Mobile Device Analysis - Aite Group 2014 Q1

Transcription

1 AUGUST 2014 Ron Shevlin Activity-Based Marketing: The Future of Mobile Marketing in Banking Photocopying or electronic distribution of this document or any of its contents without prior written consent of the publisher violates U.S. copyright law, and is punishable by statutory damages of up to US$150,000 per infringement, plus attorneys' fees (17 USC 504 et seq.). Without advance permission, illegal copying includes regular photocopying, faxing, excerpting, forwarding electronically, and sharing of online access.

2 TABLE OF CONTENTS INTRODUCTION... 3 METHODOLOGY... 4 CONSUMER ADOPTION OF MOBILE PAYMENTS AND SHOPPING... 5 WHAT ARE FIS DOING ABOUT MOBILE SHOPPING?... 9 THE FUTURE OF MOBILE MARKETING IN BANKING CONCLUSION RELATED AITE GROUP RESEARCH ABOUT AITE GROUP CONTACT LIST OF FIGURES FIGURE 1: MOBILE APPS USAGE... 3 FIGURE 2: FREQUENCY OF MOBILE PAYMENT TRANSACTIONS... 5 FIGURE 3: FREQUENCY OF MOBILE SHOPPING ACTIVITIES... 6 FIGURE 4: IMPORTANCE OF MOBILE SHOPPING ACTIVITIES... 6 FIGURE 5: IMPORTANCE OF MOBILE SHOPPING ACTIVITIES BY GENERATION... 7 FIGURE 6: CONSUMER PERCEPTIONS OF POTENTIAL MOBILE SHOPPING PROVIDERS... 8 FIGURE 7: DEPLOYED AND PLANNED MOBILE BANKING CAPABILITIES FIGURE 8: DEPLOYED AND PLANNED MOBILE SHOPPING CAPABILITIES FIGURE 9: MOBILE APP DEVELOPMENT APPROACHES FIGURE 10: MOBILE APP DEVELOPMENT APPROACHES BY FI ASSET SIZE FIGURE 11: SMARTPHONE AND TABLET DEPLOYMENT APPROACHES FIGURE 12: SMARTPHONE AND TABLET DEPLOYMENT APPROACHES BY ASSET SIZE (IN US$) FIGURE 13: ACTIVITY-BASED MARKETING EXAMPLES FIGURE 14: ACTIVITY-BASED MOBILE SHOPPING LIST OF TABLES TABLE A: CONSUMER PERCEPTIONS OF POTENTIAL MOBILE SHOPPING PROVIDERS... 8 TABLE B: CONSUMER RANKING OF POTENTIAL MOBILE SHOPPING PROVIDERS BY GENERATION... 9 TABLE C: PLANNED MOBILE SHOPPING CAPABILITIES BY FI ASSET SIZE (IN US$)

3 INTRODUCTION Americans' reliance on mobile technology is growing. Nearly 160 million people in the United States about two-thirds of all mobile phone subscribers own a smartphone. 1 Smartphone owners used an average of 27 mobile apps each month during Q4 2013, up slightly from an average of 26 apps in Q and 23 apps used in the same quarter of Although the number of apps used hasn't changed dramatically, the time spent using those apps has. In Q4 2011, smartphone owners spent, on average, a little more than 18 hours each month using mobile apps. By Q4 2012, that number had increased to 23 hours per month. In Q4 2013, smartphone users engaged with mobile apps for more than 30 hours a month with 18- to 24- year-old consumers interacting with mobile apps in excess of 37 hours per month (Figure 1). 3 Figure 1: Mobile Apps Usage Smartphone App Usage Q Q Q Average time per person (hours) Average number of apps used Source: Nielsen 1. comscore, "comscore Reports January 2014 U.S. Smartphone Subscriber Market Share," March 7, 2014, US-Smartphone-Subscriber-Market-Share. 2. MarketingCharts, "Smartphone App Usage," accessed July 24, Ibid. 3

