Nano-economics:

Mobile opportunities
for the financial sector
Nano-economics:
Mobile opportunities for the financial sector

Executive summary 3-4

Research methodology 5

Mobile opportunities 6-7

A case for change 8-9

Nano-economics 10-11
Contents
Multi-method balance checks 12

Overcoming barriers to mobile banking 13-14

Payment preferences 15

Techno-literate 16

Conclusion 17-18
Nano-economics:
Mobile opportunities for the financial sector

The Sybase 365 Mobile Banking Survey looks at user trends in approaching and utilising mobile services
across five European regions: France, Germany, Italy, Spain and the United Kingdom. The research finds
that, though existing mobile banking usage is at an ‘early adopter’ phase in its evolution, there is significant
enthusiasm for future services. Beyond mobile user perceptions, the report goes on to discuss some of the
wide implications of mobile banking on the financial sector.

In addition to specific mobile service highlighting the potential benefits and pitfalls of dynamic
mobile data services in this area. A summary of key findings from the survey is as follows:

Potential Dividends
• 75% of people using mobile banking are satisfied with the services they receive, 24% are ‘neutral’
and only 1% express dissatisfaction with the service
• 61% of non-mobile banking users would be interested in mobile services if offered by their bank
• 25% of respondents would consider switching banks if offered free mobile banking by an
alternative provider Executive summary
• 49% of respondents were not aware if their banks provided mobile services or not

Nano-economics
• 40% of respondents know ‘exactly’ how much money they have in their bank at any time, with an
additional 23% knowing balances to within £10 (Euros 15)
• 41% of respondents check bank balances at least every few days, with a core 15% requiring
daily updates
• In some markets (France and Spain), respondents want to be able to receive bank updates on the move

Security concerns
• Only 25% of respondents cited security concerns as a reason for not taking up mobile banking
services (36% cited security as an issue with internet banking)
• 63% of those respondents using mobile banking believe the service is secure, or very secure
• Only 18% consider phone theft to be a reason for not using a mobile phone for banking

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Nano-economics:
Mobile opportunities for the financial sector

With financial services businesses heavily reliant on information services and a significant investment in
place to support customer services, the report concludes that mobile banking makes a logical addition to
existing customer communications tools. Mobile data services alone are generating enough interest to
engage a significant percentage of the customer base, but, when combined with the potential cost savings
presented by using mobile services to automate some aspects of customer information requests, the
business case for refining mobile strategy is robust.

There are some considerable regional differences to take into account when looking at the survey, which
are discussed in the body of the report. A summary of country-specific trends is described below:

France
• French respondents check bank balances more frequently than all other regions and
are most supportive of receiving personal financial information on the move.
Interestingly, French respondents also describe themselves as most resistant to cutting Executive summary
edge technology
Germany
• Germans express less enthusiasm for mobile banking that is reflective of caution and
a lack of awareness. German respondents also spend less on average on mobile
calls than their European neighbours
UK
• British mobile users have the lowest level of awareness of mobile banking services,
but appear to spend more on mobile calls each month. UK respondents, along with
the French, are keen to check bank balances, with more UK consumers checking
bank balances via the internet than other European region
Italy
• Italians are the most enthusiastic cash watchers, being more likely to know exactly
how much money they have in the bank. Along with Spain, Italy expresses the most
interest for mobile banking service across the sample
Spain
• From the survey, there are more Spanish mobile bankers than any other region
(10% of overall sample). This is mirrored by the nation’s considerable enthusiasm for
a wider range of mobile banking services and high levels of awareness for mobile
banking overall

4
Nano-economics:
Mobile opportunities for the financial sector

The research surveyed 1,250 mobile users across 5 European regions: France, Germany, Italy, Spain and
the UK (250 interviews conducted in each country). Interviews were undertaken via an internet-based
questionnaire during November 2006. The research was commissioned by Sybase 365 and carried out by
Loudhouse Research, an independent research consultancy based in the UK.

