Mobile banking users are among a financial institution's most valuable customers and members. However, many financial institutions may not realize the causal impact of mobile banking adoption and usage on bottom-line results and revenue.
To quantify the tangible returns generated by engaged mobile banking users, as well as the potential benefit of increased adoption, Fiserv compared key attributes in the three months before and after consumers enrolled in mobile banking. The year-long aggregated analysis was conducted at select banks and credit unions using the Mobiliti™ banking and payments solution from Fiserv.
The study found specific returns on the mobile investment related to product usage, transaction frequency, attrition rates and revenue generated. Mobile banking usage impacted increased customer and member ROI in several ways.
Increased product holdings. The average number of product holdings, including loans, certificates of deposit, credit cards and mortgages, immediately increased after consumers' adoption of mobile banking – up 12 percent among banks in the study. Consumers who use mobile are likely more engaged with their financial institutions, and as the relationship between consumers and financial institutions deepens, it enables other types of engagement.
Increased transaction frequency. In the three months after adoption of mobile banking, consumers in the study significantly increased both the number and value of their debit and credit card, ATM and ACH transactions. Why? Immediate mobile access to financial information may influence additional transactions. The correlation between mobile banking and transaction frequency is significant because many transactions generate revenue, including interchange revenue from card transactions.
Decreased branch transactions drive potential cost savings. In the three months after adoption of mobile banking, there was a 32 percent decrease in branch transactions for credit union members, likely because simple transactions moved to the mobile channel. Although mobile banking users are less apt to go into the branch, they will likely return to perform high-touch, high-engagement transactions with staff.
Lowered attrition. Mobile banking users are less likely than branch-only users to leave their financial institutions. Among larger credit unions in the study, attrition rates were 4.9 percent for mobile bankers, compared to 13.4 percent for members who weren't enrolled in mobile or online channels. Bank branch-only customers were more than two times more likely to leave their financial institutions than mobile banking users.
Higher average revenue. Mobile banking users generate more revenue than nonusers in part because they own more products and conduct more transactions. For mobile users at the credit unions in the study, revenue was 36 percent higher than branch-only users. Banks saw 72 percent higher revenue from mobile banking users, compared to branch-only customers.
Many financial institutions incorrectly assume that if they provide mobile banking, their valuable customers or members will become actively engaged mobile users. However, marketing mobile banking is absolutely essential if financial institutions want to grow adoption and use of the service, and reap the benefits of their mobile investment.
The financial institutions in this study are experiencing tangible revenue from mobile banking and – like all banks and credit unions – have the opportunity to drive incremental value through increased adoption of mobile banking.
Interested in learning more? Fiserv published Mobile Banking Adoption: Where Is the Revenue for Financial Institutions?, a white paper outlining the return on investment (ROI) of mobile banking services, as well as guidance for increasing mobile adoption and usage.