4 In fact, according to comscore, the time consumers spent with mobile applications exceeded the time spent accessing the Internet from desktop computers for the first time ever in January And mobile banking logins exceeded online logins for the first time late in How are financial institutions (FIs) responding to consumers' use of smartphones? How will mobile technologies change how they market their products and services? This Impact Note answers these questions and introduces the new concept of activity-based marketing, or marketing done within the context of the customer's or prospect's real-time activities, to bank marketers. METHODOLOGY This Impact Note draws upon two surveys conducted by Aite Group. In Q2 2013, Aite Group surveyed 1,242 U.S. consumers regarding their financial lives and how the recession impacted them. The sample was recruited to represent the overall age, income, geographic, and gender distribution of the United States. The data have a margin of error of 3 points at the 95% level of confidence. In addition, the following analysis is based on a Q Aite Group/Financial Brand survey of senior marketing executives at 233 U.S.-based FIs. The Financial Brand is an online publication focusing on branding issues and advice affecting banks and credit unions. 4. MarketingCharts, "In the US, Time Spent With Mobile Apps Now Exceeds Desktop Web Access," March 5, 2014, 5. See Aite Group's U.S. Online Banking Vendors and Their Consumer Online Banking Solutions, July

5 CONSUMER ADOPTION OF MOBILE PAYMENTS AND SHOPPING In Q1 2013, 46% of smartphone owners in the United States made at least one mobile payment transaction. Four in 10 made a purchase in a physical store using their smartphone, with one in four doing so three or more times. Forty-five percent of smartphone owners used their mobile device to transfer money to another person's account during this time frame, and 36% received money from someone on their smartphone. In addition, roughly three in 10 smartphone owners purchased airline or train tickets using a mobile device in Q (Figure 2). Figure 2: Frequency of Mobile Payment Transactions Q. How many times did you use your mobile device to do the following transactions in Q1 2013? (n=658) Pay for a product in a store 25% 15% 60% Transfer money to another person's account 22% 23% 55% Receive money from another person 19% 17% 64% Pay a restaurant check 17% 12% 71% Split a restaurant bill with other people 15% 13% 72% Make a charitable donation 14% 13% 74% Purchase an airplane or train ticket 13% 18% 69% Send a virtual gift card 12% 14% 74% 3 or more times Once or twice None Source: Aite Group survey of 1,242 U.S. consumers, Q Mobile shopping was even more popular than mobile payments. More than half of smartphone owners looked up product prices or product reviews while shopping in a store. In addition, a third of smartphone owners received offers on their mobile device while shopping, and nearly a third stored their purchase receipts on their smartphone (Figure 3). 5

6 Figure 3: Frequency of Mobile Shopping Activities Q. How many times did you use your mobile device to do the following activities in Q1 2013? (n=658) Look up product prices while in a store 37% 18% 45% Look up product reviews while in a store 35% 18% 47% Receive special offers on my mobile device from merchants while shopping 16% 18% 66% Store purchase receipts on my mobile device 13% 15% 72% Store credit cards, loyalty cards, or coupons on my mobile device 11% 14% 75% Scan merchandise in a store to check out faster 9% 16% 75% 3 or more Once or twice None Source: Aite Group survey of 1,242 U.S. consumers, Q Highlighting the importance of mobile shopping capabilities relative to mobile payments more than four in 10 smartphone owners say it's "very" or "somewhat" important to use a mobile device to research products while they're in a store. In contrast, only about a quarter say it's important to scan merchandise in order to check out faster, and fewer than three in 10 say it's important to use a mobile device to store credit card and loyalty card information (Figure 4). Figure 4: Importance of Mobile Shopping Activities Q. How important is it to you to use a mobile device to do the following shopping activities? (n=658) Research products while in a store 42% 25% 33% Receive special offers on my mobile device from merchants while shopping 34% 31% 35% Store credit cards, loyalty cards, or coupons on my mobile device 28% 37% 35% Store purchase receipts on my mobile device 27% 37% 36% Scan merchandise in a store to check out faster 26% 39% 35% Very/somewhat important Not at all important Not sure Source: Aite Group survey of 1,242 U.S. consumers, Q

