Mobile Banking Quantified: Adoption of Mobile in Banking

Transcription

1 Mobile Banking Quantified: Adoption of Mobile in Banking March 2017 Powered by Celent 1

2 CONFIDENTIALITY Our clients industries are extremely competitive, and the maintenance of confidentiality with respect to our clients plans and data is critical. Oliver Wyman rigorously applies internal confidentiality practices to protect the confidentiality of all client information. Similarly, our industry is very competitive. We view our approaches and insights as proprietary and therefore look to our clients to protect our interests in our proposals, presentations, methodologies and analytical techniques. Under no circumstances should this material be shared with any third party without the prior written consent of Oliver Wyman. Celent

3 Celent is an industry research and advisory firm focused on the application of information technology in the global financial services industry Serving Clients Clients: broad Financial Services ecosystem banks, technology vendors, service providers, consultants, investors, etc. Engagement: research subscriptions, consulting, white papers, speaking engagements Writing Research Reports (select examples) Industry Trends: omnichannel customer acquisition, channel technology adoption Key Technologies: cash automation, cheque imaging, image analytics, self-service, teleconferencing Vendor Analysis: omnichannel customer acquisition, branch automation Case Studies: Model Bank, Easy by RHB, Fidor, Eastern Labs, University FCU Speaking at Industry Events (select examples) Portfolio of Analyst Activities Supporting Media Celent 3

4 FI Navigator provides a proprietary bank and data analytics platform Institution Analytics FI mobile adoption Customer utilization Mobile feature adoption Feature lift Customer satisfaction Churn rates Vendor Analytics Market share Market share accretion Churn rates Customer utilization Customer satisfaction FI demographics Mobile Banking Quantified Co-authored report in PDF format Updated biannually Custom Analytics Web portal Data refreshed monthly Ad-hoc queries Celent 4

5 To many banks, digital meant being competitive in the digital channels Banking executives defining digital Engaging clients in a way that we have never been able to before, using data that we ve not had up until now. Taking advantage of technology opportunities that directly affect the way the company interacts with its stakeholders mostly relating to web, mobile and Big data. Staying ahead. Guarding against new direct start-ups. Delivering on the STP promise. Replacing paper by electronic documents. Digital is like the famous story about the elephant: How you experience it depends where you are coming from Source: Celent s Survey of Financial Services Roundtable Participants Celent 5

6 What was once very clear Branches Contact center Internet Mobile ATM Transactions Sales Service Service Transactions Information Cash withdrawal Deposits Celent 6

7 is becoming increasingly blurred Branches Contact center Internet Mobile ATM Celent 7

8 Mobile is no longer just a self-service channel It is becoming an omnichannel platform For bankers and customers Branches Contact center ATM Mobile/Digital Origination and servicing Assisted self-service Digital appointment booking Click-to-call Real-time chat Virtual assistants Cardless cash access P2P payment mechanisms Assisted self-service Celent 8

9 Digital as an omnichannel platform A framework for digital in Banking/Financial Services Digital (in Banking/FS) is about Delivering a customised but consistent FI brand experience across all channels and points of interaction Underpinned by ANALYTICS AUTOMATION And requiring a change in PRODUCTS AND SERVICES ORGANISATION AND PEOPLE IT In order to deliver Demonstrable and sustainable economic value Source: Celent Celent 9

10 We re not there yet - half of retail customers aren t using digital channels Two-thirds don t actively use the mobile channel 50% Active mobile and online users as (% of retail customers 2Q16) 49% 38% 31% Resp (%) 25% 13% 0% Online Banking Mobile/Tablet Banking Source: Celent Digital Panel Survey, 2016; Q2. What percentage of your retail banking customers are active digital banking users? Note: indicate online and mobile/tablet banking channel usage separately. Celent 10

11 Many consumers aren t yet convinced about mobile banking ut mobile banking 88% se mobile banking 78% of mobile banking 73% creen is too small ust the technology 40% 43% ave a smartphone 27% se mobile banking g in my household 15% 18% ng mobile banking 6% Refused/ no to all 3% 0% 23% 45% 68% 90% Source: Federal Reserve 2016 Study on Mobile Banking and Consumers Celent 11

12 As a result Banks are deploying branch resources to increase digital utilization What is important in the near-term Source: Celent NA FI survey, August 2015, n=39 Q. For each of the objectives listed below, indicate the importance of each based on your institutions near-term branch channel priorities? Celent 12

