartphones varies in a somewhat more pronounced way: 82 percent of Hispanic mobile phone users have a smartphone, compared to 68 per- cent of non-Hispanic whites and 66 percent of non- Hispanic blacks (table 2). 3 Throughout this report, percentages are calculated as a share of all those who were asked a question, including those who did not respond. Results on phone ownership from the Board’s 2013 survey are very similar to those from the Pew Research Center for that year. In the June 2013 Smartphone Ownership— 2013 Update, the Pew Research Center reported that 91 percent of U.S. adults owned a mobile phone and 61 percent of adults with a mobile phone (or 56 percent of adults overall) had a smartphone. (See http://pewinternet.org/~/media//Files/Reports/ 2013/PIP_Smartphone_adoption_2013_PDF.pdf.) The 2013 Federal Deposit Insurance Corporation (FDIC) Survey of Unbanked and Underbanked Households provides measures of mobile and smartphone access at the household level. In 2013, its estimates showed that 83 percent of households owned or had regular access to a mobile phone and 67 percent of house- holds with a mobile phone (or 56 percent of households overall) had a smartphone. (See www.fdic.gov/householdsurvey/ 2013report.pdf.) Table 2. Smartphone usage by race/ethnicity Percent, except as noted Race/ethnicity Smartphone usage 2011 2012 2013 2014 White, non-Hispanic 41 50 57 68 Black, non-Hispanic 47 54 63 66 Other, non-Hispanic 45 54 76 83 Hispanic 55 60 72 82 2+ races, non-Hispanic 43 59 64 65 Total 44 52 61 71 Number of respondents 2,002 2,291 2,341 2,603 Note: The denominator is all respondents with a mobile phone. 4 Consumers and Mobile Financial Services 2015 Mobile phone and smartphone usage does vary with the level of household income. In households earning less than $25,000 per year, 74 percent of adults have a mobile phone of some type, and 53 percent have a smartphone. Use of both mobile phones and smart- phones increases with income, reaching 95 percent and 85 percent, respectively, for adults in households earning more than $100,000 per year. The relatively high prevalence of mobile phone and smartphone use among younger generations, minori- ties, and those with low levels of income—groups that are more likely to be unbanked or under- banked—makes mobile phones a potential platform for expanding financial access and inclusion. In 2014, the share of consumers who were unbanked rose to 13 percent from 10 percent in 2013.4 The share of consumers who would be described as underbanked—defined as having a bank account but also using an alternative financial service such as a money order, check cashing service, pawn shop loan, auto title loan, paycheck advance/deposit advance, or a payday loan—was 14 percent in 2014.5 Among individuals who are unbanked, 67 percent have access to a mobile phone and 65 percent of these are smartphones. Smartphone ownership has been increasing among the unbanked. The share of the unbanked with access to a mobile phone was 69 percent in 2013 and 59 percent in 2012, approxi- mately half of which were smartphones. Among the underbanked, 90 percent have a mobile phone, 73 percent of which are smartphones. Fur- ther, 48 percent of the underbanked with mobile phones reported using mobile banking in the 12 months prior to the survey, while 32 percent reported making mobile payments. Trends in the Utilization of Mobile Banking and Payments Services that allow consumers to obtain financial account information and conduct transactions with their financial institution (“mobile banking”) and that allow consumers to make payments, transfer money, or pay for goods and services (“mobile pay- ments”) have become increasingly prevalent. Over the past several years, these services have become avail- able at a broader range of institutions and the types of services continue to evolve. With increased dis- semination of technology and a broadening array of options, consumer adoption of mobile financial ser- vices has risen. In the 2011 survey, for instance, 22 percent of mobile phone users with bank accounts and 43 percent of smartphone users with bank accounts reported that they had used mobile banking in the previous 12 months.6 These proportions have increased in each year of the survey. In the 2014 sur- vey, the prevalence of mobile banking continued to increase, reaching 39 percent of mobile phone users with bank accounts and 52 percent of smartphone users with bank accounts (figure 1). Use of mobile payments has also increased. In 2011, 12 percent of mobile phone users and 23 percent of smartphone users reported using mobile payments. By 2014, usage of mobile payments had increased to 22 percent for mobile phone users and increased to 28 percent for smartphone users. The steady increases in the adoption rate among all mobile phone users, but more gradual rise in the adoption rate among smartphone users, suggest that smartphone adoption substantially contributed to the increased use of mobile payments. A continuing impediment to adoption of either mobile banking or mobile payments appears to be consumers’ limited demand for them: many consum- ers said their needs were already being met without mobile banking or payments, that they were comfort- able with non-mobile options, and that they did not see a clear benefit from using either service. In addi- tion, around one in five (22 percent) of those with mobile phones and bank accounts indicated they do 4 In 2011 and 2012, the wording of the bank account question was “Do you or does your spouse/partner currently have a checking, savings, or money market account?” In 2013 and 2014, the wording of the bank account question changed slightly from the prior years to explicitly reference “bank or credit union” accounts: “Do you or does your spouse/partner currently have some type of bank or credit union account such as a checking, savings, or money market account?” 