Research methodology

5
 Nano-economics:
Mobile opportunities for the financial sector

When evaluating what potential services customers seek via a mobile device, Figure 1 shows a clear picture
of what the public wants. Account balance enquires present the most obvious opportunity to get people
interacting with their accounts via mobile handsets, with 61% of respondents citing balance enquiries as a
service they would be interested in if offered by their bank.

Interestingly, the three other services that 35% to 49% of the market is interested in revolve around personal
banking security or the prevention / alerts on over-spending: Ability to freeze a card (49%), Potential fraud
alerts (44%) and minimum balance alerts. Consumers are more likely to see a mobile phone as a means of
protection, risk reduction and control than as a device that can be used for transactions. Mobile users are
more interested in being alerted if things are not as they should be, rather than paying for items or receiving
general financial information in the shape of incentives, offers, interest rates and so on.

Account balance enquiries 61%

Mobile opportunities
Ability to freeze a card 49%

Potential fraud alerts 44%

Minimum balance alerts 35%

Overdraft alerts 31%

Statements on request 30%

Fig 1 :
Payments via mobile 29% Fig 1: Which of the following
mobile banking services would
you be interested in if offered
Automatic transaction updates 27% by your bank?

Info requests eg. Interest rates 13%

0% 20% 40% 60% 80%

6
 Nano-economics:
Mobile opportunities for the financial sector

As Figure 2 shows, almost all mobile users are familiar with and utilise text-based mobile services, meaning
that they should be comfortable with text-based services. Of the 98% of mobile users in the survey that are
familiar with sending and receiving texts, 97% actually use the service. Understandably, the more sophisticated
mobile data services are not experiencing the same level of use; price and ease of use undoubtedly playing a
role in cooling user adoption.

However, with European mobile penetration rates nearing, and in some cases exceeding 100%, it is very
encouraging to see the number of people that are engaging in more sophisticated mobile services.
Current mobile data trends from many corners of the industry all suggest that this usage is only set to increase
over the next 3-5 years. Looking at bank balance checks specifically, the ratio of awareness-to-usage is also
positive with around 1 in 3 mobile users aware of the service choosing to use it. This gives rudimentary
mobile banking a higher use-to-awareness ratio than many of the more ‘infotainment’ based services, such as
watching TV streaming or checking sports scores.

98% Perhaps of wider concern is the fact that only 36% of

Send / receive texts
97% mobile users are aware that it is possible to check Mobile opportunities
Access Internet 74% banking information via a mobile. Evidently, this will be
32% influenced by the fact that not all high street banks
E-mail 67% offer mobile banking information updates, but general
19%
awareness could still be higher. This begs the question,
Play / store music 61%
32% to what degree banks are promoting mobile services to
50% existing customers? Also, and perhaps more importantly,
Check latest sport scores 12% are mobile services being marketed to potential new
Check traffic reports / directions
42% customers that are seeking value-added services?
8%
40%
Instant messaging 9%
36% Aware of Fig 2:
Check bank balance
11% Have used
Which of the following
35% mobile services are you
Watch live TV 4% a) aware of and b) have
29% used in the last 3 months?
Make payments via mobile
5%

7
Nano-economics:
Mobile opportunities for the financial sector

Figure 3 highlights further enthusiasm for mobile banking, though at this stage it is also possible to look at
how regions start to differ in their approach to mobile services. The first chart shows that there is considerable
sentiment supporting the desire to deal with finances on the move. France (59%) and Spain (58%) are more
supportive of the idea than the UK (36%) and Germany (15%).

Though it is difficult to be prescriptive about what this means for each region in terms of mobile opportunities in
banking, these findings are reflected to some degree in other areas of the survey: mobile banking awareness
is lower in Germany and the UK than the other European territories and Spain, France and Italy have more
mobile banking users than their Northern European counterparts.

The graph also shows that a surprising proportion of mobile users would consider changing banks if mobile
banking was provided as a free service. As consumers become more familiar with switching bank accounts,
mortgages, credit cards and other financial products, this potential for customer attraction should be of interest
to the financial sector.

