Mobile Remote Deposit: Capturing the Early Adopters

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Mobile Remote Deposit Capture: Capturing Early Adopters Consumer Insights Brief June 2011

Paul McAdam, SVP of Research and Thought Leadership, FIS Mandy Putnam, Director of Research and Thought Leadership, FIS

Mobile Remote Deposit Capture: Capturing Early Adopters

2 © 2011 Fidelity National Information Services, Inc. and its subsidiaries.

Mobile RDC in Initial Part of Early Adoption Stage Mobile Remote Deposit Capture (Mobile RDC) — sometimes also referred to as mobile check deposit — received widespread attention in January via the J.P. Morgan Chase Super Bowl ad promoting Chase Quick Deposit. Although no one managed to beat the Bridgestone “Saluting Beavers” ad, Chase Quick Deposit ranked No. 44 out of 101 according to the MediaCurves’ survey of several thousand ad watchers. Despite attention-getting publicity surrounding mobile RDC launches, apps had only penetrated 3 percent of the mobile phone owner population as of February 2011 (Figure 1).

From this FIS™ survey of 4,002 mobile phone owners, we learned that 12 percent of the mobile phone owner population actively uses mobile banking, therefore one-fourth of mobile banking consumers have transitioned to adopting mobile RDC. The survey also found that only 7 percent of mobile phone owners are aware their banks offer a mobile RDC app that is available for their phones. The majority — 60 percent — of mobile phone owners do not know if their primary checking account provider offers a mobile RDC app. The lack of awareness on the demand side is not surprising considering the technology is only two years old and the relatively low penetration on the supply side of mobile RDC. In Celent’s survey of financial institutions in the fall of 2010, only 2 percent of financial institutions contacted had a mobile RDC solution in place and another 2 percent were piloting a solution; 15 percent were still in the planning stage1.



The first mobile RDC app was offered in July 2009 by WV United FCU of Charleston, WV. USAA quickly followed and one year later in July 2010, Chase was the first mega bank to offer mobile RDC. Our June 2001 review of the top-20 banks’ Web sites indicated that only four — Chase, U.S. Bank, PNC and Charles Schwab Bank — offer mobile RDC, although others are launching solutions in the near future, including Bank of America. As with mobile banking adoption, consumer trials of mobile RDC will increase in parallel with the sophistication of handheld devices. While only 3 percent of the mobile phone owners reported using mobile RDC in the past 30 days, the adoption rate was 12 percent among smartphone owners. Adoption jumped to 59 percent among smartphone owners who were active mobile bankers. As is often the case with new technology, satisfaction with mobile RDC among active users is

lower than satisfaction with the more-established mobile banking technology among active users — 54 percent as opposed to 68 percent for comparable top three-box scores on an 11-point scale (Figure 2). Complaints from less-than-satisfied users point to lack of user friendliness and reliability as potential pain points.

“It was confusing to use at first but I finally got the hang of it.”

Despite having some technical challenges, mobile RDC users are depositing on average 5.2 checks within a 30-day period. This is a significantly higher-than-average number based on recently-released results from the 2010 Federal Reserve Payments Study. U.S. consumers receive 7.6 billion checks per year from business-to-consumer and consumer-to-consumer sources. This amounts to approximately 2.8 checks per month per U.S. adult consumer.



The relatively high average number of checks deposited by mobile RDC users suggests not only that the early adopters have figured out how to conquer the initial technical obstacles, they also are consumers who receive more paper checks than the average person and, thus, more motivated to adopt mobile RDC.

Security Concerns and Inertia

In our analysis, we define non-users as mobile phone owners who are aware that their primary checking account provider offers a mobile RDC app but they do not use it. Within this non-user group the most common reasons cited for lack of mobile RDC usage (Figure 3) include:

1) Security concerns (31 percent) 2) Lack of sufficient check deposits to warrant

use (29 percent) 3) Inertia regarding downloading the app (26

percent).

Findings suggest that creating awareness of one’s mobile RDC offer is only the first in a series of steps that financial institutions must take to increase penetration. Follow ups to campaigns positioned to generate awareness need to focus on assuaging security concerns and creating “calls to action” among yet-to-be-inspired customers at points of contact for check deposits — ATMs, drive-thru lines and tellers.

RDC “Wannabees” – Sizable Segment

Mobile RDC “wannabees” represent 16 percent of mobile phone owners. They are defined as mobile phone owners who are interested in using mobile RDC, even though they either do not have access or are unaware of their access to mobile RDC (Figure 4). But, interest levels rise dramatically among current mobile banking users to 57 percent. Only one in 10 mobile banking users is not interested in having access to mobile RDC.



Gen Y Leading the Way for Mobile RDC

Current mobile RDC users are overwhelmingly concentrated in the Gen Y generation, which is currently composed mostly of 20-somethings (through 31 years old) (Figure 5). Two-thirds of current mobile RDC users are members of Gen Y and nearly one-third (30 percent) are Gen X members. Baby Boomer and Mature segment penetration is negligible.

Gen Y does not dominate the interested user population to the same extent as it does the current user population. But, at 46 percent, Gen Y represents the largest generational segment of the mobile phone population that is interested in using mobile RDC.

Gen X members account for 30 percent of interested users and Baby Boomers 20 percent — this latter segment providing some optimism for future penetration beyond the younger generational segments that have been driving early adoption of mobile banking technologies.

Table Stakes in Mobile RDC Adoption

Table stakes in mobile RDC adoption include: smartphone ownership and willingness to adopt mobile apps. Smartphone ownership continues to grow at double digits with the Android operating system taking the lead during this past year. Among the leading operating systems — Android™, iPhone and BlackBerry® — none has a significant edge in terms of current mobile RDC penetration though slightly higher percentages of users are Android or iPhone owners than BlackBerry owners.