5 Due to changes in the way this question was asked, the 2014 fig- ures for underbanked households may not be comparable to results from earlier years. Most notably, relative to the 2013 report, “money order” was added to the list of alternative finan- cial services used by underbanked households, and “payroll card” was removed. 6 Here, the figures for mobile banking in the 2011 survey are expressed as percentages of mobile phone users with bank accounts. These figures differ slightly from those published in the 2011 report, which were calculated as a percent of all mobile phone users. Similarly, other estimates in the text may differ from the figures presented in appendix 3 or from estimates pub- lished in earlier reports because a subsample of the respondents was used for the calculation. March 2015 5 not know if their bank or credit union offers mobile banking, which may be consistent with a lack of interest in these services among a portion of the population. That said, the share who do not know if mobile banking is available from their bank decreased from 28 percent in the 2013 survey, and the share that said their bank does not offer the service decreased as well—from 6 percent in 2013 to 4 per- cent in 2014. These results suggest an increase in availability and consumer awareness of mobile bank- ing services. Concerns about the security of mobile banking and mobile payment technologies are also frequently cited as reasons why consumers chose not to adopt these technologies. Consumers appear to be more cognizant of the need to protect the personal infor- mation stored on their phones, as they are increas- ingly using passwords to protect their smartphones. The share of smartphone owners who password pro- tect their phone increased to 69 percent in 2014, from 61 percent in 2013 and 54 percent in 2012.7 7 At least one major mobile phone operating system has changed its default settings to require users to set a password unless they opt out. This change in default setting could also increase the incidence of password protection. Figure 1. Usage of mobile banking and mobile payments by mobile phone type, 2011–14 Smartphone All mobile phones Smartphone All mobile phones Mobile banking Mobile payments 2011 2012 2013 2014 22% 29% 33% 39% 43% 50% 51% 52% 12% 15% 17% 22% 23% 24% 24% 28% Note: For mobile banking, the results are derived from respondents with bank accounts and mobile phones and all respondents with bank accounts and smartphones, respec- tively. For mobile payments, the results are derived from respondents with mobile phones and all respondents with smartphones, respectively. 6 Consumers and Mobile Financial Services 2015 Box 1. Use of Mobile Financial Services among Rural Respondents Mobile financial services may offer convenience or access in different ways to different subpopulations. One group that could especially benefit from mobile services is rural residents. Because rural residents may have to travel longer distances to visit financial institutions compared to urban consumers, mobile banking services may be particularly convenient. However, there are also countervailing factors that could make usage less likely. To learn more, the 2014 survey included an oversample of residents in rural areas. Thirty-three percent of residents in non-metropolitan (non-metro) areas reported using mobile banking services in the prior 12 months, compared with 39 percent of respondents in metropolitan (metro) areas. Similarly, a smaller percentage (17 percent) of non-metro respondents reported using mobile payments in the prior 12 months relative to respon- dents in metro areas (23 percent). This commonly used metropolitan/non-metropolitan distinction, however, has some limitations as a way to identify rural areas. In particular, non-metro areas include some places that are connected to urban- ized areas and have a diversity of access to finan- cial services. To provide an alternate measure of usage of mobile financial services for rural respon- dents, the survey results were also analyzed using a more narrow definition, measuring as “remote areas” only the respondents who live in small towns and rural areas with low commuting flows to urban places.1 Fairly similar patterns persisted using this definition: 32 percent used mobile banking in remote rural areas, compared to 39 percent for everyone else, and 20 percent of those from remote rural areas used mobile payments, compared to 22 per- cent of the rest of respondents (figure A). If, by either measure, rural residents appear to use mobile financial services at least somewhat less than those in non-rural areas, why would this be? Results from this survey point to some combination of differing technology, access to