Fred Lum/The Globe and Mail
Less than 10 per cent of Canadians are using mobile banking, but experts say it won't be long before the service is more popular than online banking.
Research suggests that consumers in this country would prefer to check their bank balances, transfer money, or pay their bills while sitting on their morning train commute or standing in line at the coffee shop rather than at their office or home computer.
And new technology is increasing the amount that bank customers can accomplish on their phones, beyond logging on to their bank account from their smart phone screen. For instance, some consumers in the U.S. are now snapping photos of cheques with their cellphones and e-mailing them to their banks to make deposits.
Canadians have traditionally been early adopters of banking technology and among top in the world when it comes to things like debit use, but mobile banking has been slow to catch on here.
One of the reasons is that data plans for phones are more expensive here than in most places, meaning Canadians have to pay more to spend time banking on their phones, experts say.
But heightened competition in Canada's telecom industry should lead to cheaper data plans and Canadians are now lapping up smart phones and their various applications, meaning the "enablers" are now in place for mobile banking to take off, said Bob Hedges, a managing partner at Boston-based consulting firm Mercatus LLC.
"We're at the tipping point in terms of adoption," he said. "Over the next five years this will become more important than online banking."
Mercatus has just completed a study of the Canadian market and found that 9 per cent of consumers here already have a mobile banking account, and nearly 20 per cent plan to start using one within the next year. Not surprisingly, the numbers are higher among 18- to 25-year-olds.
"This is the way of the future," said Sonia Baxendale, the head of consumer banking at Canadian Imperial Bank of Commerce. Last week CIBC became the first major bank here to launch a mobile banking application for iPhones. Bank customers can already do mobile banking on a number of other smart phones. "We've been investing a significant amount of money because we absolutely believe that mobile will be a meaningful and significant way of transacting with banks and other retailers in the very near future."
She disputes the idea mobile banking will be the domain of the young, noting many 40- and 50-year-olds are multitasking on their smart phones.
Mercatus's research found Canadian mobile-banking adoption rates are similar to those in the U.S., but behind most other regions.
There are three main categories of mobile banking, notes Krista Napier, a senior analyst at IDC Canada who studies emerging Canadian technologies, and none of them are widespread in Canada.
"Mobile banking has gotten off to a slow start, it's been much more popular in other parts of the world," she said.
The first category, banking via SMS text messages, is favoured in the developing world, particularly in Asia, Africa and the Middle East where there are large rural populations and a lack of widespread land-line telephone and banking infrastructure.
Then there is browser-based banking, which involves going through a smart phone's Web browser and using a banking site designed specifically for mobile devices. Finally, there is application-based banking, which requires downloading an "app" such as the one CIBC has launched for iPhones.
Part of the reason mobile banking is so sluggish in Canada is because the country is relatively sluggish with most things mobile. The percentage of Canadians who have cellphones remains well below many other developed nations, at about 70 per cent, despite advanced technologies deployed here. And smart phone use is still only a small part of the Canadian mobile market.
Ms. Baxendale doesn't expect mobile banking will ever directly generate revenue for banks, which offer the service to clients for free. But Mr. Hedges said it can help banks in other ways, from attracting customers to reducing costs.
By the numbers |
78%: Portion of Canadians using online banking
17%: Percentage of Canadian mobile consumers using a smart phone
22.5%: Forecasted smart phone shipment growth in 2010 in Canada
70%: Portion of Canadian population using mobile devices
Source: IDC Canada