Among potential (interested) users of mobile RDC, Android and iPhone owners are significantly more dominant than Blackberry owners. Forty-one percent of Android owners and 44 percent of iPhone owners as opposed to only 26 percent of BlackBerry owners are interested in using mobile RDC (Figure 6).

Consumers must be willing to use apps and as well as having a mobile phone capable of using a mobile RDC app in order to adopt mobile RDC. Only a little more than one-half (54 percent) of mobile phone owners who are connected to the Internet use mobile apps (Figure 7). About three-quarters (73 percent) of mobile phone owners interested in using mobile RDC already use apps — significantly more than the general population of connected mobile phone owners.



Predictors of Mobile RDC Adoption

Mobile banking habits, usage of online financial services and attitudes about mobile phones offer insight into the types of consumers most likely to adopt mobile RDC. Adoption of mobile bill payment is the No. 1 predictor of adoption likelihood for mobile RDC. Among the population of consumers connected to the Internet through their mobile phones, 11 percent pay bills by using their mobile phones (Figure 8).

That percentage increases six times among mobile RDC users. Among those interested in mobile RDC, 19 percent use mobile bill payment. One tactic to facilitate penetration of mobile RDC could be ensuring that customers have mobile banking apps that allow for easy mobile bill payment.

Mobile RDC users are significantly more likely to use online financial services than non-users. At the top of the list is person-to-person (P2P) payment adoption of 61 percent among users as opposed to 48 percent among non-users (Figure 9). Usage of other online financial services is 2 – 3 times higher among mobile RDC users than non-users.

Mobile phone owners interested in using mobile RDC are nearly as likely to use P2P as current users (58 percent vs. 61 percent in Figures 10 and 9). However, their usage of other online non-traditional financial services does not approach the penetration rates among mobile RDC users, which range from about one-fourth (27 percent) for personal financial management to nearly one-third (32 percent) for Quicken Online (Figure 9). Another entry point for mobile RDC could be through bundling mobile RDC with P2P payment apps.



Attitudinal differences between users and non-users of mobile RDC also offer insight into significant differences in the way the segments view their mobile phones. Not only are users likely to be connected 24/7 to their mobile phones, but many view their mobile phones as just as capable as their computers in facilitating their Internet usage (Figure 11). Two-thirds believe that they can do most of the things they would want to do on their computers on their mobile phones. Plus, four out of 10 (43 percent) prefer to access the Internet via their mobile phone when they have access to both their computer and their mobile phone.

Comparison of mobile-phone-related attitudes between current mobile RDC users and those interested in becoming mobile RDC users show that both segments are equally tethered to their mobile phones (Figure 12). Nearly nine out of 10 report they don’t go anywhere without their mobile phones. However, opinions regarding other behaviors and attitudes related mobile phone diverge between current mobile RDC users and those just interested in using RDC.



Consumers interested in using mobile RDC have not integrated their mobile phones into their online routines as extensively as current mobile RDC users have.

Conclusion

At a 3 percent consumer utilization rate, mobile RDC has moved past the innovators and into the early part of the early adoption phase of market diffusion within the mobile phone owner population. The technology is only two years old and continued push from the supply side will be required to drive consumer adoption. Mobile RDC adoption will certainly increase as overall mobile banking adoption continues to accelerate, but anecdotal comments from RDC mobile users suggest that at least some apps lack user friendliness and reliability – problems that will surely be addressed over time but could impede adoption for some consumers beyond the trial stage.

Findings suggest that packaging mobile RDC with complementary products such as mobile bill payment apps and P2P payment apps could boost adoption speed. Reaching beyond the typically young innovator population, however, will require educating prospective users about security measures for mobile RDC and providing apps that ensure a positive user experience.



Citations:

1 Celent, The Future of Consumer RDC: Going Mainstream, November, 2010.

2 The 2010 Federal Reserve Payments Study: Noncash Payment Trends in the United States: 2006 – 2009, Updated April 5, 2011

About the Research

Mobile Remote Deposit Capture: Capturing Early Adopters is part of a series of Consumer Insight Briefs based on primary research conducted by FIS Enterprise Strategy. The research findings herein are based on a 60-question, online survey completed by about 4,002 U.S. mobile phone owners in February 2011. The survey was fielded by FIS Enterprise Strategy to a consumer panel maintained by Survey Sampling International.

The definitions of age generations used in our analysis are the standard U.S. Census Bureau definitions: Gen Y, born in 1980 or later; Gen X, born from 1965 – 1979; Baby Boomer, born from 1946 – 1964; Mature, born in 1945 or earlier.

The study’s primary objective was to determine the impact of mobile devices on behaviors related to financial transactions, including accessing accounts, paying bills, depositing checks and making purchases.

About FIS

FIS (NYSE: FIS) is the world’s largest global provider dedicated to banking and payments technologies. With a long history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100 countries. Headquartered in Jacksonville, Fla., FIS employs more than 32,000 people worldwide and holds leadership positions in payment processing and banking solutions, providing software, services and outsourcing of the technology that drives financial institutions. FIS is ranked 426 on the Fortune 500, is a member of Standard & Poor’s 500® Index and consistently holds a leading ranking in the annual FinTech 100 list. For more information about FIS, visit www.fisglobal.com.

Mobile Remote Deposit Capture: Capturing Early Adopters was authored by Paul McAdam, SVP of Research and Thought Leadership at FIS and Mandy Putnam, Director of Research and Thought Leadership at FIS.

Please contact the authors if you have questions about the research or how the results apply to your financial institution.

Paul McAdam Ph: 708.449.7743 [email protected]

Mandy Putnam Ph: 614.414.4207 [email protected]

http://www.fisglobal.com/

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Mobile Remote Deposit: Capturing the Early Adopters