mobile banking quantified- adoption of mobile in...

© Celent 1

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Mobile Banking Quantified: Adoption of Mobile in Banking

March 2017

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

© Celent 3

Celent is an industry research and advisory firm focused on the application of information technology in the global financial services industry

Writing Research Reports (select examples)• Industry Trends: omnichannel customer acquisition,

channel technology adoption

Speaking at Industry Events (select examples)

Supporting Media

Portfolio of Analyst Activities

Serving Clients

• Clients: broad Financial Services ecosystem – banks, technology vendors, service providers, consultants, investors, etc.

• 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

• Engagement: research subscriptions, consulting, white papers, speaking engagements

© Celent 4

FI Navigator provides a proprietary bank and data analytics platform

Vendor Analytics

Mobile Banking Quantified Custom Analytics

Institution Analytics

• FI mobile adoption • Customer utilization • Mobile feature adoption • Feature lift • Customer satisfaction • Churn rates

• Market share • Market share accretion • Churn rates • Customer utilization • Customer satisfaction • FI demographics

• Co-authored report in PDF format • Updated biannually

• Web portal • Data refreshed monthly • Ad-hoc queries

© Celent 5

To many banks, digital meant being competitive in the digital channels

“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

Banking executives defining digital

© Celent 6

What was once very clear…

• Transactions

• Sales

• Service

• Service • Transactions

• Information

• Cash withdrawal

• Deposits

Contact center InternetBranches ATMMobile

© Celent 7

…is becoming increasingly blurred

Contact center InternetBranches ATMMobile

© Celent 8

• 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

Mobile is no longer just a self-service channelIt is becoming an omnichannel platform – For bankers and customers

Mobile/Digital

Contact centerBranches ATM

© Celent 9

Digital as an omnichannel platformA framework for digital in Banking/Financial Services

Digital (in Banking/FS) is about…

Underpinned by…

And requiring a change in…

In order to deliver…

Delivering a customised but consistent FI brand experience across all channels and points of interaction

ANALYTICS AUTOMATION

PRODUCTS AND SERVICES

ORGANISATION AND PEOPLE

Demonstrable and sustainable economic value

IT

Source: Celent

© Celent 10

We’re not there yet - half of retail customers aren’t using digital channelsTwo-thirds don’t actively use the mobile channel

Active mobile and online users as (% of retail customers 2Q16)

Res

p (%

)

0%

13%

25%

38%

50%

Online Banking Mobile/Tablet Banking

31%

49%

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 11

Many consumers aren’t yet convinced about mobile banking

My banking needs are being met without mobile banking

I don't see any reason to use mobile banking

I'm concerned about the security of mobile banking

The mobile phone screen is too small

I don't trust the technology

I don't have a smartphone

It's too difficult to use mobile banking

I don't do the banking in my household

My bank charges a fee for using mobile banking

Refused/ no to all

0% 23% 45% 68% 90%

3%

6%

15%

18%

27%

40%

43%

73%

78%

88%

Source: Federal Reserve 2016 Study on Mobile Banking and Consumers

© Celent 12

As a result…Banks are deploying branch resources to increase digital utilization

Source: Celent NA FI survey, August 2015, n=39Q. For each of the objectives listed below, indicate the importance of each based on your institutions’ near-term branch channel priorities?

What is important in the near-term

© Celent 13

Where are we? Mobile Banking Quantified, September 2016

1What 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?

Key Research Questions

@ Celent 14

Mobile Banking App Age

FI Asset Group Bank AvgMB Age

CU Avg MBAge

MB AgeDifferential(CU-Bank)

< $100M

$100M - $500M

$500M - $1B

$1B - $10B

$10B - $100B

> $100B

1.22

0.56

0.71

0.49

0.29

5.38

4.53

4.30

3.47

2.54

6.06

4.16

3.96

3.59

2.98

2.25

MB Age by Asset Group and FI Type

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Mobile Banking Age

Current Period09/30/2016

App TypePersonal Mobile Banking

FI TypeAll

FI Asset GroupAll

App Age GroupAll

Vendor BrandedAll

Industry AnalyticsMobile Banking Age - Personal Mobile Banking

OverviewIA Adoption Age reflects the mobile banking age or time since the release of the initial mobile banking app of financialinstitutions by asset segment. Comparing banks to credit unions reveals that credit unions were earlier adopters of mobilebanking in every comparable asset segment. Generally adoption has progressed from larger asset segments down tosmaller segments. That early adoption by larger financial institutions is clearly reflected in the mobile banking app age bysegment.

