Consumers and Mobile Financial Services
March 2015
Print- Preface
- Executive Summary
- Introduction
- Accessing Financial Services
Introduction
In 2011, the Federal Reserve Board's Division of Consumer and Community Affairs conducted its first Survey of Consumers' Use of Mobile Financial Services. Since that time, the adoption of mobile financial services has continued to increase, along with the range of services offered. As part of its ongoing efforts to monitor developments in the mobile financial services arena and to gain insights into consumers' usage of, and attitudes toward, mobile financial services, the Board has continued to conduct the survey annually.1 The fourth survey, conducted in December 2014, included a random sample of respondents to the previous survey in 2013, as well as a random sample of new respondents. The subsample of respondents who voluntarily completed both the 2013 and 2014 waves of the survey allows for the analysis of changes in behavior over the past year among these individuals.
Survey Background
The original survey instrument and subsequent waves of the survey were designed in consultation with a mobile financial services advisory group made up of key Federal Reserve System staff with relevant consumer research and payments backgrounds. The 2012, 2013, and 2014 survey samples were all composed of a mix of a randomly selected respondents to the previous year's survey and new survey respondents.
The 2014 survey was again administered by GfK, 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 5, 2014, and concluded on December 21, 2014.
For the results presented in the main body of this report, the sample was drawn following the method used for the 2012 and 2013 surveys. As shown in table 1, e-mails were sent to 2,308 randomly selected respondents to the 2013 survey and 2,657 randomly selected respondents from the remaining members of KnowledgePanel ®. The respondents completed the survey in approximately 12 minutes (median time). Of the 2,925 respondents, 1,489 had responded to the 2013 survey one year before, while 1,436 were new survey respondents drawn from the general population.2 Further details on the survey methodology are included in appendix 1.
Table 1. Key survey response statistics: Main interview
| Number sampled for main survey | Qualified completes |
Completion rate |
|
|---|---|---|---|
| 2013 re-interviews | 2,308 | 1,489 | 64.5% |
| Fresh cases | 2,657 | 1,436 | 54.0% |
| Total primary sample | 4,965 | 2,925 | 58.9% |
As with any survey method, Internet panels can be subject to biases resulting from undercoverage or nonresponse and, in this case, potential underrepresentation of adults who may be uncomfortable with technology. Not everyone in the United States has access to the Internet, and there are demographic (income, education, age) and geographic (urban and rural) differences between those who do have access and those who do not. These concerns are addressed by GfK providing Internet access to respondents who do not have it in order to include the portion of the population that does not have Internet access in KnowledgePanel ®, and using sample weights to ensure that the Internet usage and key demographics of the sample population matches the adult U.S. population. See appendix 1 for a more detailed discussion. While care has been taken to ensure the survey results are generalizable to the adult U.S. population, the usual caveats regarding surveys nevertheless apply.
The full survey questionnaire is presented in appendix 2 and the responses to all the categorical survey questions are presented in appendix 3 in the order that the questions were asked of respondents. Tables of summary statistics for the respondent demographics by mobile phone usage are also included as tables C.66 to C.69. Beginning at table C.70, cross-tabulations are presented of consumers' use of mobile phones, mobile banking, and mobile payments by age, race, gender, education, and income.
The following sections of this report summarize key findings from the Federal Reserve Board's survey of consumers conducted by GfK, with a focus on how consumers use mobile phones to conduct their banking, make payments, enhance information gathering while shopping, and manage their finances. The numbers cited in this report are derived from the Board survey unless otherwise noted. All data were weighted to yield estimates for the U.S. adult 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 2 and appendix 3.
Box 1. Use of Mobile Financial Services among Rural Respondents
Mobile financial services may offer convenience or access in different ways to different subpopulations. One group that could especially benefit from mobile services is rural residents. Because rural residents may have to travel longer distances to visit financial institutions compared to urban consumers, mobile banking services may be particularly convenient. However, there are also countervailing factors that could make usage less likely. To learn more, the 2014 survey included an oversample of residents in rural areas.
Thirty-three percent of residents in non-metropolitan (non-metro) areas reported using mobile banking services in the prior 12 months, compared with 39 percent of respondents in metropolitan (metro) areas. Similarly, a smaller percentage (17 percent) of non-metro respondents reported using mobile payments in the prior 12 months relative to respondents in metro areas (23 percent).