On average, 25% of respondents would be tempted by

free mobile banking services, making it a considerable A case for change
36%
marketing tool in an increasingly competitive sector.
I would like to 15% In Spain and Italy, the percentage increases to one in
be able to deal
w ith my 59%
three mobile users. With general awareness of mobile
finances on banking services already considered as something that
the move 58%
requires greater attention, the potential of new customers
49% may provide a catalyst for some banks to review their
existing focus on mobile banking marketing.

23%
I w ould
consider 16%
sw itching to a Fig 3:
bank if I w as 16%
UK
Statements of agreement
offered free
G e rm any
surrounding enthusisam for
mobile 37% mobile services: % shown
banking
France
are those scoring 4/5 on
33% S p a in
1-5 scale of agreement
Ita ly
(agree / strongly agree)
0% 20% 40% 60%

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Nano-economics:
Mobile opportunities for the financial sector

The temptation to switch banks points to a wider issue for banks seeking to provide expanded mobile banking
provision; mobile services receive a warmer reception when there is no charge attached. This underlines the
need for banks to consider what strategy to pursue when looking at developing or refining mobile strategy.
In terms of value added services, mobile banking need not be seen as purely a nice-to-have for ‘sophisticated’
customers. Another point to consider is that the resource burden experienced by customer call centres in
responding to relatively basic customer requests could be eased by text, or mobile data services.

The significant push on telephone banking from the financial sector over the past three years has resulted in
15% of respondents in the survey checking balances over the phone. At present 7% of respondents check
balances by text message, though, anecdotally the level of marketing drive to push text services is far less than
that of telephone banking. This suggests, especially with the raft of enthusiasm for internet banking (68% of
respondents use the internet to check bank balances), that users are becoming more familiar with efficient
data/information services, and less reliant on a voice at the end of the phone for some aspects of personal
banking.

A case for change

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Nano-economics:
Mobile opportunities for the financial sector

The Sybase 365 Mobile Banking Survey highlights a particular breed of personal banker in Europe – the
‘nano-economist’. 40% of Europeans can be described as nano-economists, and, as shown in Figure 4,
can be identified by their ability to state their exact bank balance at any point in time. Such diligence seems
to increase with age; only 29% of 18-24 year olds claim to know their exact bank balance whilst 47% of
those aged 45 or over can boast this degree of knowledge. The reasons behind such high levels of
financial awareness are likely to be wide-ranging and may include a lack of available funds, a prudent attitude
to money and potential concerns over fraud or identity theft.

Whilst the vast majority of Europeans (81%), will know their bank balance within £100, at the other end of the
spectrum 17% of Europeans can be described as ‘financial ostriches’ and are completely ignorant about how
much is in their bank account.

Some interesting country differences emerge in terms of the need to stay abreast of personal financial affairs.
Italians are the most ‘on the ball’ with 60% claiming to know their exact bank balance. UK consumers can
typically estimate their bank balance to the nearest £10 or £100 whilst at the other extreme, Spanish
consumers are the most lackadaisical; a third have no idea what their bank balance is and another 25% can
only estimate this within £1000. Nano-economics

Exactly 40%

To nearest £10 23%

To nearest £100 18% Fig 4:

Degree that people know
the amount of money in
To nearest £1000 2% personal bank accounts

Don't know 17%

0% 20% 40% 60%

10
Nano-economics:
Mobile opportunities for the financial sector

Against a context of almost obsessive financial awareness, it is not surprising that consumers are checking
their bank balances very frequently - monitoring the ‘nano-economy’ - often daily or every few days as shown
in Figure 5.

The French are the most frequent bank balance checkers, with 23% checking their balances daily whilst in
line with their more laissez-faire attitude to finance, the Spanish are checking their bank balances less often
than their European neighbours, only 7% are checking daily and 28% are checking them on an ad hoc basis.
For Italians, ad hoc checking of bank balances (28%) seems to be translating into a more exact knowledge of
financial wellbeing, in contrast to Spain where this ad hoc balance checking is more likely to be coupled with
something of a financial fog.