broadband ser- vices, services offered by financial institutions, and consumer awareness of those services. Non-metro residents are slightly less likely than metro residents—84 versus 88 percent—to own a mobile phone, but considerably less likely to own a smartphone—54 versus 63 percent. They are also less likely to report near-constant access. When asked to characterize their Internet access on a mobile phone through wifi or a wireless network, 57 percent of non-metro respondents described it as “nearly always available,” compared to 64 percent of respondents in metro areas (table A).2 This relative lack of smartphone ownership and constant mobile Internet access may make use of certain mobile ser- vices less attractive or perhaps not possible. When it comes to mobile banking, the supply of ser- vices also appears to differ. When asked whether mobile banking was offered by their financial institu- tion, 65 percent of respondents in non-metro areas said yes, compared to 75 percent in metro areas (figure B). A higher share (30 percent) of respon- dents in non-metro areas also reported not knowing if mobile banking was offered by their financial insti- tution, compared to 21 percent in urban areas. Whether this represents a lack of interest by rural consumers or simply a lack of awareness, it would seem that fewer rural residents have access to (continued on next page) 1 This alternate measure uses Rural-Urban Commuting Area (RUCA) codes, developed by the Department of Agriculture. The “Remote areas” correspond to small towns (less than 2,500 people) and rural areas with low urban commuting in RUCA code categories 7.0, 7.2, 8.0, 8.2, 9.0, 10.0, 10.2, and 10.3. (See www.ers.usda.gov/data-products/rural-urban-commuting- area-codes.aspx.) The companion category “Not remote” includes most portions of metropolitan and micropolitan areas, as well as small towns and rural areas that have a substantial secondary commuting flow (30–50 percent) to urban areas. This narrower definition of rural areas is very similar to a definition developed by the WWAMI Rural Health Research Center (http:// depts.washington.edu/uwruca/ruca-maps.php). See appendix 1 for additional information on the sampling methods used for the primary sample and rural oversample included in this analysis. 2 Nearly 1.3 million people in rural areas lacked access to mobile broadband in 2012, and rural residents generally face greater challenges with mobile coverage than urban residents. See https ://apps.fcc.gov/edocs_public/attachmatch/FCC-13-34A1.pdf. Figure A. Mobile banking and mobile payments, by geography Not remote Remote areas Metro Non-metro 33% 23% 32% 20% 39% 22% 17% 39% Used mobile banking in past 12 months Used mobile payments in past 12 months March 2015 7 Box 1. Use of Mobile Financial Services among Rural Respondents–continued mobile banking or are aware of available mobile banking services relative to residents of more urban areas. Demographic differences between residents of metro and non-metro areas also may be a factor in any observed differences in the use of technology or the adoption of mobile financial services across areas.3 In addition, preferences regarding technol- ogy use may be correlated with residential location apart from these other demographic factors. Overall, respondents from non-metro areas are as likely to be “banked” as metro area respondents—86 versus 87 percent, respectively—but somewhat less likely to use either mobile banking services or mobile payments. The lower usages may be associ- ated with lower availability of or consumers’ knowl- edge about mobile banking services by their finan- cial institution, lower levels of smartphone adoption, and less continuous mobile broadband access. They could also be attributed to other factors, including differences between urban and rural residents in preferences, demographic characteristics, or demand for these services. These results indicate that the promise of mobile technology as a way to bridge some challenges of living in rural areas may have not yet been fully realized. 3 For example, estimates from the 2013 American Community Survey show that the median age of the population in non-metro areas is higher than in metro areas. Mobile banking use is lower among older consumers, as noted in this report. Table A. Internet access on mobile phone through wifi or a wireless network (3G, 4G, LTE) is{ Almost always available Not always available, but is available at convenient locations Available only at locations that require extra effort or planning to get to Not available I do not need access to the Internet on my mobile phone Non-metro 57% 12% 2% 10% 20% Metro 64% 8% 1% 7% 18% Remote areas 59% 10% 1% 10% 19% Not remote 63% 9% 1% 8% 18% Note: Here and elsewhere in this report, totals may not add to 100 percent due to rounding and question non-response. Figure B. Bank or credit union offers mobile banking, by geography Not remote Remote areas Metro Non-metro 65% 5% 30% 75% 4% 21% 62% 6% 33% 74% 4% 21% Yes No Don’t know 8 Consumers and Mobile Financial Services 2015 Accessing Financial Services Survey respondents were given a set of screening questions that asked if they had access to a bank account, the Internet, and a mobile phone. They were further asked about the various ways in which they access their