This commonly used metropolitan/non-metropolitan distinction, however, has some limitations as a way to identify rural areas. In particular, non-metro areas include some places that are connected to urbanized areas and have a diversity of access to financial services. To provide an alternate measure of usage of mobile financial services for rural respondents, the survey results were also analyzed using a more narrow definition, measuring as "remote areas" only the respondents who live in small towns and rural areas with low commuting flows to urban places.1 Fairly similar patterns persisted using this definition: 32 percent used mobile banking in remote rural areas, compared to 39 percent for everyone else, and 20 percent of those from remote rural areas used mobile payments, compared to 22 percent of the rest of respondents (figure A).
If, by either measure, rural residents appear to use mobile financial services at least somewhat less than those in non-rural areas, why would this be? Results from this survey point to some combination of differing technology, access to broadband services, services offered by financial institutions, and consumer awareness of those services.
Non-metro residents are slightly less likely than metro residents--84 versus 88 percent--to own a mobile phone, but considerably less likely to own a smartphone--54 versus 63 percent. They are also less likely to report near-constant access. When asked to characterize their Internet access on a mobile phone through wifi or a wireless network, 57 percent of non-metro respondents described it as "nearly always available," compared to 64 percent of respondents in metro areas (table A).2 This relative lack of smartphone ownership and constant mobile Internet access may make use of certain mobile services less attractive or perhaps not possible.
Table A. Internet access on mobile phone through wifi or a wireless network (3G, 4G, LTE) is...
|
Almost always available |
Not always available, but is available at convenient locations |
Available only at locations that require extra effort or planning to get to |
Not available |
I do not need access to the Internet on my mobile phone |
|
|---|---|---|---|---|---|
| Non-metro | 57% | 12% | 2% | 10% | 20% |
| Metro | 64% | 8% | 1% | 7% | 18% |
| Remote areas | 59% | 10% | 1% | 10% | 19% |
| Not remote | 63% | 9% | 1% | 8% | 18% |
Note: Here and elsewhere in this report, totals may not add to 100 percent due to rounding and question non-response.
When it comes to mobile banking, the supply of services also appears to differ. When asked whether mobile banking was offered by their financial institution, 65 percent of respondents in non-metro areas said yes, compared to 75 percent in metro areas (figure B). A higher share (30 percent) of respondents in non-metro areas also reported not knowing if mobile banking was offered by their financial institution, compared to 21 percent in urban areas. Whether this represents a lack of interest by rural consumers or simply a lack of awareness, it would seem that fewer rural residents have access to mobile banking or are aware of available mobile banking services relative to residents of more urban areas.
Demographic differences between residents of metro and non-metro areas also may be a factor in any observed differences in the use of technology or the adoption of mobile financial services across areas.3 In addition, preferences regarding technology use may be correlated with residential location apart from these other demographic factors.
Overall, respondents from non-metro areas are as likely to be "banked" as metro area respondents--86 versus 87 percent, respectively--but somewhat less likely to use either mobile banking services or mobile payments. The lower usages may be associated with lower availability of or consumers' knowledge about mobile banking services by their financial institution, lower levels of smartphone adoption, and less continuous mobile broadband access. They could also be attributed to other factors, including differences between urban and rural residents in preferences, demographic characteristics, or demand for these services. These results indicate that the promise of mobile technology as a way to bridge some challenges of living in rural areas may have not yet been fully realized.
1. This alternate measure uses Rural-Urban Commuting Area (RUCA) codes, developed by the Department of Agriculture. The "Remote areas" correspond to small towns (less than 2,500 people) and rural areas with low urban commuting in RUCA code categories 7.0, 7.2, 8.0, 8.2, 9.0, 10.0, 10.2, and 10.3. (See www.ers.usda.gov/data-products/rural-urban-commuting-area-codes.aspx.) The companion category "Not remote" includes most portions of metropolitan and micropolitan areas, as well as small towns and rural areas that have a substantial secondary commuting flow (30-50 percent) to urban areas. This narrower definition of rural areas is very similar to a definition developed by the WWAMI Rural Health Research Center (http://depts.washington.edu/uwruca/ruca-maps.php 
). See appendix 1 for additional information on the sampling methods used for the primary sample and rural oversample included in this analysis. Return to text
2. Nearly 1.3 million people in rural areas lacked access to mobile broadband in 2012, and rural residents generally face greater challenges with mobile coverage than urban residents. See https://apps.fcc.gov/edocs_public/attachmatch/FCC-13-34A1.pdf. Return to text
3. For example, estimates from the 2013 American Community Survey show that the median age of the population in non-metro areas is higher than in metro areas. Mobile banking use is lower among older consumers, as noted in this report. Return to text
Consumer Access to Mobile Phones
As of December 2014, 87 percent of the U.S. population ages 18 and above owned or had regular access to a mobile phone. While the percent of the adult population with mobile phones has remained constant over the previous two years, an increasing proportion of those own smartphones: this survey's 71 percent smartphone ownership rate among those with mobile phones is a substantial increase over the 61 percent rate reported in 2013, 3 52 percent rate in 2012, and 44 percent rate in 2011.