Banks

Credit Unions

Large banks were mobile early-adoptersand it shows up in app age

Source: FI Navigator Dataset; September 30, 2016; Celent analysis

© Celent 15

Banks vs. Credit Union Adoption $100M to $100B

Among smaller institutions, credit unions have had a big jump on banksbut banks are catching up…

2013Q2 Q3 Q4

2014Q1 Q2 Q3 Q4

2015Q1 Q2 Q3 Q4

2016Q1 Q2 Q3

Banks

CreditUnions

Grand Total 58.5%

74.1%

53.5%

53.1%

69.0%

48.0%

50.1%

66.0%

45.0%

72.8%

83.5%

69.2%

69.4%

81.9%

65.2%

66.3%

79.7%

61.9%

62.0%

76.8%

57.3%

80.5%

88.8%

77.7%

78.8%

87.5%

75.8%

77.1%

86.9%

73.7%

74.9%

85.5%

71.3%

85.7%

92.6%

83.3%

84.4%

91.8%

81.7%

82.5%

90.6%

79.6%

MB Adoption by Asset Group for $100M - $500M, $500M - $1B, $1B - $10B and 1 more

2013 Q3 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1 2016 Q3

20%

40%

60%

80%

100%

66.0%

92.6%

45.0%

83.3%


Beginning Period06/30/2013

FI Asset GroupsMultiple values

Industry AnalyticsFI Adoption - Personal Mobile Banking

OverviewAdoption Trend Type analysis overviews the trends in mobile adoption of credit unions and banks since June 2013examining the proportion of financial institutions with a live mobile banking app relative to all financial institutions by FI Type.Generally adoption has progressed from larger asset segments down to smaller segments.

FI TypeBanks

Credit Unions


© Celent 16

All Financial Institutions

Customer utilization varies dramaticallyLarge banks have a massive lead (perspective: BAC 4Q16 customer utilization =47%)

2013 Q3 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1 2016 Q3

0%

5%

10%

15%

20%

25%

30%

35%

23.0%

13.3%

8.5%

26.0%

5.7%

37.1%

12.5%

3.1%

14.3%

9.0%

17.6%

FI Asset Group2013

Q2 Q3 Q4

2014Q1 Q2 Q3 Q4

2015Q1 Q2 Q3 Q4

2016Q1 Q2 Q3

< $100M

$100M - $500M

$500M - $1B

$1B - $10B

$10B - $100B

> $100B

Grand Total 19.1%

27.1%

15.7%

10.4%

7.3%

5.6%

4.1%

17.8%

25.0%

14.4%

9.2%

6.6%

5.1%

3.8%

16.7%

23.0%

13.3%

8.5%

5.7%

4.5%

3.1%

23.0%

31.8%

20.7%

14.2%

10.1%

8.2%

6.1%

22.0%

30.5%

19.9%

13.2%

9.1%

7.4%

5.7%

21.6%

30.8%

19.0%

12.3%

7.7%

6.7%

5.2%

20.8%

29.7%

18.2%

11.5%

7.7%

6.2%

4.9%

25.9%

34.8%

23.8%

17.5%

12.7%

10.7%

7.4%

25.2%

34.1%

22.8%

16.7%

12.3%

10.0%

7.5%

24.2%

32.5%

22.0%

16.1%

11.7%

9.3%

7.0%

23.8%

32.6%

21.2%

15.0%

10.9%

8.8%

6.5%

27.6%

37.1%

26.0%

17.6%

14.3%

12.5%

9.0%

26.7%

36.1%

25.0%

16.9%

13.8%

11.8%

8.5%

26.2%

35.1%

23.7%

17.9%

13.0%

11.1%

8.0%

Utilization Growth by Asset Group for All Current Period09/30/2016

Beginning Period06/30/2013

Date LevelQuarter

Utilization MetricEnrolled Customers toAccounts


FI TypeAll

FI Asset GroupAll

App Age GroupAll

Industry AnalyticsUtilization Growth - Personal Mobile Banking

OverviewCustomer Utilization Growth depicts the change in customer utilization by financial institution asset segment for a chosentime period. Customer utilization is measured by dividing the financial institutions’ estimated lifetime mobile banking appinstalls by deposit accounts. Deposit accounts as the denominator gives a good proxy for penetration potential. While lifetimeinstalls are a solid proxy for client penetration, they fail to reflect banking customer attrition. Enrolled customers reflectsestimated attrition considering the institution’s account growth, app ratings (satisfaction) and other performance factors. Thelonger an institution has offered a mobile banking application the greater the gap between utilization as measured by installs(gross) and mobile banking customers (net) as more attrition occurs during a longer span. This differential is readilyobserved as you progress to larger asset segments. While it may appear that larger financial institutions are better at drivingcustomer utilization, much of the differential in utilization rates can be explained by app age. App age reflects the time fromwhen the financial institution first introduced a mobile banking app.