7 Interest in mobile shopping features varies by generation. More than half of Generation Yers say it's important to them to use a mobile device to research products in a store, and 42% say it's important to use a mobile device to receive offers when they're shopping in a store. Compared to members of other generations, a larger percentage of Gen Yers and Gen Xers say it's important to use a mobile device to store receipt and card information, and to scan merchandise in order to check out faster (Figure 6). Figure 5: Importance of Mobile Shopping Activities by Generation Q. How important is it to you to use a mobile device to do the following activities? (Percentage responding "very" or "somewhat" important) Research products while in a store Receive special offers on my mobile device from merchants while shopping Store purchase receipts on my mobile device Store credit cards, loyalty cards, or coupons on my mobile device Scan merchandise in a store to check out faster 16% 34% 28% 19% 16% 38% 36% 42% 33% 28% 36% 27% 32% 29% 52% Generation Y (Ages 21 to 35) (n=265) Generation X (Ages 36 to 49) (n=206) Baby boomers (Ages 50 to 68) (n=171) Source: Aite Group survey of 1,242 U.S. consumers, Q Financial institutions may be surprised to learn that many consumers think that FIs would provide an "acceptable" or "excellent" overall mobile shopping experience, especially in comparison to other potential providers. Fifty-three percent of smartphone owners believe that their bank or credit union would provide an "acceptable" or "excellent" mobile shopping experience. In contrast, less than four in 10 thought that Apple or Google would provide that level of experience, and less than three in 10 thought that Facebook would provide an "acceptable" or "excellent" mobile shopping experience (Figure 6). 7

8 Figure 6: Consumer Perceptions of Potential Mobile Shopping Providers Percentage of Smartphone Users Who Rate the Following as Potentially Providing an Excellent or Acceptable Mobile Shopping Experience (n=658) 53% 49% 45% 42% 39% 38% 29% Bank/credit union Amazon PayPal Mobile phone provider Google Apple Facebook Source: Aite Group survey of 1,242 U.S. consumers, Q Digging deeper into these perceptions, nearly six in 10 smartphone owners think their bank or credit union would provide "acceptable" or "excellent" data privacy and data security for mobile shopping, a higher percentage than those who believe that other potential providers would offer that level of experience. In terms of respondents that think providers propose relevant offers during the mobile shopping experience, Amazon tallies a larger percentage than other providers do, but banks and credit unions garner a larger percentage than Google, Apple, PayPal, or Facebook. Smartphone owners' perceptions regarding payment and shopping advice during the mobile shopping experience follow a similar pattern (Table B). Table A: Consumer Perceptions of Potential Mobile Shopping Providers ("Acceptable" or "Excellent"Responses) Overall user Data Data Relevant Payment and experience privacy security offers shopping advice Bank/credit union 53% 58% 57% 42% 42% Amazon 49% 51% 49% 45% 46% PayPal 45% 49% 45% 35% 39% Mobile phone provider 42% 42% 40% 33% 35% Google 39% 37% 36% 36% 35% Apple 38% 40% 49% 34% 34% Facebook 29% 25% 25% 24% 24% Source: Aite Group survey of 1,242 U.S. consumers, Q

9 As with perceptions regarding the importance of mobile shopping features, consumers' ratings of which companies would provide an "acceptable" or "excellent" overall mobile shopping experience vary by generation. One thing is consistent across the generations, however: Banks and credit unions are the most highly rated by each of the generations (Table B). Table B: Consumer Ranking of Potential Mobile Shopping Providers by Generation ("Acceptable" or "Excellent"Responses) Young Gen Y (Ages 21 to 26) (n=143) Old Gen Y (Ages 27 to 35) (n=228) Gen X (Ages 36 to 49) (n=352) Bank/credit union Amazon Mobile phone provider PayPal Google Facebook Apple Baby boomer (Ages 50 to 68) (n=464) Source: Aite Group survey of 1,242 U.S. consumers, Q WHAT ARE FIS DOING AB OUT MOB ILE SHOPPING? How are FIs responding to consumers' use of mobile devices? Not surprisingly, many are focused on building out mobile banking capabilities. Nearly nine in 10 FIs expect to offer mobile bill pay by the end of 2015, and another one in 10 say they will probably offer it at some point. More than half of FIs anticipate taking applications for checking accounts, mortgages, and car loans via a mobile device by the end of And almost half of FIs expect to have mobile personal financial management features like budgeting and expense categorization in place by the end of 2015 (Figure 7). 9