14%
17%
D aily 23%
7%
12%

38%
33% Nano-economics
E v e ry fe w d ays 27%
18%
18%

29%
19%
W e e kly 29%
25%
28%

8%
8%
M o n thly 9%
12%
11% Fig 5:
Frequency that people
11%
17%
check bank balances
Ad h oc/ wh e n I
12%
n e e d to 28% UK
26%
Ge rman y
0% F rance
L e ss th an 5%
1% Sp ain
o n ce a mo nth 11%
5% Italy

0% 20% 40%

11
Nano-economics:
Mobile opportunities for the financial sector

Consumers now have a wealth of tools at their disposal to check their bank accounts, many of which reflect
the 24/7 society in which we now live. Figure 6 shows the methods that consumers use to check their bank
balances. Two-thirds of Europeans (68%) now check their bank balances via the Internet, whilst 42% will use
a cash point or ATM. Internet banking is particularly popular amongst those aged 25-34 years, used by 76%
of this age group, whilst checking at the cash point is most evident amongst the under 24s, presumably to
check funds are available to withdraw against.

Some would claim that telephone banking has lost its way in recent years. Despite a strong industry push in
its early years, it is used only by 15% of consumers. This is perhaps due in part to highly publicised call centre
outsourcing and the emergence of an arguably more convenient and flexible alternative via the Internet. Mobile
banking, as a relative newcomer, is used by 7% of Europeans to check their bank balances.

Again, interesting regional differences emerge in terms of banking preferences. UK consumers are more likely
to be banking via multiple methods and are higher than average users of the Internet (80%), cash points (55%),
statements (39%) and telephone banking (21%). Spain shows a stronger predilection for bank contact either
via cash points (60%) or within the branch itself (36%) than other markets. In contrast, consumers in France
are most likely to shun the banks themselves, preferring to check their bank balances either on the Internet (80%) Multi-method balance checks
or via statements (35%).

Of course, consumers do not typically stick to just one

In te rn e t 68% method of checking their bank balances. Internet bankers
often still check their balance prior to withdrawing cash from
Via AT M / cash
a cash point and may still receive statements in the post.
p o in t
42%
Mobile banking provides another alternative for people
wanting to keep in touch with their finances, offering the
S tate me n t in
26%
distinct advantage to consumers of being able to check
p o st
finances whilst on the move and to receive finance alerts
and updates virtually instantaneously rather than having to
G o to b an k 24% wait to log on or to queue at the cash point or branch.

Via te le p h o n e 15%

M o b ile
b an kin g / te xt 7%
fro m b an k Fig 6:
Methods used to check
0% 20% 40% 60% 80% bank balances

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Nano-economics:
Mobile opportunities for the financial sector

Mobile banking has not yet reached widespread consumer consciousness, despite other mobile services,
such as games and music gaining popular appeal. Indeed, half of European consumers (49%) do not actually
know whether their bank offers mobile banking services and only 6% can categorically state that their bank
does not offer mobile banking. Awareness is particularly low in the UK (69%), Germany (50%) and France (51%).
Better promotion by banks of both the existence of a mobile banking service and the benefits this offers
consumers, is vital for mobile banking to become both a mainstream mobile service or added value banking
offering.

Critical to maximising the appeal of mobile banking to consumers is the need to better understand the reasons
why people have not yet included this in their bank balance checking tool box. As the predecessor to mobile
banking, exploring the adoption of Internet banking provides some interesting parallels. Barriers to both Internet
and mobile banking follow similar themes – most notably, non-users struggle to see the need for these services
and may have either security or usability concerns. Security was stated as a barrier to Internet banking use by
36% of respondents on the survey (not shown), higher than for mobile banking where 25% see this as a reason
not to use the service (Figure 7).

