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Board of Governors of the Federal Reserve System
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Consumers and Mobile Financial Services
March 2012


Mobile phones have clearly become ubiquitous and a standard aspect of daily life for many American consumers in the last decade. Ongoing innovations in mobile finance show some potential to change the way consumers conduct financial transactions by offering consumers new services. Yet, many people remain skeptical of the benefit of mobile financial services and the level of security provided along with such services.

To further understanding of these developments and consumers' usage of and attitudes towards mobile financial services, the Board conducted a consumer survey in late 2011 and early 2012.

Trends in the Utilization of Mobile Banking and Payments 

A number of new services allow consumers to obtain financial account information and conduct transactions with their financial institution ("mobile banking") and others allow consumers to make payments, transfer money, or pay for goods and services ("mobile payments").

As the market share of Internet-enabled smartphones continues to grow, the utilization of mobile banking and mobile payment technologies also increases.1 As of March 2011, nearly one out of every five Americans with both a bank account and a mobile phone has used their phone to view account balances, receive account alerts, and conduct banking with their financial institution in the past 90 days.2 

Although mobile payments have been adopted more slowly by consumers in the U.S. than in many other countries, these services may become more popular over the coming years as the technology evolves and if the services become more widely accepted as a form of payment. In September 2011, for example, Google launched the Google Wallet service, which allows consumers to use smartphones equipped with a near field communication (NFC) chip to make "tap payments" at any retailer accepting MasterCard PayPass. Besides Google, many other firms--including mobile phone carriers, credit card issuers, and payment networks--are investing in mobile wallet technology. As the number of phones equipped with NFC increases, mobile payments may also increase.

Consumers respond to timely financial incentives and emotional appeals. Recent survey data show that some consumers view mobile payments as time-saving and convenient while providing them with increased access to, and control of, their finances. Despite these positive mobile finance attributes and perceptions, consumers also remain concerned about the cost and the security risks inherent in mobile financial transactions.3 

Potential Utilization for "Underbanked" and "Unbanked" Consumers 

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.

A significant number of Americans do not have a bank account of any kind, and many make regular use of alternative financial services such as payday loans, check cashers, rent-to-own services, money orders, or pawn shops. A 2009 study by the Federal Deposit Insurance Corporation (FDIC) found that 8 percent of Americans had no checking or savings account, and thus were defined as unbanked.4 An additional 18 percent had a bank account but had used an alternative financial service at least once per year and so were classified as underbanked.

While there remains a digital divide in computer Internet access across the socioeconomic spectrum, this divide does not hold true for mobile phone access. The 2011 Pew Internet study showed that 83 percent of American adults have a mobile phone, and 35 percent have a smartphone that can access the Internet. Moreover, adoption of mobile phones is actually higher among minorities, as 89 percent of non-Hispanic blacks and 86 percent of Hispanics own a mobile phone.

Indeed, minorities are also more likely to own a smartphone than non-Hispanic whites, with 44 percent of both non-Hispanic blacks and Hispanics owning a smartphone compared with 30 percent of non-Hispanic whites. While mobile phone and smartphone adoption is less prevalent at lower levels of income, approximately 75 percent of U.S. adults in households earning less than $20,000 per year have a mobile phone of some type, and 20 percent have a smartphone.5 

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Younger Age Groups: Mobile Phone and Mobile Banking Adoption 

Unsurprisingly, mobile phone adoption is highest for younger age groups: only 5 percent of individuals ages 18 to 24 do not have a mobile phone, and 49 percent have a smartphone. In contrast, 44 percent of those ages 65 and over do not have a mobile phone, and only 11 percent have a smartphone.6 

Furthermore, and perhaps more surprisingly, a recent survey by the Center for Financial Services Innovation (CFSI) shows that individuals under the age of 25 are increasingly underbanked--some as a matter of choice--and appear comfortable with alternative financial services.7 Given the prevalence of mobile phone usage among young individuals, minorities, and low-income families--groups most likely to be unbanked or underbanked--there is potential for mobile financial services to help integrate these individuals into the financial mainstream.

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Survey Background 

In consultation with a mobile financial services advisory group made up of key Federal Reserve System staff with relevant consumer research backgrounds, the Consumer Research Section in the Federal Reserve Board's Division of Consumer and Community Affairs designed a survey instrument to examine consumers' usage of and attitudes towards mobile phones and mobile financial services.

The survey was administered by Knowledge Networks, an online consumer research company, on behalf of the Board. The survey was conducted using a sample of adults ages 18 and over from KnowledgePanel®, a proprietary, probability-based web panel of more than 50,000 individuals from randomly sampled households; the sample was designed to be representative of the U.S. population. After pretesting, the data collection for the survey began on December 22, 2011 and concluded on January 9, 2012. The 2,290 respondents completed the survey in approximately 15 minutes (median time).

The number of respondents sampled and participating in the survey, and the survey completion rates, are presented in table 1. A total of 3,382 e-mail solicitations to participate in the survey were sent out to the KnowledgePanel, and 2,290 individuals completed the survey fully (a "cooperation rate" yield of 68 percent). To enhance the cooperation rate, Knowledge Networks sent e-mail reminders to non-responders on days three and six of the field period.

The responses to all the survey questions are presented in Appendix 2 in the order in which they were asked of respondents. A table of summary statistics for the respondent demographics is also included as table B.87. Beginning at table B.88, cross-tabulations are presented of consumers' use of online banking, telephone banking, mobile banking, and mobile payments by age, race, gender, education, and income.

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Table 1. Key survey response statistics: Main interview  

Number sampled for main survey Qualified completes Cooperation rate
3,382 2,290 68%

The following sections of this report summarize key findings from the Knowledge Networks survey of consumers, with a focus on how consumers are using mobile phones to conduct their banking, make payments, enhance information gathering while shopping, and manage their finances. All data were weighted to yield estimates for the U.S. population. Only questions pertaining to these topics are discussed in the report; however, the complete survey questionnaire and the results of the entire survey are summarized in Appendix 1 and Appendix 2.

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1. The Pew Research Center reports that 35 percent of American adults owned a smartphone as of May 2011. Pew Internet study, 2011, 35% of American Adults Own a Smartphone (PDF) Leaving the Board. Return to text

2. In its July 2011 report on smartphone banking security (based on a March 2011 survey), Javelin Strategy and Research finds that 19 percent of U.S. consumers are using mobile banking. Javelin, 2011, "Smartphone Banking Security: Mobile Banking Utilization Stalls on Consumer Fears." Return to text

3. Javelin, 2011, Smartphone Banking Security: Mobile Banking Utilization Stalls on Consumer Fears. Return to text

4. Federal Deposit Insurance Corporation, 2009 Survey of Unbanked and Underbanked Households (PDF)  Leaving the Board. Return to text

5. Pew Internet study, 2011, 35% of American Adults Own a Smartphone (PDF)  Leaving the Board. Return to text

6. Ibid. Return to text

7. Center for Financial Services Innovation (CFSI), 2010, Financial First Encounters: An Examination of the Fractured Financial Landscape Facing Youth Today (PDF) Leaving the Board. Return to text

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Last update: August 2, 2013