Consumers Are Ready for Mobile
We found overall interest mobile-commerce features is high, with the majority of
consumers indicating they are ready to start using these services now or in the
Banks may still have some issues to work out with wireless operators, but
consumers are all set to start using their handsets for banking functions, with
mobile payments likely to follow, says Chris Allen.
Chris Allen is director at Dove Consulting, a division of Hitachi Consulting, and
manages its payments strategy team within Hitachi Consulting’s Financial
Services Industry practice. Reach him at firstname.lastname@example.org. Chris
D’Ambrosio, a senior consultant at Dove, also contributed to this article.
For many of us, our mobile devices (phones, PDAs, Blackberrys, etc.) are more than a way of
communicating with friends and family. They have become a central part of our daily routines.
Our devices serve as a way to stay connected to the office through e-mail, surf the Web, send
text messages, and even play games on the subway. In fact, if you walk out of your house and
realize you forgot your mobile phone, chances are very high you will go back and get it. I know I
Given the prominent role our mobile devices play in our lives, and our level of comfort with
them for numerous applications, it makes sense that U.S. consumers are ready to add to the
functionality available on their phones. Recent consumer research we conducted at Dove
Consulting indicates consumers are interested in using their devices for mobile commerce,
particularly mobile banking and mobile payments at the point of sale (POS).
We conducted consumer focus groups in a number of cities, and the results were both surprising
and not surprising at the same time. We found overall interest mobile-commerce features is high,
with the majority of consumers indicating they are ready to start using these services now or in
the near future. While this was not surprising, we were surprised by how sophisticated the
mainstream mobile-device user has become. Most were very comfortable in speaking about their
experiences, and many are taking advantage of the technology they are holding in their hands.
When asked which mobile commerce applications they are most excited to use, nearly two-thirds
of research participants chose mobile banking, while 30% chose mobile payments at the POS.
For both of these mobile applications, added convenience is the primary factor driving consumer
interest. The ability to conduct banking transactions from anywhere, check balances in real time
before making purchases, and pay a bill at the last minute while on vacation are just a few of the
potential benefits that mobile banking offers consumers. The benefits of mobile payments at the
POS are similar, with the prospect of not having to carry a wallet and quicker checkout times
cited as the major benefits. For many consumers, mobile devices are much more accessible than
wallets and purses, and the prospect of simply holding a phone up to a checkout reader instead of
digging through a purse to find a specific payment card or cash is very appealing.
Also likely contributing to the market interest in mobile banking is the growing prevalence and
availability of mobile-banking programs. Some of the largest financial institutions in the U.S.,
including Bank of America, Citibank, and Wachovia, have either piloted or launched mobile-
banking applications, and many other institutions have joined them or are making plans to follow
suit. As banks continue to advertise mobile banking and educate their account holders as to the
benefits and features of these applications, it is likely consumer confidence and interest in this
function will continue to grow—in fact, industry projections estimate the number of mobile-
banking users will be between 50 million and 100 million by 2016.
While the future of conducting banking and commerce using a mobile device is bright,
consumers do have some concerns about this new technology. More than half of the consumers
we spoke to raised serious concerns about the security of their personal information. The
consumers were very aware of recent high-profile data breaches (like the one at TJX) and worry
that their banking or payment information can be stolen “right out of the air” as one participant
Others were concerned about what may happen if they were to lose their mobile device. Some
said that they thought they are more likely to lose their mobile device than their wallet and
wondered how easy it would be to extract their personal information from the device.
Looking forward, it will be interesting to see what kind of strategies banks employ regarding
mobile banking. From a functionality standpoint, mobile banking enables bank customers to
conduct most of the same transactions as are available via the Internet, including balance and
transaction inquiries, bill payment, funds transfer between accounts, branch and ATM locations,
and click-to-dial customer service. Given this functionality overlap, some financial institutions
could view mobile banking as a way to extend Internet banking functionality to current online-
banking users and increase convenience for them.
On the other hand, mobile banking could also be a way for banks to penetrate a new segment of
the banking population that does not currently use Internet banking. Since many people have
mobile devices but not personal computers, mobile banking would be a way of getting this
segment of account holders to use automated banking services. It could substantially lower
customer-service costs and help increase customer loyalty.
Elephant in the Room
Unlike with mobile banking, there are few prominent examples of mobile payments at the POS
for consumers to refer to and this lack of familiarity with the concept and technology is a likely
factor making this functionality less appealing than mobile banking with consumers. Although
mobile-payments pilots exist on a local level, there has been no large-scale rollout, and there are
a number of barriers that are likely to keep this from happening in the short term.
In addition to a lack of infrastructure currently in place to enable the spread of mobile payments
at the POS, questions remain around how financial institutions, wireless carriers, and card
associations will partner in order to bring this functionality to consumers. The consumers we
spoke to wondered who they would call if something goes wrong with this new way to pay.
Would they call their bank or their mobile provider? This is the elephant in the room when it
comes to how the mobile-payments ecosystem will evolve. Most in the industry claim that the
mobile carriers will not want to enter the payments business. I remain skeptical and think that
mobile carriers will enter the payments arena. Why shouldn’t they?
However, assuming these separate players can find a way of working together to enable this
functionality and more applications are developed that allow consumers to pay with their mobile
devices at the POS, consumer interest in this functionality will grow and we will see it move into
While the future looks bright for mobile commerce, a word of caution: Consumers are ready for
mobile commerce, but it will still take time for them to fully adopt these features. As with any
new technology, adoption is likely to begin with a smaller group of tech-savvy consumers who
feel comfortable with the technology and will help to demonstrate the benefits of these functions
to other consumers. The majority of consumers will only start using these functions after they
have become more established and their concerns have been adequately addressed. This was very
clear with the consumers we spoke to.
To help encourage adoption, banks and other mobile-commerce providers will have to actively
educate consumers about the security measures in place. However, there is little doubt that this
barrier will be overcome. Security concerns often accompany the rollout of new payment
technologies. We all remember consumers’ concern regarding the use of the Internet to make
purchases in the earlier part of this decade. Now, Amazon has revenues of nearly $15 billion and
consumers of all ages use the Internet to make purchases each day.
Just as consumers became comfortable using the Internet for e-commerce, in due time they will
eagerly move into the world of mobile commerce.