Banking UP

The US Federal Reserve has just released a report about how consumers use mobile financial services.

The full report can be found here.

It contains a substantial section about how the under-banked population uses mobile phones to access financial services.

Just because people are un-banked or under-banked, does not mean that they are “unphoned”.

Mobile phone use is high among younger generations, minorities, and those with low levels of income—groups that are prone to be unbanked or underbanked.Mobile banking and mobile payments have the potential to expand financial access to the unbanked and underbanked by reducing transaction costs and increasing the accessibility of financial
products and services.

Although the report contains some contradictory numbers, it mentions that 91 percent of the underbanked have a mobile phone and 57 percent have a smartphone—rates far above those for the overall population.

As mentioned in an earlier post, we found that over 85% of the UPside Visa prepaid card users have a smartphone.
So we have just deployed a mobile banking application for both Android phones and iPhones.

Only last November, I wrote about how 75% of our mobile customers were using a smartphone to access their account. Well, 2 months later, the number is now beyond 80%:

• 56.7% Android
• 24.2% iPhone

This penetration ratio is astounding. The technical team at Plastyc is getting itchy to release the applications we have prepared for both platforms.

Below is a sneak preview of the iPhone application:

Once released, anyone among the 80%+ with a smartphone will be able to manage the entirety of their account without touching a PC again.

According to the Economist’s special report on personal technology of October 8, 2011, the Personal Computer is on its way out.

Consumers will gradually ditch their laptop or desktop computers in favor of smart phones and tablets to handle their everyday online activities. It turns out that the early adopters of smart phones are not only the young and the geeks. They are also people who find them more convenient and cheaper than PCs. Many of them have also disconnected their land-line phone for the same reason.

I surprised many of my industry peers in the past few weeks when I told them that 75% of the people who access their UPside Visa prepaid card account from their cell phone, do so from a smart phone. It is counter-intuitive that consumers with limited access to large banks would be equipped with the latest and greatest mobile phone technology.

Here is the proof. This is our mobile server logs, detailing what type of mobile browser has been used to access accounts from cell phone during the past 3 weeks:

• 49.6% Android browsers
• 24.1% Safari (i.e. iPhone) browsers

Most wireless network operators now offer an Android phone with their low-cost no-contract prepaid cellphone plans. Kudos to Metro PCS, Virgin Mobile, Cricket Wireless, Boost Wireless, Simple Mobile, T-Mobile, AT&T, Verizon and others for providing your customers with very good phones on prepaid plans.

The new iPhone prices announced by Apple on October 4 will also help increase their penetration among consumers who are usually considered to be late adopters.

This is a big change from only 18 months ago, when only 30% of our customers had a smartphone. Guess what? We are frantically working on a mobile banking smartphone application that will surpass anything available to the under-banked.

Our most recent analysis of about 50,000 visits to the UPside Visa prepaid card mobile portal shows that 47% of the card holders are using an Android phone, dwarfing the iPhone which comes in at 16.5%.

Not surprisingly, a majority of prepaid Visa cardholders tend to prefer… prepaid phone accounts too. And since the iPhone only comes with postpaid subscriptions, it is not as popular as the many Android phones that are now available from prepaid wireless carriers.

Another interesting fact is the amount of mobile access: in December, we had about 50,000 visits to our mobile site versus a bit more than 200,000 visits to our “fixed” website: so, for every 5 PC users, we have someone preferring to use their cellphone to manage their money.
It is probably higher than industry averages. We believe that under-banked users will be heavier users of mobile financial services.
This is in part because staying on top of your money at all times from anywhere is more important when you don’t have a lot of money.