10 Figure 7: FIs' Planned Mobile Banking Capabilities Deployed and Planned Mobile Banking Capabilities From FIs (N=233) Bill pay 86% 11% Checking account applications 55% 20% 25% Mortgage applications 54% 23% 23% Car loan applications 53% 23% 24% Budgeting 49% 30% 21% Expense categorization 48% 30% 22% Already have or will likely have by end of 2015 Not deployed, but probably will Not deployed, and probably won't Source: Aite Group survey of 233 bank and credit union executives, Q Mobile shopping capabilities aren't on the docket for many FIs, however. About three in 10 already provide, or plan to provide by the end of 2015, merchant-funded offers through a mobile device. About one in four FIs expect to provide mobile apps that help consumers shop for new homes or cars. But only about one in 10 FIs expect to offer non-financial product recommendations, product reviews, or price comparisons through mobile apps (Figure 8). Figure 8: Deployed and Planned Mobile Shopping Capabilities Deployed and Planned Mobile Shopping Capabilities From FIs (N=233) Merchant-funded offers 31% 22% 47% Fee/rate comparisons* Home buying application Car shopping application Purchase receipts Product reviews* Daily deals Product recommendations** Product reviews** Price comparisons** 12% 10% 9% Already have or will likely have by end of % 20% 20% 27% 27% 26% 22% 24% 24% * Financial products ** Non-financial products 29% 24% 28% 34% 29% 38% Not deployed, but probably will 63% 68% 68% 51% 56% 44% 39% 44% 37% Not deployed, and probably won't Source: Aite Group survey of 233 bank and credit union executives, Q

11 Regardless of what features they expect to offer, roughly half of FIs expect to bundle all features into a single, integrated mobile app. And it's not like the rest plan to develop multiple apps nearly three in 10 of the FIs surveyed say they have no defined approach to mobile app development or aren't sure what their approach is or will be, leaving just one in five FIs that plan to deploy separate, stand-alone mobile apps (Figure 9). Figure 9: Mobile App Development Approaches Q. Which best describes your FI's approach to developing mobile apps? (N=233) No defined approach/not sure 28% Single, integrated app 52% Separate, standalone apps 20% Source: Aite Group survey of 233 bank and credit union executives, Q Plans for mobile app functionality vary by FI size. Six in 10 FIs with more than US$10 billion in assets will provide mobile merchant-funded offers by the end of 2015, and 53% expect to offer daily deals on a mobile device. Far fewer FIs with assets less than US$10 billion in assets plan to have these mobile capabilities. And practically no FIs in the US$500 million-to-us$10 billion range anticipate having mobile product recommendations, comparisons, and reviews (Table C). Table C: Planned Mobile Shopping Capabilities by FI Asset Size in US$ $10 billion+ (n=32) $1 billion to $10 billion (n=61) $500 million to $1 billion (n=42) Merchant-funded offers 60% 29% 27% 27% Daily deals 53% 20% 17% 11% Purchase receipts on mobile device 40% 27% 16% 21% Car shopping application 40% 17% 20% 32% Home buying application 40% 17% 27% 30% Non-financial product recommendations 38% 5% 3% 13% $100 million to $500 million (n=76) 11

