Two facets of mobile payment adoption have reached an inflection point, according to separate studies released in successive weeks.
Consumers have used their smartphones for 61% of all online transactions so far in 2019, according to a report released this week by iovation, a subsidiary of credit reporting agency TransUnion. That figure surpassed 50% for the first time last year, and is up from 28% in 2014, the report indicated.
But that trend also extends to potentially nefarious dealings. Half of suspected fraudulent transactions originated from mobile devices so far this year, according to the same report, which showed that figure has more than doubled since 2017, when it was 21%.
Separately, half of consumers are now using in-app digital wallets, a 7% uptick from one year ago, according to a study McKinsey & Company unveiled last week at Las Vegas’s Money20/20 conference. And more than three-quarters (77%) of U.S. consumers made a mobile payment of some type — online, in-store or in-app — in the year preceding August.
Although that figure encompasses 91% of millennials, that digital behavior was by no means limited to that generation: 64% of baby boomers also were party to a mobile payment, the report showed.
The iovation report canvassed more than 1,600 U.S. and U.K. consumers, 72% of whom said account security and privacy were primary concerns in choosing a financial institution. More than half of respondents age 18 to 34 said they’ve closed an account within the past two years over security and fraud concerns. And nearly two-thirds of all participants said they would switch financial institutions for a company that has better security protocols in place, the iovation report found.
That may be aspirational, however. A J.D. Power survey from April found that just 4% of customers reported switching banks in the past year, regardless of how many said they would consider it.
When asked about this at last week’s Money20/20 conference in Las Vegas, iovation report author Molly Hetz told Banking Dive, "It probably is a small number, but of those who were willing to spend their Sunday morning going through the process of changing banks, I would bet overwhelmingly the reason is fraud."
Fostering consumer trust is crucial, and the mobile platform drives customer satisfaction, said Melissa Gaddis, iovation’s senior director of customer success. That sentiment mirrors the result of another study this week, released by J.D. Power, indicating that banks’ mobile apps are responsible for an uptick in satisfaction among another segment: small-business owners.
"If banks aren’t delivering meaningful digital experiences, they will continue to lose consumers to neobanks and more digitally mature financial service providers," said Adam Miller, director of the customer experience design practice at banking software company Temenos.
"The key to building better customer experiences is for the banks to integrate with a wide variety of [financial institution] applications and services to better satisfy the needs and goals of their customers," Miller said.