Security Concerns Inhibit Mobile Banking Adoption Among Older Consumers
While developing countries such as Kenya have made mobile banking an indispensable part of the country’s economy, the U.S. still lags in its adoption. Based on data from Comscore MobiLens® Plus, 65% of the mobile population (i.e. those who own either a mobile phone or tablet) does not use their mobile device for banking activities.
When asked their reasons for not using mobile banking, 42% indicated that they preferred using a desktop computer for these activities, while 36% cited security concerns as a deterrent. As some might expect, the desktop preference and mobile security concerns were even more significant of factors among the 55+ age group, who were six percentage points more likely than the total mobile population to cite these issues.
It’s worth noting that banks derive significant financial benefit from mobile banking by reducing customer traffic in branches and call centers, improving customer retention, and generating incremental cross-selling opportunities. Analysts from Forrester have actually quantified the average ROI on mobile banking services at about 16%. The good news is that the mobile banking adoption trend should continue to grow organically as the number of mobile-only Internet users will become more prevalent over time. But if banks want to accelerate this growth and improve their ROI, they should start thinking about the demographic segments with low incidence of mobile banking (particularly the Age 55+ population) and how to make them more comfortable accessing banking services on their mobile devices.
One way for banks to do this could be adding another layer of security over the regular password authentication mechanism. Mobile devices are increasingly coming with security features such as fingerprint scanners, and some banks have already explored this route. Once again using data from MobiLens Plus, we see that the Age 55+ smartphone population is significantly less likely (12%) to use a fingerprint scanner compared to the overall population of smartphone users (21%) and particularly 18-34 year-olds (28%). The low incidence of older smartphone owners using fingerprint scanners represents a major opportunity for banks. As more smartphones incorporate this technology and more 55+ year-olds adopt this behavior, there’s a good chance many will begin to feel more secure about banking on their mobile device.
These findings indicate that increased adoption of mobile banking seems to be held back in large part by security concerns and preferences for other methods of banking, the latter likely stemming from unfamiliarity and lack of comfort on this relatively new digital platform. While older consumers are often the most resistant to adopting new digital behaviors, financial institutions have a significant opportunity to tap into this segment if they can overcome these psychological hurdles.