12 $10 billion+ (n=32) $1 billion to $10 billion (n=61) $500 million to $1 billion (n=42) Non-financial product price comparisons 27% 5% 0% 8% Non-financial product reviews 27% 5% 3% 10% $100 million to $500 million (n=76) Source: Aite Group survey of 233 bank and credit union executives, Q Nearly two-thirds of FIs with more than US$10 billion in assets expect to deploy mobile functionality in a single, integrated app. In contrast, a third of FIs in the US$1 billion-to-us$10 billion asset range plan to develop separate, stand-alone mobile apps. A third of FIs with assets between US$100 million and US$500 million have no defined approach for developing mobile apps (Figure 10). Figure 10: Mobile App Development Approaches by FI Asset Size FIs' Approach to Developing Mobile Apps (By assets in US$) $10 billion+ (n=32) 19% 19% 63% $1 billion to $10 billion (n=61) 33% 23% 44% Single, integrated app $500 million to $1 billion (n=42) $100 million to $500 million (n=76) 21% 24% 16% 33% 51% 56% Separate, standalone apps No defined approach/not sure Source: Aite Group survey of 233 bank and credit union executives, Q In addition, many FIs have yet to figure out their mobile device deployment strategy. About three in 10 say they have separate strategies for smartphone and tablet deployment, and about a quarter will not distinguish between the two devices, leaving about four in 10 that have no defined approach or are not sure how they will approach the two devices (Figure 11). 12

13 Figure 11: Smartphone and Tablet Deployment Approaches Q. Which best describes your FI's approach to developing mobile apps? (N=233) No defined approach/not sure 42% Separate strategies for smartphone and tablet deployment 31% Will not distinguish between smartphone and tablet deployment 27% Source: Aite Group survey of 233 bank and credit union executives, Q Device strategies do vary by asset size, however. A majority of the largest FIs indicate that they have separate strategies for smartphone and tablet deployment. Fewer FIs with less than US$10 billion in assets have separate strategies than the largest FIs do, however, and many nearly half of those with US$100 million to US$500 million in assets have no strategy at all (Figure 12). Figure 12: Smartphone and Tablet Deployment Approaches by Asset Size FIs' Approach to Developing Mobile Apps for Tablets and Smartphones (By assets in US$) $10 billion+ (n=32) $1 billion to $10 billion (n=61) $500 million to $1 billion (n=42) 20% 20% 30% 30% 40% 38% 29% 32% 60% Separate strategies for smartphone and tablet deployment Will not distinguish between smartphone and tablet deployment $100 million to $500 million (n=76) 24% 30% 46% No defined approach/not sure Source: Aite Group survey of 233 bank and credit union executives, Q

14 THE FUTURE OF MOBILE MARKETING IN BANKING Aite Group believes that many FIs are missing the bigger picture in mobile marketing. Three reasons drive our view: 1. An FI that plans to bundle all mobile functionality into a single, integrated app will be disappointed by the low volume of customers and prospects, for that matter who use its app. Smartphone owners have demonstrated that they will use apps that serve very specific purposes like reporting account balances or tracking rewards points. Bundling all mobile functionality into a single app won't serve customers who don't want to navigate through all the functionality or log in to an app when all they want to do is access non-transactional functionality. In addition, a single, integrated app will exclude prospective customers from using a mobile app that helps them shop for mortgages, car loans, or checking accounts. 2. Many FIs don't recognize that what consumers want from their mobile devices is help in making better purchasing decisions and help tracking and analyzing those purchases. Using a mobile app to make the payment isn't as important as the activities that occur before and after the payment itself. 3. Many FIs are applying traditional forms of outbound marketing transmitting marketing messages to the channels, media, and devices that consumers use to the mobile channel. Marketers often deceive themselves into thinking that, because they can determine a consumer's location through his or her smartphone, the message they transmit through the mobile device will be relevant than the messages they currently send. But without any context regarding what activity or task the consumer is actually doing at that location, the message isn't any more likely to be relevant or acted upon. ACTIVITY-BASED MARKETING Aite Group believes that a new type of marketing will emerge, which we call "activity-based marketing," or marketing within the context of an activity being performed by a customer or prospect. What activity-based marketing does is change how consumers shop for and buy products and services. Instead of disseminating marketing messages in the hope that it will reach an interested consumer at the right time, activity-based marketing creates the process and the context for marketers to interact with prospects. A number of financial institutions are already doing activity-based marketing for processes like the following (Figure 13): Car shopping: USAA's Auto Circle app changes the car-buying process by providing car shoppers with an app that lets them search for the type of car they want, track those cars for future reference and comparison, get a loan for the car when they're ready to buy it, and insure it as well. The presale activity facilitated by the app helps put USAA first in line for a consumer's loan and insurance business. 14

