The growing sophistication in use of mobile technologies among consumers makes the one-size-fits-all approach to mobile banking strategies redundant. As a result, retail banks (as well as other consumer-facing businesses) need to intelligently segment customers into groups — based on needs, preferences and maturity — to customize offerings that maximize investments and deliver better customer experience.
To achieve this, we surveyed approximately 2,100 banking consumers, roughly 700 of whom are mobile users, across age, income, gender, ethnicity, education and employment backgrounds.
Understanding Consumer Segmentation
Our study identified five consumer segments (see Figure 1) based on their use of mobile devices — both smartphones and tablets.
Response base: 2143
Note: The size of the bubble denotes the number of respondents in the respective segments. Source: Cognizant Research Center analysis
Understanding Mobile Banking Consumers
Average mobile banking adoption level across all segments was a meager 33%. The highest adoption is in the 25-34 year age bracket and at annual income levels above $75,000. Ardent Affluents with above-average income levels lead the way with an adoption level of 74%.
Not surprisingly, mobile banking services are accessed predominantly through mobile phones and tablets; 24% of respondents use both. Consumers tend to prefer smartphone apps over mobile banking Web sites; only 12% of consumers prefer text banking — typically an older segment.
Core Mobile Banking Feature Usage
The top features sought by consumers pivot around information search and payments: account balances/loan balances tracking, transaction history and transferring funds between existing accounts.
Beyond the basics, while remote deposit capture (RDC) and mobile chat customer support are the features most desired by Aspiring Bloomers and Ardent Affluents, real-time alerts on unusual account activity is the feature most desired by Liberal Users and Cautious Seniors — reinforcing that security is a critical concern to these segments.
Enhanced Security: Key to Mobile Banking Success
Among mobile banking consumers, 70% of respondents believe security is a major concern. Furthermore, 68% of respondents indicated they believe biometric security features are important, while 35% noted that they are willing to pay for such a feature.
Surveyed consumer across all income segments desire to receive mobile alerts about suspicious transactions. A notification via text alerts is the most preferred method, with 53% of consumers choosing this method.
Mobile Payments Progression
Among consumers who use mobile payments, 44% of those surveyed do so at least once a week. Paying bills and transferring funds to another account are the two most important transaction types.
Tablet Banking: A Distinct Mobile Experience
Approximately 40% of survey respondents want to use tablets compared with smartphones. While smartphones — that are generally always with consumers — provide immediacy of information and response, tablets — which are rapidly replacing PCs/laptops for in-home computing — provide a form factor for more detailed sharing of information, often less transaction-driven. Moreover, 60% of tablet owners prefer to use their tablet for mobile banking. The preferences are more pronounced among affluent consumers (see Figures 2 and 3).
Response base: 706
Response base: 367
Feature-Driven Innovations and Offers Open Digital Wallet Opportunities
Our research suggests that consumers look for applications that provide easy access, a streamlined user interface, superior security features and an optimized experience accessible across multiple channels. By offering these, banks can increase adoption of mobile services and also influence perception of brand strength/ security among consumers.
Other advanced features, such as personal financial management tools and customer support features, including interactive chat (via voice and/or video), can further boost adoption of mobile banking. The inclination to use personal financial management tools is significant among young mobile banking consumers, including Aspiring Bloomers and Ardent Affluents (see Figure 4).
Response base: 706
The Inflection Point of Mobile Banking and Digital Wallet
Roughly 20% of consumers surveyed said they are looking for NFC or other advanced mobile POS payment interactions using a smartphone as the actual payment mechanism as part of a retail bank-offered digital wallet. Not surprisingly, younger consumers appear to be more interested in innovative approaches to payments than older consumers. A similar number of respondents show interest in using mobile photo bill pay.
Marketing Additional Products
Consumers with income levels above $50,000 have a relatively stronger desire to purchase insurance/retirement products and mutual funds/bonds. There is a strong desire to purchase identity-theft protection products and gift cards.
This study shows that requirements and priorities of each segment varies significantly, offering banks useful insights for developing or expanding mobile service adoption and profitability. Based on these insights, we recommend that retail banks consider the following approaches to increase their mobile banking wallet share:
Remote check deposit and real-time alerts should be given prime importance.
Security is key: Device advances in biometrics and implementing sophisticated alerting capabilities, such as interactive and actionable alert management, can increase consumer engagement.
Personalization of features should be allowed: rearranging of tabs and functions within the mobile application, altering date/time format and themes (color, etc.).
Digital wallet offers great scope: Discounts and offers from retailer partners should be made available on mobile devices.
Tablet banking does not only present an opportunity to provide detailed information, it also ties to cross-selling, market differentiation and relationship-building.
Customer support features such as online chat/voice/video should be made available to mobile devices.
Insights on spending patterns should be provided to consumers, to better target offers, drive revenue and increase customer satisfaction.
For further insights from the study, details of findings and in-depth discussion, please read our whitepaper Segment-based Strategies for Mobile Banking. Also visit Cognizant Banking and Financial Services practice and Cognizant's Mobility practice for more information.