Figure 7 shows how barriers to mobile banking Overcoming barriers to

Not 48%
35% vary by country. A perceived lack of need for mobile banking
co n sid e re d 46%
n e ce ssary
52% mobile banking is more apparent amongst
38%
non-users in UK, France and Spain. Security is a
29%
N o t in te re ste d
27%
37%
bigger barrier in the UK (33%) and Germany (30%)
30%
35% than in other countries, whilst France is more
33% concerned about service costs (27%) than other
S e cu rity 30%
21% countries.
co n ce rn s 21%
22%

N o t su re my 48%
35%
phone 46%
52%
su p p o rts it 38%
17%
C o st o f 20%
27%
se r v ice 21%
13% UK

27% Ge rman y
16%
P h o n e th e ft 22% F ran ce
11%
Sp ain
Fig 7:
14%
Barriers to mobile banking
22% Italy
D o n 't
25%
u n d e rstan d 13%
12%
h o w to u se it 11%

0% 20% 40% 60%

13
Nano-economics:
Mobile opportunities for the financial sector

Interestingly, amongst users of mobile banking, perceptions of security improve, as shown in Figure 8.
Whilst only 33% of non-users consider mobile banking to be secure, this figure climbs to 63% amongst
users of mobile banking.

Similarly, satisfaction levels amongst users of mobile banking are encouraging for the industry. Three quarters
of users of mobile banking are either satisfied or very satisfied with the service and satisfaction levels climb to
90% amongst those for whom the service is free.

Overcoming barriers to
mobile banking
63%

Mobile
banking 33%
Users Fig 8:
Respondents that agree,
Non-users or strongly agree that mobile banking
is secure
0% 20% 40% 60% 80%

14
Nano-economics:
Mobile opportunities for the financial sector

Figure 9 shows the methods of payment preferred for mobile banking services. The services shown are the
five most popular services from the survey that respondents would pay a nominal fee to receive. Cleary, the
services that justify a per message or subscription payment for mobile users are those that reduce the risk of
money leaving their accounts fraudulently, where, logically, a per message alert service is the most common
preference.

The sample is split more evenly when selecting preferred formats for making payments via the mobile.
Typically, mobile transaction costs, which is most commonly used for ‘infotainment’ purchases such as theatre
tickets etc., will be absorbed in the overall purchase price. However, Figure 9 shows that, if charges are to be
added to mobile transactions, 40% of respondents are prepared to pay a nominal subscription fee.

Per message Subscription No preference

Payment preferences
Potential
fraud alerts 71% 19% 10%

Ability to freeze a
card 80% 12% 8%

Payments via
mobile
53% 40% 7%

Overdraft alerts 66% 19% 15%

Fig 9:
Info requests eg. How would you prefer to
Interest rates 60% 30% 10% pay for mobile banking serices?

15
Nano-economics:
Mobile opportunities for the financial sector

One of the considerations that many businesses have to factor into a mobile content strategy is the issue of
technology formats. Though this challenge is being overcome with each new iteration of delivery platforms and
devices, (lack of) compatibility is something that can confuse users. However, surprisingly the Sybase 365
survey shows that users have a high level of understanding of different technology formats, with two thirds of
respondents in each region familiar with technologies such as MMS and WAP. Figure 10 shows that, though
there is a degree of understanding of phone formats, the majority of respondents express either ‘no preference’
or ‘don’t know’ which format is preferable. Notably, MMS is perceived to be the best format of the three
provided in the survey

Within the survey, only 7% of respondents describe themselves as techno-phobic, though in France this spiked
to 22%. An additional 6% said they were resistant to technology, but generally speaking mobile users are either
happy to keep pace with tech developments or keen to be ahead of the curve.

24%
Perhaps the most important consideration for
15% banks regarding the technology considerations of
P re fe r M M S 46%
29%
mobile users is that enthusiasm for mobile banking
53% is not technology driven. Techno-phobes are no Te c h n o - l i t e r a t e
more or less likely to desire mobile banking
13%
17% services than ‘early adopters’ in the survey. It is a
P re fe r W AP 7% practical need to keep a handle on finances
9% UK (177)
7% rather than a want for state-of-the-art services that
Ge rman y (204)
Fr an ce (187)
creates the strongest driver for mobile banking.
6%
P re fe r Jav a 7% Sp ain (199)
5%
Ap plication Italy (196)
6%
7%

44% Fig 10:

35% Preferred mobile format for
N o p re fe re n ce 31%
receiving banking servives
50%
25%
(Brackets show number of
respondents that could identlfy)
13%
26%
D o n't kno w 11%
6%
8%

0% 20% 40% 60%

16
Nano-economics:
Mobile opportunities for the financial sector

Financial sector organisations have a unique opportunity to capitalise on mobile services, but the strategy will
only pay dividends if executed appropriately. In order to do this, it is important to first understand how mobile
banking fits into a wider mobile picture.