financial accounts. Of the 87 percent of American consumers who have a checking, savings, or money market account, the majority use some form of technology to interact with their financial institution. As shown in figure 2, the most common way of interacting with a financial institution remains in-person at a branch, with 87 percent of consumers who have a bank account reporting that they had vis- ited a branch and spoken with a teller in the 12 months prior to the survey. The second-most com- mon means of access in the previous 12 months was using an automated teller machine (ATM) at 75 per- cent, followed by online banking at 74 percent.8 One- third of all consumers with bank accounts used tele- phone banking, while 35 percent used mobile bank- ing, up from 30 percent the previous year.9 (For 8 The definition of online banking changed slightly between the 2012 and 2013 surveys. For the 2011 and 2012 surveys the defi- nition was “Online banking involves checking your account bal- ance and recent transactions, transferring money, paying bills, or conducting other related transactions with your bank or credit card company using the Internet.” For the 2013 and 2014 surveys, the definition was “Online banking involves checking your account balance and recent transactions, transferring money, paying bills, or conducting other related transactions with your bank or credit union using the Internet.” 9 The relative prevalence of channel usage in the Board’s Mobile Survey is similar to results from the 2013 FDIC Survey of Unbanked and Underbanked Households. Of the households with bank accounts that reported accessing their accounts in the Figure 2. Usage of different means of accessing banking services, 2011–14 Mobile banking2 Online banking1 Telephone banking ATM Bank branch 85% 82% 87% 74% 75% 75% 2011 2012 2013 2014 33% 34% 33% 65% 67% 72% 74% 20% 26% 30% 35% 33% Note: Percentages are of all respondents with a checking, savings, or money market account for each banking channel, regardless of mobile phone ownership or access to the Internet. Questions about usage of bank branches and ATMs were not included on the 2011 survey. 1. For online banking, respondents who reported that they did not have regular access to the Internet other than that provided by GfK were not asked the online banking ques- tion in the 2011–2013 surveys. In the 2014 survey, all respondents with bank accounts were asked the question about online banking, which raised the measure for 2014 to 74 percent—2 percentage points higher than if these respondents had been excluded as in prior years. 2. For mobile banking, the percentages here may differ from the incidence rates elsewhere in this report because the latter are computed for those with mobile phones and bank accounts. 9 additional information on the use of various banking channels by mobile banking users, see box 2.) Mobile Banking The Federal Reserve survey defines mobile banking as “using a mobile phone to access your bank or credit union account. This can be done either by accessing your bank or credit union’s web page through the web browser on your mobile phone, via text messaging, or by using an app downloaded to your mobile phone.”10 Adoption Rates The adoption of mobile banking has continued to increase in the past year. When asked about usage in the previous 12 months, 39 percent of mobile phone users with a bank account reported that they used mobile banking, a proportion that has been steadily climbing (figure 1). Mobile banking among smart- phone users with a bank account is substantially higher at 52 percent, up modestly from earlier sur- veys. The higher incidence of mobile banking adop- tion among smartphone users suggests that as smart- phone adoption continues to increase, mobile bank- ing usage may also increase. A significant fraction of mobile banking users have only recently adopted the technology. Although the majority of mobile banking users reported that they started using it more than one year ago, 15 percent reported that they adopted mobile banking in the last six months, and 12 percent reported that they adopted mobile banking between six and twelve months ago. Among those consumers with mobile phones who do not currently use mobile banking, 11 percent reported that they will “probably” or “definitely” use mobile banking in the following 12 months. Although previous surveys suggest that the reported adoption intentions of the respondents do not per- fectly reflect subsequent behavior, there is an associa- tion between the planned use of mobile banking and subsequent adoption. Using the panel of respondents to both the 2013 and 2014 Board surveys, it is pos- sible to compare the reported mobile banking adop- tion intention over the next 12 months from the 2013 survey to the reported use of mobile banking in the 2014 survey. Of those consumers who reported in 2013 that they would “definitely” or “probably” adopt mobile banking in the following 12 months, only 28 percent had, in fact, adopted mobile banking one year later. Nonetheless, this is a higher propor- tion than those who said they did not expect their activity to change. Among those who indicated that they “probably will not” and “definitely will not” adopt mobile banking, 15 percent and 2 percent, respectively, had adopted mobile banking in 