Roughly one of every three American adults picked up a cell phone to conduct banking business in 2013.
That statistic has risen significantly since 2011, when 18 percent of cell phone owners in the United States reported that they had used their phones to check an account balance or transact business with a bank, according to the Pew Research Center.
Mobile banking has swiftly taken hold as an essential service for banks large and small that want to remain competitive, and Kentucky banking institutions are no exception. Executives at Kentucky banks are reporting adoption rates similar to the national statistics for their mobile banking options, and they expect the demand for these and even more transformative technologies will only grow.
“Customers are looking for convenience,” said Larry McClanahan, director of digital delivery at Fifth Third Bank. “They are looking for ways to do things on their timelines, according to their schedules. Mobile offers that.”
By using today’s mobile banking apps, customers can quickly check their account balances or recent transaction history and transfer money between accounts. Some banks have enabled customers to check their balance by text message or to receive an automatic alert when a balance drops below a certain threshold. A growing number of banks also allow customers to pay their bills with their smartphones and to make mobile deposits by snapping a picture of a check and transmitting it to the bank.
More than 25 percent of Fifth Third Bank’s customers currently use mobile banking on a consistent basis, McClanahan said, and the annual growth in mobile banking usage at Fifth Third over the past year has been about 40 percent.
At Your Community Bank, which offers apps for both iPhone and Android users and is testing mobile deposit, the number of customers who activated their mobile banking settings on their smartphones increased 23 percent last year, said Todd Frossard, the bank’s executive vice president of business services.
“As it relates to banking, the mobile side of things is exploding,” Frossard said. “You try to be as convenient as you can for your customers, and there’s just no better convenience than the mobile phone.”
In the fast-moving world of mobile technology, the popularity of mobile banking has spurred growing investment by banks in new applications and continual updates and improvements. Fifth Third rolled out an improved user interface for its Apple-based mobile app in April, and it expects to release an updated version for Android devices in the coming weeks. As clients become more reliant on their smartphones, McClanahan said, they are looking for better options that make their banking experience more convenient, secure and easy.
“We’ve seen huge increases month-over-month in the number of people using [mobile banking],” said Michael Sadofsky, senior vice president and chief marketing officer for Republic Bank.
And customers are not simply converting from one method of banking to another, Sadofsky said. Today’s tech-savvy clients are using more than one method for their transactions and switching flexibly between them.
“Almost 30 percent of our mobile users use multiple devices,” Sadofsky said. “They may do something through text, they may use an app — it varies. So basically it’s whatever’s convenient for the client at that moment. It gives them the power.”
Sadofsky said Republic Bank has seen increased adoption of mobile banking by customers of all ages, but younger users have been particularly comfortable in adapting to the new technology.
“The younger generations now, whether it’s the Millennials or Gen X... that’s the way they’ve chosen to do a lot of their interaction,” Sadofsky said.
The need to keep abreast of mobile banking technology is no less important for smaller community banks, said Stacy Mills, vice president and deposit officer at Bank of the Bluegrass. While smaller banks may not have the resources to break new ground in mobile banking, their customers have quickly come to expect the same services that national banks provide, and community banks have come to rely heavily on technology partners to keep them up to speed.
Bank of the Bluegrass is currently developing a mobile application that it expects to release by the end of the year, Mills said. In the meantime, customers can access the bank’s e-banking services on their mobile devices to view balances and transfer funds between accounts. The new app will add bill payment options and possibly mobile deposit capabilities, Mills said.
“In the past year and a half, we have really made technology a focus,” Mills said. “We are never going to be a technology innovator, because we are a small community bank, but we do want to be competitive and offer the same kind of products and services that the bigger banks offer.”
Bank of Lexington was a relatively early adopter of mobile banking, rolling out services as soon as they became available through the bank’s core processor in 2010, said Ashley Corbett, vice president, deposit operations. At the time, Bank of Lexington customers weren’t clamoring for the service, but the bank saw the need to stay on top of the technology, Corbett said. Since then, the bank, which offers a smartphone app and text-based services, has seen consistently strong growth in mobile banking usage, according to Corbett.
For many community banks in particular, balancing an emphasis on personalized service with the new mobile technology can be challenging, Corbett said. Finding the right balance is not about exchanging one service for another, she said, but rather meeting customers whenever and wherever they choose.
“We try to promote the technology because we know that is something that is in demand from the customers, but at the same time, we try to promote the fact that we are here if you need us,” Corbett said. “If they can’t get online or if they need that personalized, one-on-one, face-to-face communication, we definitely want customers to know we are still here for them.”
Experts in the banking industry expect the advances to continue and, likely, accelerate in the next decade. Over the next five to 10 years, Your Community Bank’s Frossard expects that the technology will evolve beyond the type of online and mobile access to traditional banking services that are provided today, into the new frontier of the mobile wallet, which would allow smartphones to replace the need for cash, debit and credit cards in making retail purchases. Many in the banking industry see the change as inevitable. The biggest obstacle isn’t necessarily the technology, Frossard said, but the integration of the infrastructure on the retail side of the equation.
“It would be a pretty enormous change,” Frossard said, “but what has happened over the last five years has been pretty enormous.”
In the meantime, the development of new and better mobile solutions will continue, changing both the industry and the way consumers do business.
“It’s constantly changing, and there’s constantly new products on the landscape and new ways to process payments,” said Bank of the Bluegrass’ Mills. “I think there will be more adoption by customers. ... I think you’ll see more electronic transactions taking place, with fewer people carrying cash and fewer people writing checks. And I think you’ll see fewer branch locations in the future.”