Mobile banking services to see rapid increase in Western Europe

Adoption of m-banking should increase rapidly in major European markets. Thanks to improvements in mobile technology and high mobile phone adoption rates in Europe, banks are able to offer a wide range of added value m-banking services, according to a new report, ‘Mobile Banking Services in Western Europe' from Celent.

The mobile phone delivery channel represents a challenge for the European banking industry, enabling institutions to differentiate themselves from competitors, reduce costs, and develop customer loyalty. The adoption of m-banking should increase rapidly in major European markets over the next few years, from an average of 6% today to 25% of the Spanish, French, Italian, and British markets by 2010.

Significant barriers remain: a general lack of awareness, technological issues, customers' perception of security, and more significantly, the cost of mobile internet are major hurdles to mass market m-banking adoption. If mobile internet usage increases, we can expect a larger number of users to interact with their banks through their mobile phones as they currently do online.

European banks have anticipated the dissolution of adoption barriers and have already launched various m-banking services using mainly WAP and SMS technologies. Only a few downloadable applications have been successful, mainly in the UK and in Germany. French and Spanish banks are currently offering a broader range of mobile services, followed by Italian banks. However, there are still many disparities between countries regarding the number and type of m-banking services offered. At the European level, information and SMS services are the most common.

“The adoption of m-banking by the mass market depends not only on the suppression of major barriers, but also on marketing and promotion from banks. Once customers recognize the benefits, the convenience, and the ease of usage, they will adopt m-banking as they adopted online services,” says Perrine Fiorina, an analyst with Celent's banking group and author of the report.

Key findings of the report include:
• Adoption of m-banking should increase rapidly in major European markets, from an average of 6% today to 25% of the Spanish, French, Italian, and British markets by 2010. However, significant barriers remain: lack of awareness, technological issues, customers' perception of security, and more significantly, the cost of mobile internet.
• If mobile internet usage increases, we can expect users to interact with their banks through their mobile phone as they currently do online. Hence, the share of internet m-banking users in Europe should increase from 5% today to 18% in 2010.
• European banks have anticipated the dissolution of adoption barriers and have launched various m-banking services mainly using WAP and SMS technologies. Indeed, only a few downloadable applications have been successful, mainly in the UK and in Germany.
• French and Spanish banks are offering a broader range of mobile services, followed by the Italian banks. However, there are still many disparities between countries regarding the number and type of m-banking services offered. At the European level, information services and SMS services are the most common.
• Strategic alliances and partnerships between banks, mobile carriers, and technology providers will help m-banking reach the mass market by offering a broader range of value-added services.
• Marketing and promotion is a key success factor. Customers need to be informed about these services, their costs, and their level of security. Once customers recognize the benefits, convenience, and ease of use of m-banking, they will adopt it as they adopted online services.