15 Home buying: Australian Commonwealth Bank's app uses augmented-reality technology to let users take a picture of a home or building, determine the location, access the realtor database, and display the price and details of the home if it's for sale. This app enables Commonwealth to identify potential mortgage customers much sooner than it was able to in the past. The app can also give marketers interested in reaching new movers (who typically spend thousands of dollars in the six months after moving) opportunities to reach prospects even before they move, enabling Commonwealth to generate advertising revenue. Ticket purchasing: Caixa Bank in Spain has developed an app that lets consumers buy tickets (movies, sports, etc.) using their mobile devices, transforming the ticket selection and buying process. Figure 13: Activity-Based Marketing Examples Source: USAA, Commonwealth Bank of Australia, Caixa Bank Activity-based marketing need not be limited to just big-ticket items such as cars and homes. Let's say that a consumer scans the bar code or QR code for a pair of shoes. There are plenty of apps on the marketplace that can tell the customer that it's a pair of Jimmy Choo shoes that cost US$400 (not that you can really get Jimmy Choo shoes for US$400, but play along for a moment). There are not, however, apps available that address the following questions (Figure 14): Can the customer afford the shoes? Answering this question requires the app to access the customer's bank and credit card accounts and have some knowledge of the upcoming inflows and outflows associated with those accounts. Google, Apple, and the Merchant Customer Exchange (MCX) consortium participants can't access that information. Only banks and credit unions can do that. 15

16 How should the customer pay? Should the customer put a purchase on a debit card or a credit card? Can he or she use rewards points earned toward the purchase? A company called Myze is attempting to answer exactly these questions by monitoring rewards sources to find the best reward and offers available. When consumers shop online or through a mobile device, Myze lets them know which of their cards gives them the best value for that purchase. Can the customer get an offer? Is another merchant (maybe one within a certain geographic distance) willing to match or beat this price? What did others pay? Is this a good deal? How does it compare with what other people paid for the product? What do others think? How good or bad are the reviews for this product? Figure 14: Activity-Based Mobile Shopping Source: Aite Group Why is this activity-based marketing? Because it changes the process of how someone shops for a product. Why should a bank or credit union provide this capability? Because of the following: It helps consumers spend their money more wisely. Getting advice and guidance on money management issues is especially important to Gen Yers. With increased complexity in their financial lives, many millennials are looking for help managing their finances, and as a result, two-thirds of young Gen Yers and nearly threequarters of old Gen Yers turn to third-party tools and sources for help See Aite Group's How Millennials Manage Their Money, May

17 It offers FIs opportunities to market additional services. A shopper with insufficient funds to make a purchase may be interested in a payday loan at the point of purchase or may be interested in applying for a credit card from the FI. FIs providing merchant-funded offers and daily deals will find an activity-based marketing app to be a more effective channel for disseminating those offers. Consumers want them to. As Aite Group found in its consumer survey, many consumers believe that FIs will provide strong data privacy and security capabilities for mobile shopping as well as a good overall user experience (Table A). T H E B E N E F I T S O F A C T I V I T Y - B A S E D M A R K E T I N G Few banks understand that mobile shopping is the link between mobile banking and mobile payments. In the new world of mobile shopping, banks must figure out how to add value in this process beyond having customers check their account balances prior to the transaction or being the payment mechanism (mobile device or not). Aite Group believes that activity-based marketing provides FIs with a number of benefits: Get involved earlier in consumers' decision-making processes. A research study from Demand Metrics found that "During their journey from need to purchase, only 25% of buyers reveal their interest to vendors early. Ninety percent of marketers believe that it is somewhat or very important to engage buyers earlier in their journey." 7 Activity-based marketing creates a new point of interaction for FIs. Historically, banks' point of interaction with customers or prospects is the point of purchase (e.g., when the consumer is ready to buy the house and needs to find a loan or when the consumer is sitting down with the car dealer and negotiating a price). Activity-based marketing changes the point of interaction for FIs, moving that point much closer to the identification of the need or want for the product or service. Moving that point of interaction gives FIs more opportunity to influence the consumers' choice of providers, but does so in a way that provides value to the consumer by transforming the overall activity. Engage prospects in new ways. Activity-based marketing apps like USAA's Auto Circle and Commonwealth Bank's home shopping app can be used by prospective customers as well as the FI's existing customers. Providing tools that help consumers not just customers make decisions about important purchases helps these FIs build trust with prospects and helps them create and establish a position as technology leaders, an attribute important to many millennials evaluating financial providers. Create context for marketing efforts. A Harvard Business Review blog post titled "The Content Marketing Revolution" claims that "we are in the midst of a historic transformation for brands and companies everywhere and it centers on content. The phenomenon of content marketing and brand publishing has unfolded rapidly because it responds to consumer preference. According to the Content Marketing 7. Demand Metric, Lead Generation: Fueling the Revenue Engine, 17