< $100M

$100M - $500M

$500M - $1B

$1B - $10B

$10B - $100B

> $100B


© Celent 17

Chase leads in number of active mobile customers

Number of mobile customers for Wells Fargo, Chase, and Bank of America

Source: Celent Analysis; Quarterly financial statements from Wells Fargo, JP Morgan, and Bank of America’s websites

# o

f Act

ive

Mob

ile U

sers

(Mill

ions

)

0

17.5

35

52.5

70

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16Wells Fargo JP Morgan Bank of America

(47%)

© Celent 18

All Financial Institutions

Mobile feature adoption also varies dramatically

0% 20% 40% 60% 80% 100%Percent of FIs

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

100.0%

98.7%

94.4%

87.7%

81.1%

65.6%

26.7%

22.9%

22.1%

22.1%

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%


Asset GroupAll

Age GroupAll

Industry AnalyticsMobile Banking Features

OverviewMobile Banking Features examines the relative number of financial institutions offering certain mobile banking features byasset segment and overall. Features are grouped into six categories of Basic Banking, Enhanced Banking, Quick Access,Payments, Support & Information, and Fraud Management. Much like overall mobile banking implementation, new featureadoption typically tends to occur earlier with the larger asset segments working its way down to smaller segments. Featuresare identified through text analyses of mobile banking app descriptions. Many additional features have been identified andinventoried until greater representation occurs.


© Celent 19

One Year Ago: September 30, 2015

Tr-12 Months: September 30, 2016

Feature Leaderboard: hot features are apparent


Previous %of FIs w/Feature

Current % ofFIs w/ Feature

# of FIsAdding New

Feature

Quick Balance


Mobile Deposit

P2P Payments

Debit Card On/Off 179

257

497

637

1,552

5.04%

22.13%

65.63%

12.96%

26.74%

2.13%

17.31%

52.49%

3.41%

2.75%

MB Feature Leaderboard Top 5 Features for All

0 250 500 750 1,000 1,250 1,500

# of FIs Adding New Feature


Previous Period09/30/2015

Top Features5

FI TypeAll

FI Asset GroupAll

Industry AnalyticsMobile Banking Feature Leaderboard

OverviewFeature leaderboards examine the trends in mobile banking feature provision for a chosen time span. The leaderboard ranksfeatures by how many institutions started offering them during the period. Only those institutions that offered a mobilebanking application at the beginning of the time horizon are included in the analysis. The hottest features from the span arepresented and sorted by the number of additions. Relative feature maturity can be assessed by the previous and currentpercentage of all institutions offering the feature.Features are grouped into six categories of Basic Banking, Enhanced Banking, Quick Access, Payments, Support &Information, and Fraud Management. Much like overall mobile banking implementation, new feature adoption typically tendsto occur earlier with the larger asset segments working its way down to smaller segments. Features are identified throughtext analyses of mobile banking app descriptions. Many additional features have been identified and inventoried until greaterrepresentation occurs.



# of FIsAdding New

Feature

Mobile Deposit

Bill Pay


Account Alerts

Quick Balance 133

138

150

207

561

3.15%

20.83%

3.94%

86.37%

59.51%

0.89%

15.44%

1.22%

70.59%

43.19%


0 250 500




Top Features5

FI TypeAll

FI Asset GroupAll





# of FIsAdding New

Feature

Quick Balance

Mobile Deposit


P2P Payments

Transaction History 56

67

101

158

1,140

94.43%

22.13%

12.96%

65.63%

26.74%

91.20%

20.92%

11.47%

62.23%

10.06%


0 250 500 750 1,000




Top Features5

FI TypeAll

FI Asset GroupAll



Tr-3 Months: September 30, 2016

© Celent 20

Vendor Market Share: Fiserv is twice the size of its nearest competitorIn terms of FI client count

Rank Vendor Name MarketCount

% ofTotal

Market

1 Fiserv

2 FIS

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

26.7%1,82613.6%93412.6%8608.5%5834.9%3394.3%2953.9%2683.6%2462.8%1952.1%1471.9%1311.8%1231.4%981.4%931.1%75

10.2%701100.0%6,850

Top 15 Vendors Market Share by FI Clients

0 500 1,000 1,500Market Count

% of Total Market Count


Market MeasureFI Clients

Top Vendors15


FI TypeAll

FI Asset GroupAll

App Age GroupAll

Vendor BrandedAll

Known VendorYes

Vendor AnalyticsMarket Share - Personal Mobile Banking

OverviewMarket Share reflects the banking vertical vendor’s share of the defined market. Market share can reflect the client count,app lifetime installs, enrolled mobile banking customers or deposit accounts of the vendor’s clients as a percentage of thedefined market. The defined market might reflect all financial institutions or a defined segment of financial institutions (ex.asset segment or FI type). Market share is typically measured by client count, but other measures might serve as a betterproxy for revenue share (ex. enrolled customers) or revenue potential (ex. accounts).