Rates of mobile phone usage remain high and consistent across demographic and socioeconomic groups. The prevalence of mobile phones demonstrates the extent to which they have become engrained in modern culture. Mobile phone usage is approximately 91 percent for persons ages 18 to 44, and declines only slightly to 87 percent for persons ages 45 to 59 and to 80 percent for persons ages 60 and over. Smartphone adoption is also higher among younger generations, with the differences being more pronounced among age groups: 84 percent of those ages 18 to 29 and 86 percent of those ages 30 to 44 who own a mobile phone have a smartphone, while 67 percent of mobile phone owners ages 45 to 59 and 47 percent of mobile phone owners ages 60 and over have a smartphone.
Mobile phone ownership varies slightly by race and ethnicity, with non-Hispanic whites, Hispanics, and non-Hispanic blacks having rates of 88 percent, 85 percent, and 83 percent, respectively. However, adoption of smartphones varies in a somewhat more pronounced way: 82 percent of Hispanic mobile phone users have a smartphone, compared to 68 percent of non-Hispanic whites and 66 percent of non-Hispanic blacks (table 2).
Table 2. Smartphone usage by race/ethnicity
Percent, except as noted
| Race/ethnicity | Smartphone usage | |||
|---|---|---|---|---|
| 2011 | 2012 | 2013 | 2014 | |
| White, non-Hispanic | 41 | 50 | 57 | 68 |
| Black, non-Hispanic | 47 | 54 | 63 | 66 |
| Other, non-Hispanic | 45 | 54 | 76 | 83 |
| Hispanic | 55 | 60 | 72 | 82 |
| 2+ races, non-Hispanic | 43 | 59 | 64 | 65 |
| Total | 44 | 52 | 61 | 71 |
| Number of respondents | 2,002 | 2,291 | 2,341 | 2,603 |
Note: The denominator is all respondents with a mobile phone.
Mobile phone and smartphone usage does vary with the level of household income. In households earning less than $25,000 per year, 74 percent of adults have a mobile phone of some type, and 53 percent have a smartphone. Use of both mobile phones and smartphones increases with income, reaching 95 percent and 85 percent, respectively, for adults in households earning more than $100,000 per year.
The relatively high prevalence of mobile phone and smartphone use among younger generations, minorities, and those with low levels of income--groups that are more likely to be unbanked or underbanked--makes mobile phones a potential platform for expanding financial access and inclusion.
In 2014, the share of consumers who were unbanked rose to 13 percent from 10 percent in 2013.4 The share of consumers who would be described as underbanked--defined as having a bank account but also using an alternative financial service such as a money order, check cashing service, pawn shop loan, auto title loan, paycheck advance/deposit advance, or a payday loan--was 14 percent in 2014.5
Among individuals who are unbanked, 67 percent have access to a mobile phone and 65 percent of these are smartphones. Smartphone ownership has been increasing among the unbanked. The share of the unbanked with access to a mobile phone was 69 percent in 2013 and 59 percent in 2012, approximately half of which were smartphones.
Among the underbanked, 90 percent have a mobile phone, 73 percent of which are smartphones. Further, 48 percent of the underbanked with mobile phones reported using mobile banking in the 12 months prior to the survey, while 32 percent reported making mobile payments.
Trends in the Utilization of Mobile Banking and Payments
Services that allow consumers to obtain financial account information and conduct transactions with their financial institution ("mobile banking") and that allow consumers to make payments, transfer money, or pay for goods and services ("mobile payments") have become increasingly prevalent. Over the past several years, these services have become available at a broader range of institutions and the types of services continue to evolve. With increased dissemination of technology and a broadening array of options, consumer adoption of mobile financial services has risen. In the 2011 survey, for instance, 22 percent of mobile phone users with bank accounts and 43 percent of smartphone users with bank accounts reported that they had used mobile banking in the previous 12 months.6 These proportions have increased in each year of the survey. In the 2014 survey, the prevalence of mobile banking continued to increase, reaching 39 percent of mobile phone users with bank accounts and 52 percent of smartphone users with bank accounts (figure 1).
