Android smartphones gaining fast in mobile banking realm
2010-06-21
While banks that are developing mobile banking applications have long focused on Apple's popular iPhone, a new report from Javelin Research shows that financial institutions may also need to shift their efforts toward smartphones with Google's Android operating system.

The report found that while Android controlled just 4 percent of the market six months ago, it now accounts for 12 percent of all smartphones, and 17 percent of active mobile banking users. While iPhone and Blackberry users still account for a larger percentage of the market of mobile banking users, the sharp gain of Android shows that a failure to adapt to the quickly growing operating system could lead to customer attrition.

Android users also generally log into mobile banking more often, and are using advanced mobile services - such as online bill pay - more and more frequently. Javelin researchers say that Andoid's quick adoption is because of the users that it attracts - younger, more affluent consumers who view their phone as a utility first, rather than a music player.

"To see Android come out so quickly and surpass iPhone or come even with iPhone, we didn't expect that," James Van Dyke, Javelin's president and founder, told Digital Transactions News. "Now we're saying [to banks], 'You've got to invest in Android' as well as the iPhone."

Developing an Android-compatible application is easier said than done. According to Javelin, applications meant for Android users need to be "customized" for each different device - the number of which is currently at 18 and rising.

As many banks have not developed their own Android-compatible applications as part of their customer loyalty solutions, many consumers have turned to third-party developers to give them the capabilities they want, according to American Banker. The news provider says that former JPMorgan Chase employee Jeff Peiffer has developed a mobile banking application which supports several financial institutions. He says that more than 5,000 users have downloaded the $2.50 application.

Using third party developers also has significant risks. Last year, First Tech Credit Union warned its customers that one banking application was actually stealing people's financial data. Downloadable applications offer a greater degree of security for financial institutions than mobile web browsing or SMS-based mobile banking, according to Risk.com. The risk of fraud is another reason that banks need to speed up development of their Android applications.

Fraud protection and data security are the top priorities for most financial institutions, according to a recent Fundtech survey. More than half of banking executives surveyed by the company replied that fraud monitoring was their biggest challenge regarding payment processing.

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