UK mobile banking “at tipping point” says VocaLink

One in four UK customers now use mobile banking services according to VocaLink

One in four customers in the UK is now using mobile banking services– and bank-driven systems are leading the way, according to new research by mobile payments specialist VocaLink.

The firm’s research suggests 60% of people in the UK have a smartphone, rising to 80% in the 16-24 age bracket. One in four users already have banking or financial apps, which are mostly used for checking balances, accessing bank details and viewing transactions. Of those with a smartphone, some 27% of respondents are using their smartphones for mobile banking, while 20% are using them to make payments.

VocaLink operates the proxy service that underpins the Barclays Pingit mobile payment service and will be rolled out by all UK banks next year under the auspices of the Payments Council.

Despite recent mishaps such as the attacks on NatWest customers last October and the Eurograbber attack in December, in which criminals stole £30 million from 30,000 accounts in four European countries, customers still trust their banks. Some 35% of respondents said they were more likely to pay for items using a mobile if the service was provided by their bank, while 63% of those already making mobile payments would trust their banks to provide this service.

The biggest competition to banks appears to come from the supermarkets such as Sainsbury’s, M&S and Tesco, each of which have launched banking services in recent years. Some 46% of survey respondents said they would trust supermarkets as mobile payment providers, rising to 52% of smartphone users.

In September, seven-day account switching rules come into force in the UK, meaning that banks will be mandated to switch customer accounts to a -competitor on request within a maximum period of seven days. The new rules are driving banks to focus on customer retention, according to VocaLink – meaning that mobile channels are increasingly recognised by banks as a good means of engaging with the customer.

Of those who said they were likely to use a mobile payment service, 81% were more likely to do so if it was offered by their bank; 67% of those saying they would use the service say it would encourage more shopping on their mobile phone (32%) and the new method would be used instead of debit cards (45%), credit cards (35%) and PayPal (28%).

VocaLink notes that the advantages of mobile payment systems are that they may be more cost effective for the bank, the transaction becomes more visible in banking systems versus for example cash, and the customer data associated with a digital transaction can be used by the bank in enhancing customer retention, for example by providing more customised services, promotions and offers.

“This robust consumer market research indicates that there is real appetite for mobile payments,” said Paul Stoddart, head of strategy and business development at VocaLink and author of the study. “All the indicators point towards the time being right for a genuinely ubiquitous solution, based on the huge increases in smartphone adoption. There are significant commercial growth opportunities for early adopters – provided they can deliver a sufficiently ubiquitous and functional solution. This will require appropriate collaboration between stakeholders including retailers, banks and telcos. Given the extraordinarily rapid growth in ownership and their use as app platforms, smartphones look set to outpace other payment solutions. VocaLink believes the mobile payments battle will be played out on the small touch screen in the near future.”

Elsewhere in Europe, Spanish banks La Caixa and Santander are currently planning together with telecoms firm Telefónica to create a joint venture offering mobile payment services and a digital wallet designed to relegate conventional payment methods to the history books. Users of the new service will be able to gather all their credit cards into the new digital wallet; they will also be able to send and receive funds via their mobile phone. The plans are similar to a separate mobile payments project between MasterCard and Telefónica in Brazil, which launched earlier this month.