Use of mobile payments has also increased. In 2011, 12 percent of mobile phone users and 23 percent of smartphone users reported using mobile payments. By 2014, usage of mobile payments had increased to 22 percent for mobile phone users and increased to 28 percent for smartphone users. The steady increases in the adoption rate among all mobile phone users, but more gradual rise in the adoption rate among smartphone users, suggest that smartphone adoption substantially contributed to the increased use of mobile payments.
Note: For mobile banking, the results are derived from respondents with bank accounts and mobile phones and all respondents with bank accounts and smartphones, respectively. For mobile payments, the results are derived from respondents with mobile phones and all respondents with smartphones, respectively.
A continuing impediment to adoption of either mobile banking or mobile payments appears to be consumers' limited demand for them: many consumers said their needs were already being met without mobile banking or payments, that they were comfortable with non-mobile options, and that they did not see a clear benefit from using either service. In addition, around one in five (22 percent) of those with mobile phones and bank accounts indicated they do not know if their bank or credit union offers mobile banking, which may be consistent with a lack of interest in these services among a portion of the population. That said, the share who do not know if mobile banking is available from their bank decreased from 28 percent in the 2013 survey, and the share that said their bank does not offer the service decreased as well--from 6 percent in 2013 to 4 percent in 2014. These results suggest an increase in availability and consumer awareness of mobile banking services.
Concerns about the security of mobile banking and mobile payment technologies are also frequently cited as reasons why consumers chose not to adopt these technologies. Consumers appear to be more cognizant of the need to protect the personal information stored on their phones, as they are increasingly using passwords to protect their smartphones. The share of smartphone owners who password protect their phone increased to 69 percent in 2014, from 61 percent in 2013 and 54 percent in 2012.7
References
1. See the "Consumers and Mobile Financial Services" reports series for previous years' survey findings. Results of the 2011, 2012, and 2013 surveys (published in March 2012, 2013, and 2014, respectively) are available at www.federalreserve.gov/communitydev/mobile_finance_publications.htm. Return to text
2. The 2014 survey also included an oversample of respondents from rural areas. For comparability with prior years of the survey, the oversample was not used in computing the results in the main body of this report; therefore, respondents from the oversample are not included in table 1. However, selected statistics based on the oversample are included in box 1. Additional information on the sample is provided in appendix 1. Return to text
3. Throughout this report, percentages are calculated as a share of all those who were asked a question, including those who did not respond. Results on phone ownership from the Board's 2013 survey are very similar to those from the Pew Research Center for that year. In the June 2013 Smartphone Ownership--2013 Update, the Pew Research Center reported that 91 percent of U.S. adults owned a mobile phone and 61 percent of adults with a mobile phone (or 56 percent of adults overall) had a smartphone. (See http://pewinternet.org/~/media//Files/Reports/2013/PIP_Smartphone_adoption_2013_PDF.pdf .) The 2013 Federal Deposit Insurance Corporation (FDIC) Survey of Unbanked and Underbanked Households provides measures of mobile and smartphone access at the household level. In 2013, its estimates showed that 83 percent of households owned or had regular access to a mobile phone and 67 percent of households with a mobile phone (or 56 percent of households overall) had a smartphone. (See www.fdic.gov/householdsurvey/2013report.pdf.)Return to text
4. In 2011 and 2012, the wording of the bank account question was "Do you or does your spouse/partner currently have a checking, savings, or money market account?" In 2013 and 2014, the wording of the bank account question changed slightly from the prior years to explicitly reference "bank or credit union" accounts: "Do you or does your spouse/partner currently have some type of bank or credit union account such as a checking, savings, or money market account?" Return to text
5. Due to changes in the way this question was asked, the 2014 figures for underbanked households may not be comparable to results from earlier years. Most notably, relative to the 2013 report, "money order" was added to the list of alternative financial services used by underbanked households, and "payroll card" was removed. Return to text
6. Here, the figures for mobile banking in the 2011 survey are expressed as percentages of mobile phone users with bank accounts. These figures differ slightly from those published in the 2011 report, which were calculated as a percent of all mobile phone users. Similarly, other estimates in the text may differ from the figures presented in appendix 3 or from estimates published in earlier reports because a subsample of the respondents was used for the calculation. Return to text
7. At least one major mobile phone operating system has changed its default settings to require users to set a password unless they opt out. This change in default setting could also increase the incidence of password protection. Return to text