All Financial Institutions: Top 15


© Celent 21

Vendor market share looks very different among banks and credit unions

Banks



% ofTotal

Market

1 Fiserv

2 FIS

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

31.1%1,29721.2%88417.2%7207.5%3135.3%2215.3%2205.0%2092.6%1101.8%751.0%400.9%380.5%190.4%160.3%130.2%80.7%28

100.0%4,175


0 200 400 600 800 1,000 1,200Market Count




Top Vendors15


FI TypeBanks

FI Asset GroupAll

App Age GroupAll

Vendor BrandedAll

Known VendorYes




% ofTotal

Market

1 Fiserv

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

14 Malauzai

15 CO-OP Financial Svcs

16 Others

Grand Total

19.8%52912.5%33410.1%2705.5%1475.2%1404.9%1304.6%1233.7%983.5%933.2%852.8%752.7%711.9%501.8%471.6%43

17.5%468100.0%2,675


0 100 200 300 400 500Market Count




Top Vendors15


FI TypeCredit Unions

FI Asset GroupAll

App Age GroupAll

Vendor BrandedAll

Known VendorYes



Credit Unions

Among banks, the top three vendors garner nearly 70% of bank clients

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.

© Celent 22

Fiserv also dominates in terms of enrolled users

All Financial Institutions: Top 15


Rank Vendor Name Market Count % of TotalMarket

1 Fiserv

2 FIS

3 NCR Corporation

4 Monitise

5 Access Softek

6 Jack Henry

7 Q2 Holdings

8 Wescom Resources..

9 Sybase 365

10 Alkami Technology I..

11 Vertifi Software

12 MobileShift

13 Malauzai

14 MEA Financial Ente..

15 Tyfone

16 Others

Grand Total

31.1%22,131,95221.2%15,114,04713.3%9,490,4396.5%4,662,6245.5%3,893,2753.4%2,389,3643.3%2,374,6002.4%1,715,8792.4%1,712,8081.2%882,9091.2%879,2111.1%802,5261.1%766,2980.9%644,0610.7%513,4774.5%3,220,465

100.0%71,193,935

Top 15 Vendors Market Share by Enrolled Customers

0 5,000,000 10,000,000 15,000,000 20,000,000Market Count



Market MeasureEnrolled Customers

Top Vendors15


FI TypeAll

FI Asset GroupAll

App Age GroupAll

Vendor BrandedAll

Known VendorYes



© Celent 23

Mobile banking is now a replacement market

All FIs, Client Count: 1 Year Ago Trailing 12 months


Vendor NamePrevious

MarketShare

CurrentMarketShare

NetMarketGrowth

MarketShare

Accretion

Fiserv

FIS

Jack Henry

NCR Corporation

Access Softek

Q2 Holdings

MEA Financial Enterp..

Malauzai

D+H

Computer Marketing ..

CU Mobile Apps

Wescom Resources ..

MobileShift

HomeCU LLC

ShareTec Systems

Others

Grand Total

0.80%0.36%

-0.56%-0.16%0.13%0.34%0.59%0.46%0.00%

-0.26%-1.47%-1.60%0.19%

-1.32%0.83%

226.1%71.1%

-24.4%3.2%

22.3%36.2%40.9%30.1%13.9%7.3%

-10.0%-3.3%15.5%4.4%

17.4%

1.2%1.1%1.1%1.6%1.9%2.1%3.0%3.7%3.6%4.3%5.6%9.1%

12.7%14.7%26.4%

0.4%0.7%1.7%1.7%1.7%1.7%2.5%3.2%3.6%4.6%7.0%

10.7%12.5%16.1%25.6%

0.58%21.9%8.7%8.2%0.00%13.8%100.0%100.0%

Top 15 Vendors Market Share Accretion (09/30/2014 to 09/30/2015)

-1.50% -1.00% -0.50% 0.00% 0.50%

Market Share Accretion




Top Vendors15


FI TypeAll

FI Asset GroupsAll

Known VendorYes

Vendor AnalyticsMarket Share Accretion - Personal Mobile Banking

OverviewMarket Share Accretion (Dilution) reflects the gain (loss) of competitor market share for a defined time period (ex. trailing-12months). If the growth rate of share basis (ex. client count or lifetime installs) is less than the aggregate growth of the entiremarket then market share will be diluted. Market share accretion is often measured by client count, but other measures mightserve as a better proxy for revenue growth (ex. enrolled customers) or revenue potential (ex. deposit accounts).

© Celent 24

FIs

Vendors

Recommendations for Financial Institutions and Vendors

• Devote time and effort to increasing adoption. • 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. • 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.

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.

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