Mobile suggests immediacy of information and flexibility for any type of information delivery. Its usage, in general
terms, is more widely associated with dynamic forms of information, such as sports fixtures and news events.
However, dynamic content can also be relevant to people when looking at personal financial information,
especially for those individuals with ‘lively’ accounts, or those with share portfolios wanting to track stock price
movements.

The Sybase 365 Mobile Banking survey shows that current adoption rates for mobile banking services sit at
around 7% of mobile users across the five regions sampled in the study. Evidently, these figures will shift from
country-to-country and by demographic variables, but this modest level of use tells a story in itself.
Mobile banking is very much in its infancy. Despite this, mobile devices are becoming increasingly sophisticated
communication tools, with mobile users becoming more familiar and comfortable with data and text based
services.
Conclusion
Mobile services deliver value in one of two ways: Monetisation and cost reduction. Monetisation is often
presented as the more ‘vibrant’ area for businesses to focus on, especially in the media and entertainment
fields where premium pay mobile content creates exciting new revenue opportunities. Here lies one of the
first important considerations for the banking sector; consumers seem prepared to pay handsomely for
ringtones and wallpaper for mobile devices, but they are less enthusiastic about the parting with money for
an SMS bank statement.

There are monetisation opportunities for the financial sector as people are prepared to pay for premium services,
alerts of potential fraud activity, card freezing, overdraft alerts and mobile payments are cited in the survey as
the most popular options for subscriber, or per message payments.

The legacy of bank charges, and the highly emotive response it renders from customers, is a potential barrier
to mobile services adoption. If customers are resistant to charges from banks then mobile charges may
compound this issue. However, as the precedent for paying for services has already been set by existing
services, some customers will tolerate fees. On average, one in three people in the survey would pay a
nominal charge for alerts on overdrafts or fraud payments.

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Nano-economics:
Mobile opportunities for the financial sector

Cost reduction also presents a compelling business proposition for mobile banking services. Creating data
services to lighten the burden on customer services infrastructure, whilst also adding value to the customer
experience, is more likely to create a business case for financial services companies. In short, banks need a
360-degree view of mobile service deployment and its benefits to customer and operational expenditure alike.

Financial sector organisations need not look at mobile users in the same way that an operator or content
providers does. Average Revenue Per User (ARPU), the common model for establishing commercial feasibility
of a mobile data project, should be exchanged for a Total Cost of Customer Ownership model in order for banks
to fully realise mobile data opportunities.

Overall, the signs for the industry are look promising. Users are generally satisfied and with use, any lingering
security concerns are largely allayed. The onus is on the industry, banks in particular, to more actively promote
mobile banking services and to highlight the benefits of mobile banking to an audience who are likely to be open
to using another tool to support their financial fastidiousness in a more immediate manner than the Internet
can provide.

In response to the findings, Sybase 365 has developed five key considerations for evolving mobile services and Conclusion
adoption in the banking sector:

• Increase awareness of mobile banking services amongst customer base

• Develop more sophisticated mobile data services beyond balance and payment updates
• Establish the enthusiasm for mobile banking services with different aspects of the customer demographic
• Evaluate operational savings of text ‘push’ services to replace aspects of customer service proposition
• Use flexibility of mobile data projects to validate wider strategy mobile services expansion

Mobile banking should not be seen as a panacea for all customer needs. Like any technology format it is a tool
that can enhance existing services. However, it appears that existing mobile provisioning could do more to For further information on the
capture the imagination of mobile users. In a sector where innovation and cost management is integral to Sybase 365 Mobile Banking Study,
commercial success there are solutions to operational and customer needs held in the vaults of mobile please contact:
banking service. The challenge ahead for financial sector businesses is finding the right combination to unlock Carmel Coscia
this mobile potential. carmel.coscia@sybase.com
Tel: +331 53 05 29 10
Fax: +331 53 05 29 09

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