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What?s holding smartphone owners back from banking apps?

By Stephanie Knopf

Banks are not sitting idly on the sidelines even as smartphone applications attract increasing buzz.

According to market researcher ABI Research, the number of U.S. banks offering mobile banking will jump from 245 in 2008 to 614 this year.

The supply of mobile banking applications is increasing rapidly, but what does demand look like? Do smartphone owners want to manage their finances from their phones?

As an avid iPhone user, I frequently surf the new applications in search of anything new or exciting. I never downloaded my bank's free mobile banking application because I never saw the need to check my account balance or transfer funds while waiting in line for coffee. Apparently, I am not the only one.

In our quarterly Smartphone Intelligence survey, Compete asked smartphone owners how they are using their mobile devices to manage finances.

Of the people surveyed, 82 percent do not currently use their mobile device to manage their finances.

We also noticed that 53 percent of smartphone owners said they saw no need to manage their finances from a mobile device, while about one-third said they did not trust mobile banking security.

Other reasons, such as concern about the cost of mobile banking, not knowing the service exists, slow Internet connection on their phone, and not having Internet on their phone, were less significant for users.

So banks are confronted with two big challenges when it comes to mobile banking: convincing their customers of why they need to bank on their phones as well as building a sense of trust in mobile banking security.

Changing both of these things may just take some time, as it did with online banking, to get people used the idea and integrate the service into their regular routines.
But it will likely also take some marketing on the part of the banks to increase trust in security for mobile transactions and to help customers find ways to try and use the service on a regular basis.

The other day, I downloaded the Bank of America application to test it out. The application features a simple and user-friendly interface.

However, I rarely find myself in a situation where I need to perform a financial transaction, or even find a nearby ATM, from my phone. I might be one of those people the banks need to convince.

Stephanie Knopf is analyst at TNS Compete, Boston. Reach her at
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