13 Where are we? Mobile Banking Quantified, September 2016 Key Research Questions 1 What insights are provided by a comprehensive view of the entire US mobile banking market? 2 What are the most significant mobile developments for US FIs? 3 What are the key trends and benchmarks for US mobile vendors? Celent 13

14 Large banks were mobile early-adopters and it shows up in app age Mobile Banking App Age FI Asset Group Bank Avg MB Age CU Avg MB Age MB Age Differential (CU-Bank) Banks Credit Unions Mobile Banking Age < $100M $100M - $500M $500M - $1B $1B - $10B $10B - $100B > $100B Source: FI Navigator Dataset; September 30, 2016; Celent Celent 14

15 Among smaller institutions, credit unions have had a big jump on banks but banks are catching up Banks vs. Credit Union Adoption $100M to $100B Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Banks 45.0% 48.0% 53.5% 57.3% 61.9% 65.2% 69.2% 71.3% 73.7% 75.8% 77.7% 79.6% 81.7% 83.3% Credit Unions 66.0% 69.0% 74.1% 76.8% 79.7% 81.9% 83.5% 85.5% 86.9% 87.5% 88.8% 90.6% 91.8% 92.6% Grand Total 50.1% 53.1% 58.5% 62.0% 66.3% 69.4% 72.8% 74.9% 77.1% 78.8% 80.5% 82.5% 84.4% 85.7% 100% 80% FI Type Banks Credit Unions 92.6% 83.3% 60% 66.0% 40% 45.0% 20% 2013 Q Q Q Q Q Q Q3 Source: FI Navigator Dataset; September 30, 2016; Celent analysis Celent 15

16 Customer utilization varies dramatically Large banks have a massive lead (perspective: BAC 4Q16 customer utilization =47%) All Financial Institutions Utilization Growth by Asset Group for All FI Asset Group Q2 Q3 Q4 Q1 Q2 Q3 Q Q1 Q2 Q3 Q Q1 Q2 Q3 < $100M 3.1% 3.8% 4.1% 4.9% 5.2% 5.7% 6.1% 6.5% 7.0% 7.5% 7.4% 8.0% 8.5% 9.0% $100M - $500M 4.5% 5.1% 5.6% 6.2% 6.7% 7.4% 8.2% 8.8% 9.3% 10.0% 10.7% 11.1% 11.8% 12.5% $500M - $1B 5.7% 6.6% 7.3% 7.7% 7.7% 9.1% 10.1% 10.9% 11.7% 12.3% 12.7% 13.0% 13.8% 14.3% $1B - $10B 8.5% 9.2% 10.4% 11.5% 12.3% 13.2% 14.2% 15.0% 16.1% 16.7% 17.5% 17.9% 16.9% 17.6% $10B - $100B 13.3% 14.4% 15.7% 18.2% 19.0% 19.9% 20.7% 21.2% 22.0% 22.8% 23.8% 23.7% 25.0% 26.0% > $100B 23.0% 25.0% 27.1% 29.7% 30.8% 30.5% 31.8% 32.6% 32.5% 34.1% 34.8% 35.1% 36.1% 37.1% Grand Total 16.7% 17.8% 19.1% 20.8% 21.6% 22.0% 23.0% 23.8% 24.2% 25.2% 25.9% 26.2% 26.7% 27.6% 35% 30% 25% < $100M $100M - $500M $500M - $1B $1B - $10B $10B - $100B > $100B 37.1% 26.0% 20% 15% 23.0% 17.6% 14.3% 10% 5% 13.3% 8.5% 5.7% 3.1% 12.5% 9.0% 0% 2013 Q Q Q Q Q Q Q3 Source: FI Navigator Dataset; September 30, 2016; Celent analysis Celent 16

17 Chase leads in number of active mobile customers Number of mobile customers for Wells Fargo, Chase, and Bank of America 70 # of Active Mobile Users (Millions) (47%) 0 Wells Fargo JP Morgan Bank of America 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Source: Celent Analysis; Quarterly financial statements from Wells Fargo, JP Morgan, and Bank of America s websites Celent 17