18 Institute, 70% of people would rather learn about a company via an article than an ad." 8 But providing content without context won't have the intended impact. Current content-marketing practices, like most traditional marketing efforts, happen out of context. That is, messages are displayed on TV, in magazines, or in banner ads when consumers are doing things other than shopping for, or even thinking about, the product or service being marketed to them. Activity-based marketing gives FIs opportunities to understand where consumers are in the decision-making process by creating the process of shopping for and evaluating a particular product or set of products. Create and capture new types of data. Many pundits have speculated about big data's ability to improve marketers' ability to predict and explain consumers' behaviors, and, as a result, to improve marketing's effectiveness. But where is this big data going to come from? FIs can't access consumers' smartphone activities. And location-based data is only available to the marketers providing apps that consumers use to help them with their shopping efforts. If FIs are going to bundle all mobile functionality in a single, integrated app, Aite Group believes that consumers won't use that app for their mobile shopping activities, effectively locking FIs out of accessing mobile-related and location-based data and activity. 8. Alexander Jutkowitz, "The Content Marketing Revolution," Harvard Business Review blog, July 1, 2014, 18

19 CONCLUSION Roughly two-thirds of all mobile phone subscribers in the United States own a smartphone, and Americans now spend more time accessing the Internet from mobile applications than they do from desktop computers. From our surveys of U.S. consumers and marketers at banks and credit unions, Aite Group concludes that: Consumer adoption of mobile payments and shopping is approaching half of smartphone owners. In Q1 2013, 46% of smartphone owners in the United States made at least one mobile payment transaction. In addition, in the same quarter, more than half of smartphone owners looked up product prices or product reviews while shopping in a store. Consumers see a role for FIs in mobile shopping. Fifty-three percent of smartphone owners believe that their bank or credit union would provide an "acceptable" or "excellent" mobile shopping experience. FIs scored strongly among consumers' perceptions regarding data security and privacy as it relates to mobile shopping. Few FIs see the mobile shopping opportunity. Despite consumers' views, a minority of FIs plan to build out mobile shopping capabilities such as providing product recommendation and reviews. FIs' mobile strategies will limit their marketing effectiveness. Bundling all mobile functionality into a single, integrated app will deter many consumers from downloading and using the app to serve specific needs. In addition, FIs that don't develop device-specific strategies for smartphones and tablets will build functionality that will go unused on one of the two devices. A new form of marketing will emerge. Activity-based marketing marketing within the context of an activity being performed by a customer or prospect will emerge to help financial services marketers create new points of interactions and new opportunities to provide value to consumers' shopping decisions. 19

20 RELATED AITE GROUP RESEARCH Bank and Credit Union Marketing Trends, 2014, March Marketing Analytics in Retail Banking, March Mobile Banking Forecast: Smartphone and Tablet Use in the United States, December

21 ABOUT AITE GROUP Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities & investments, and insurance, Aite Group's analysts deliver comprehensive, actionable advice to key market participants in financial services. Headquartered in Boston with a presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends. CONTACT For more information on research and consulting services, please contact: Aite Group Sales sales@aitegroup.com For all press and conference inquiries, please contact: Aite Group PR +44.(0) pr@aitegroup.com For all other inquiries, please contact: info@aitegroup.com 21