2014. In total, 11 percent of those who reported that they were not mobile banking users in 2013 reported being mobile banking users in 2014.11 However, 14 percent of those who were mobile banking users in 2013 reported that they had not used mobile bank- ing in 2014.12 Among panel respondents overall, mobile banking usage increased from 33 percent of mobile phone users with bank accounts in 2013 to 35 percent in 2014. For the group of respondents in the 2013 survey who believed they “definitely” or “probably” would use mobile banking in the coming year, the most notable difference between those who actually did adopt mobile banking by the 2014 survey and those who did not was that the adopters were more likely to own a smartphone. Of this likely-to-adopt group, 42 percent with smartphones in 2014 used mobile banking, while 3 percent with feature phones used mobile banking. In both the panel and cross- sectional data, smartphone users were more likely to engage in mobile banking than non-smartphone users. In every year of the survey, older consumers have consistently been less likely to use mobile banking previous 12 months, 79 percent used a bank teller; 70 percent used an ATM/kiosk; 55 percent used online banking; 26 percent used telephone banking; and 23 percent used mobile banking. Comparing these FDIC figures to the results from the 2013 Mobile Survey, the relative ranking of the channels is the same across the two surveys, but the incidence of use is higher in the Mobile Survey for all channels. The incidence of online banking and of households with Internet access are notably higher in the 2013 Mobile Survey than in the FDIC survey. This may be due to differences in the survey methodology. The FDIC survey is conducted by phone and in person. The Mobile Survey is con- ducted via an online panel. 10 The definition of mobile banking in the 2011 and 2012 surveys differed slightly from the definition above. In the earlier surveys, mobile banking was defined as using “a mobile phone to access your bank account, credit card account, or other financial account. This can be done either by accessing your bank’s web page through the web browser on your mobile phone, via text messaging, or by using an application downloaded to your mobile phone.” 11 This group represents 6 percent of panel respondents who were mobile phone users in both years. 12 This group represents 4 percent of panel respondents who were mobile phone users in both years. 10 Consumers and Mobile Financial Services 2015 than have younger consumers (table 3). For those with a mobile phone and a bank account, results from the 2014 survey indicate that mobile banking use is 60 percent for those in the 18-to-29 age range and 54 percent for those in the 30-to-44 age group. By comparison, only 13 percent of individuals ages 60 or older reported having used mobile banking. Usage has generally increased from year to year for all age groups. Consistent with the data from previous surveys, minorities continue to be more likely to use mobile Box 2. Channel Use among Mobile Banking Users Mobile banking can provide convenient access to some banking services. However, consumers may still need or want to use other banking channels. For example, a visit to an automated teller machine (ATM) or branch may be necessary to withdraw cash, and visiting a branch or talking with a cus- tomer service representative may be preferred ways of resolving a problem. Respondents to the survey were asked about their use of five banking channels (branch, ATM, telephone, online banking, and mobile banking), and the answers provide a fuller picture of how mobile banking users interact with their bank or credit union. Users of mobile banking services generally access them frequently, but not to the exclusion of other kinds of bank services. In general, mobile banking users reported using multiple channels to conduct banking business: 82 percent reported using four or five of these channels; only 2 percent used one or two channels. In the prior 12 months, 95 percent of mobile banking users also used online banking, 92 percent used an ATM, 85 percent visited a branch and spoke with a teller, and 36 percent used telephone banking (table A). Most mobile banking users (90 percent) reported accessing mobile banking in the preceding month, and the median number of uses for those who used it in that month was five. Similarly, among mobile banking users who accessed online banking, 97 percent used online banking in the prior month, and the median number of uses of online banking was six. The FDIC has noted that many banks have required their customers to be enrolled in online banking before they can enroll in mobile banking, and some mobile banking features, such as setting up payees for bill payment and enrolling in alerts, may require an online setup.1 These types of bank policies would contribute to the high level of online banking use we observed among mobile banking users. For mobile banking users who accessed ATMs and bank branches, the likelihood of having used those channels in the past month was lower (85 and 72 percent, respectively), and the median number of uses was lower as well (three for ATM and two for branch). These responses suggest that many mobile banking users use online and mobile banking quite consistently