18 Mobile feature adoption also varies dramatically All Financial Institutions View Account Balances Intrabank Account Transfer Transaction History Bill Pay ATM/Bank Location Mobile Deposit Quick Balance Account Alerts P2P Payments Search Transaction History View Check Images Fingerprint Authentication Click to Call/Live Chat Surcharge-Free ATM Locator PIN Code Access View estatements Personal Financial Manage.. Debit Card On/Off Rewards Management Current Rates Interbank ACH/Wire Transfer Stop Payment Social Media Streams Reorder Checks Bill Presentment Credit Card Management Credit Score Photo Bill Pay Travel Notification Prepaid Card Management Replacement Card Schedule Appointment Cardless Cash 13.3% 13.0% 7.3% 6.6% 5.8% 5.6% 5.1% 5.0% 4.2% 4.2% 3.5% 2.2% 2.0% 1.7% 0.8% 0.7% 0.5% 0.5% 0.5% 0.3% 0.2% 0.2% 0.1% 26.7% 22.9% 22.1% 22.1% 65.6% 100.0% 98.7% 94.4% 87.7% 81.1% 0% 20% 40% 60% 80% 100% Percent of FIs Source: FI Navigator Dataset; September 30, 2016; Celent analysis Celent 18

19 Feature Leaderboard: hot features are apparent Tr-3 Months: September 30, 2016 Quick Balance Mobile Deposit Fingerprint Authentication P2P Payments Previous % of FIs w/ Feature 10.06% 62.23% 11.47% 20.92% Current % of FIs w/ Feature 26.74% 65.63% 12.96% 22.13% # of FIs Adding New Feature 1, Transaction History 91.20% 94.43% # of FIs Adding New Feature ,000 Tr-12 Months: September 30, 2016 MB Feature Leaderboard Top 5 Features for All Quick Balance One Year Ago: September 30, 2015 Fingerprint Authentication Mobile Deposit P2P Payments Previous % of FIs w/ Feature 2.75% 3.41% 52.49% 17.31% Current % of FIs w/ Feature 26.74% 12.96% 65.63% 22.13% # of FIs Adding New Feature 1, Debit Card On/Off 2.13% 5.04% 179 # of FIs Adding New Feature ,000 1,250 1,500 Mobile Deposit Bill Pay Fingerprint Authentication Account Alerts Previous % of FIs w/ Feature 43.19% 70.59% 1.22% 15.44% Current % of FIs w/ Feature 59.51% 86.37% 3.94% 20.83% # of FIs Adding New Feature Quick Balance 0.89% 3.15% 133 # of FIs Adding New Feature Celent 19 Source: FI Navigator Dataset; September 30, 2016; Celent analysis

20 Vendor Market Share: Fiserv is twice the size of its nearest competitor In terms of FI client count All Financial Institutions: Top 15 Top 15 Vendors Market Share by FI Clients Rank 1 Fiserv 2 FIS Vendor Name 3 Jack Henry 4 NCR Corporation 5 Access Softek 6 Q2 Holdings 7 Malauzai 8 MEA Financial Enterprises 9 D+H 10 Computer Marketing Corp. 11 CU Mobile Apps 12 ShareTec Systems 13 HomeCU LLC 14 Wescom Resources Group 15 Automated Systems 16 Others Grand Total Market Count 1, ,850 % of Total Market 26.7% 13.6% 12.6% 8.5% 4.9% 4.3% 3.9% 3.6% 2.8% 2.1% 1.9% 1.8% 1.4% 1.4% 1.1% 10.2% 100.0% % of Total Market Count ,000 1,500 Market Count Source: FI Navigator Dataset; September 30, 2016; Celent analysis Celent 20

21 Vendor market share looks very different among banks and credit unions Rank Banks 1 Fiserv 2 FIS Vendor Name 3 Jack Henry 4 NCR Corporation 5 Malauzai 6 Q2 Holdings 7 MEA Financial Enterprises 8 D+H 9 Automated Systems 10 Data Center Inc. 11 Computer Services, Inc (C.. 12 FPS GOLD 13 FI-Mobile 14 Monitise 15 MobileShift 16 Others Grand Total Market Count 1, % of Total Market 31.1% 21.2% 17.2% 7.5% 5.3% 5.3% 5.0% 2.6% 1.8% 1.0% 0.9% 0.5% 0.4% 0.3% 0.2% 0.7% 4, % ,000 1,200 Market Count Among banks, the top three vendors garner nearly 70% of bank clients % of Total Market Count Source: FI Navigator Dataset; September 30, 2016; Celent analysis Grand Total 2, % Celent Market Count 21 Rank 1 Fiserv Vendor Name 2 Access Softek 3 NCR Corporation 4 Computer Marketing Corp. 5 Jack Henry 6 CU Mobile Apps 7 ShareTec Systems 8 HomeCU LLC 9 Wescom Resources Group 10 D+H 11 Q2 Holdings 12 iparse LLC 13 FIS Among credit unions, the top three vendors hold less than 45% of the total market by client count. Fragmented markets tend to experience more pricing variance and greater churn. Credit Unions 14 Malauzai 15 CO-OP Financial Svcs 16 Others Market Count % of Total Market 19.8% 12.5% 10.1% 5.5% 5.2% 4.9% 4.6% 3.7% 3.5% 3.2% 2.8% 2.7% 1.9% 1.8% 1.6% 17.5% % of Total Market Count

