Javelin Strategy & Research announces its latest research report — “Smartphone Banking Security: Mobile Banking Utilization Stalls As Consumers React To Security Issues”. With the explosive growth of smartphone ownership, zooming upwards of 40% since 2010, and constant buzz about such hot new technologies as mobile wallets for payments, financial institutions (FIs) expected that mobile banking growth would continue to skyrocket as well. However, Javelin’s data reveals that mobile banking has actually plateaued. The Javelin report, based on surveys conducted with more than 13,000 consumers, examines this surprising trend, identifies the real reasons why more consumers aren’t using mobile banking, and presents the steps FIs must take if they want to engage more mobile consumers.

Tech-savvy consumers are increasing their use of smartphones to do almost everything these days – everything, that is, except mobile banking and purchasing. Javelin found that the rate of adoption of mobile banking barely budged between 2010 and 2011, despite FIs’ aggressive promotion, and rates of mobile purchasing also stayed the same. One reason - smartphone owners perceive mobile banking as less secure. Between 2009 and 2010 the number of consumers who rated mobile banking as “unsafe” or “very unsafe” increased by a shocking 54%.

“This study is a wake-up call to FIs to look into what consumers really want,” said Philip Blank, Managing Director, Security, Risk and Fraud. “First and foremost, FIs need to address consumers’ needs around security and communicate to consumers their commitment to creating a safe and trusted channel for mobile banking.”

As FIs forge ahead to build mobile relationships with smartphone users, they must neutralize mobile threats in order to build consumer confidence. These consumer responses reflect attitudes before the big data breaches of 2011, which affected more than 180 million personal records, and the malware attacks in early March 2011 on Google’s Android Market. These data breaches make consumers feel even more uneasy about using mobile channels.

“FIs need to get ahead of the problem and focus both on addressing security concerns and responding to consumers’ needs around mobile banking,” said James Van Dyke, President and Founder of Javelin. “Really listen to consumers and give them what they want. Our report clearly shows how the consumer prefers to do their mobile banking. That’s where FIs need to concentrate their development efforts to boost interest in mobile banking and –at the same time - respond to consumers’ significantly increased fears.”

Selected Key Report Findings – Smartphone Banking Security

- The key factor that mobile banking is lacking, and what FIs need to do to generate significant and compelling demand for mobile banking.

- The FIs that have the most active mobile banking consumers – and the surprising FI that ranks the highest.

- Details behind the rates of rates of mobile banking and purchasing and smartphone adoption by consumers.