for their banking needs, and access other bank channels on a periodic basis. In a separate question, respondents were asked to rank the three main ways they interact with their bank or credit union. Twenty-one percent of mobile banking users ranked the mobile channel first—a lower share than those who chose online banking (35 percent) or ATM (30 percent), but a higher share than for the branch (13 percent) or telephone banking (1 percent).2 Tallying the share of mobile banking users who ranked each of the channels in their top three, the ATM channel had the largest share (80 percent), followed by online banking (73 percent), mobile banking (60 percent), branch (56 percent), and telephone banking (17 percent). Taken together, these estimates indicate that while mobile banking users are utilizing technological plat- forms at a high rate and on a consistent basis, they have also maintained connections to their banks through the more traditional branch and ATM channels. 1 For the full FDIC white paper “Assessing the Economic Inclusion Potential of Mobile Financial Services,” see www.fdic.gov/ consumers/community/mobile/Mobile-Financial-Services.pdf. 2 The 2013 FDIC National Survey of Unbanked and Underbanked Households reported the primary banking method for house- holds who used mobile banking and accessed their account in the last 12 months as follows: online banking (50 percent), mobile banking (25 percent), ATM/Kiosk (15 percent), bank teller (7 percent), and telephone banking (2 percent). For the full report on the survey, see www.economicinclusion.gov/surveys/ 2013household/documents/2013_FDIC_Unbanked_HH_Survey_ Report.pdf. Table A. Channel access among mobile banking users Percent, except as noted MB users who used channel in the past 12 months MB users who used channel in the past month1 Median frequency of channel use past month2 Mobile banking 100 90 5 Online banking 95 97 6 ATM 92 85 3 Branch/teller 85 72 2 Telephone banking 36 68 2 1 Of those who used channel in the past 12 months. 2 Of those who used channel in the past month. March 2015 11 banking than non-Hispanic whites. In particular, Hispanic mobile phone users with bank accounts show a higher rate of use of mobile banking (53 per- cent) relative to mobile phone users with bank accounts overall (39 percent) (table 4). Among those with a mobile phone and bank account, mobile banking use is more common for those with higher levels of education. Usage for those with a college degree or some college (44 percent) is greater than for those with a high school degree or less (29 percent). In addition, mobile banking usage for those mobile phone users with bank accounts with household incomes of $40,000 and above (41 percent) is greater than for those with incomes below $40,000 (34 percent). Common Mobile Banking Activities Among those who reported using mobile banking in 2014, the most common mobile banking activity was checking financial account balances or transaction inquiries, with 94 percent of mobile banking users hav- ing performed this function in the 12 months prior to the survey (figure 3). This was followed by transfer- ring money between accounts, performed by 61 per- cent of users. In addition, 57 percent of mobile bank- ing users received an alert from their financial institu- tion through a text message, push notification, or e-mail. Depositing a check to an account electroni- cally using a mobile phone camera (known as remote deposit capture) and making an online bill payment from a bank account using a mobile phone were the next most common activities (done by 51 percent and 48 percent of mobile banking users, respectively). Mobile banking users appear to be using mobile applications to conduct their banking transactions, as 71 percent of mobile banking users have installed their bank’s application on their phones. Among all mobile banking users, the frequency of mobile banking use has increased slightly over the past year. The median reported usage increased from four times per month in 2013 to five times per month Table 3. Use of mobile banking in past 12 months by age

Mobile phones have increasingly become tools thatconsumers use for banking, payments, budgeting,and shopping. Given the rapid pace of developmentsin the area of mobile finance, the Federal ReserveBoard began conducting annual surveys of consumers’use of mobile financial services in 2011. The surveyexamines trends in the adoption and use ofmobile banking, payments, and shopping behaviorand how the emergence of mobile financial servicesaffects consumers’ interaction with financialinstitutions. 

This report presents findings from the 2014 survey,fielded in December, which focused on consumers’use of mobile technology to access financial servicesand make financial decisions. Where applicable, thefindings from the current survey are also comparedwith the findings from the 2011, 2012, and 2013 surveys.Topics include consumer access to bank servicesusing mobile phones (“mobile banking”), consumerpayment for goods and services using mobile phones(“mobile payments”), and consumer shopping decisionsfacilitated by use of mobile phones. Detailsabout the survey, its methodology, and limitationscan be found in the body of the report and in a methodologicalappendix.

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