22 Fiserv also dominates in terms of enrolled users All Financial Institutions: Top 15 Top 15 Vendors Market Share by Enrolled Customers Rank Vendor Name Market Count 1 Fiserv 22,131,952 2 FIS 15,114,047 3 NCR Corporation 9,490,439 4 Monitise 4,662,624 5 Access Softek 3,893,275 6 Jack Henry 2,389,364 7 Q2 Holdings 2,374,600 8 Wescom Resources.. 1,715,879 9 Sybase 365 1,712, Alkami Technology I.. 882, Vertifi Software 879, MobileShift 802, Malauzai 766, MEA Financial Ente.. 644, Tyfone 513, Others 3,220,465 Grand Total 71,193,935 % of Total Market 31.1% 21.2% 13.3% 6.5% 5.5% 3.4% 3.3% 2.4% 2.4% 1.2% 1.2% 1.1% 1.1% 0.9% 0.7% 4.5% 100.0% % of Total Market Count 0 5,000,000 10,000,000 15,000,000 20,000,000 Market Count Source: FI Navigator Dataset; September 30, 2016; Celent analysis Celent 22

23 Mobile banking is now a replacement market All FIs, Client Count: 1 Year Ago Trailing 12 months Top 15 Vendors Market Share Accretion (09/30/2014 to 09/30/2015) Vendor Name Previous Market Share Current Market Share Net Market Growth Market Share Accretion Market Share Accretion Fiserv 25.6% 26.4% 17.4% 0.83% FIS 16.1% 14.7% 4.4% -1.32% Jack Henry 12.5% 12.7% 15.5% 0.19% NCR Corporation 10.7% 9.1% -3.3% -1.60% Access Softek 7.0% 5.6% -10.0% -1.47% Q2 Holdings 4.6% 4.3% 7.3% -0.26% MEA Financial Enterp.. 3.6% 3.6% 13.9% 0.00% Malauzai 3.2% 3.7% 30.1% 0.46% D+H 2.5% 3.0% 40.9% 0.59% Computer Marketing.. 1.7% 2.1% 36.2% 0.34% CU Mobile Apps 1.7% 1.9% 22.3% 0.13% Wescom Resources.. 1.7% 1.6% 3.2% -0.16% MobileShift 1.7% 1.1% -24.4% -0.56% HomeCU LLC 0.7% 1.1% 71.1% 0.36% ShareTec Systems 0.4% 1.2% 226.1% 0.80% Others 8.2% 8.7% 21.9% 0.58% Grand Total 100.0% 100.0% 13.8% 0.00% -1.50% -1.00% -0.50% 0.00% 0.50% Source: FI Navigator Dataset; September 30, 2016; Celent analysis Celent 23

24 Recommendations for Financial Institutions and Vendors Devote time and effort to increasing adoption. FIs Consciously adopt features that align with your strategy. If near the end of a contract, proactively re-evaluate your vendor. Understand vendors with high competitive churn. Help your bank clients increase adoption. Make products easy to implement and change. Vendors Identify target prospects by examining their mobile performance with their incumbent vendor and know when the contract period ends. Assess feature adoption. Advocate and support a longer-term vision for digital. Celent 24

25 QUALIFICATIONS, ASSUMPTIONS AND LIMITING CONDITIONS This report is for the exclusive use of the Oliver Wyman client named herein. This report is not intended for general circulation or publication, nor is it to be reproduced, quoted or distributed for any purpose without the prior written permission of Oliver Wyman. There are no third party beneficiaries with respect to this report, and Oliver Wyman does not accept any liability to any third party. Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been independently verified, unless otherwise expressly indicated. Public information and industry and statistical data are from sources we deem to be reliable; however, we make no representation as to the accuracy or completeness of such information. The findings contained in this report may contain predictions based on current data and historical trends. Any such predictions are subject to inherent risks and uncertainties. Oliver Wyman accepts no responsibility for actual results or future events. The opinions expressed in this report are valid only for the purpose stated herein and as of the date of this report. No obligation is assumed to revise this report to reflect changes, events or conditions, which occur subsequent to the date hereof. All decisions in connection with the implementation or use of advice or recommendations contained in this report are the sole responsibility of the client. This report does not represent investment advice nor does it provide an opinion regarding the fairness of any transaction to any and all parties.