Mobile commerce grew to $4 billion in 2011, and e-commerce has been rising as a percentage of total U.S. retail sales for the last ten years.

35.6 million mobile phone users are projected to use mobile coupons by 2013, according to eMarketer. However, not everyone is comfortable with mobile coupons, with Opus Research reporting that nearly 52 percent of consumers are “not likely to use” mobile coupons.

These and other interesting statistics are captured by legal firm Loeb & Loeb in its infographic on Mobile Commerce.

Click here to view the full infographic.

Many of the new entrants in the mobile payments space must face one nagging reality: consumers still trust their banks and credit card companies to drive the mobile payments market. That’s according to new research from KPMG and mobile analyst Chetan Sharma as previously reported in MobileFI.

This doesn’t mean that initiatives such as Google Wallet, Square, Isis or PayPal are doomed to fail; most are already aligned with banks and credit card companies. But consumers’ embrace of mobile payments are seemingly smoother when led by a known financial institution (FI).

KPMG found that:

• When asked who they trusted the most with their mobile commerce financial data, 56% of respondents identified their FI; only 7 percent trusted retailers and 6 percent said they trusted their mobile/Internet service providers. Secure payment systems, such as PayPal, fared better, with 30 percent saying they trust them with their information.
• 72 percent rated the “brand/reputation” of the institution as very important in gaining trust with respect to data privacy and security.
• The percentage of people worried about data privacy and security concerns has gone from 75 percent in the previous survey to 90 percent now.

Sharma found similar results:

• 37 percent of respondents believed FIs were most likely to define the mobile payments and commerce space, up from a little more than 31 percent in 2011.
• Meanwhile, operators, Google and PayPal were well behind, with respondents expressing less confidence in their ability to define the payment market in 2012 compared to last year.
• Start-ups as a group got more backing from respondents in 2012 while Amazon and Apple showed up on the charts for the first time this year.

Given they are clearly in the mobile payments driver’s seat, FIs should not squander the opportunity.

FIs interested in maintaining control of their mobile payments initiative should download the Clairmail white paper, Mobile Payments: Driving New Revenue from the Mobile Channel.

Andres Fontao, Clairmail Executive Mobile Banking Consultant

In financial services, until only recently, the term “mobile banking” was used almost exclusively to describe a retail banking account management performed with a mobile (or cellular) phone using SMS or WAP technology. This service was first introduced in Europe (and by some accounts, on a global level) by the likes of tech-savy Nordea (Finland) and innovation-driven Bankinter (Spain) in the early 2000s. It has evolved from a one-way, informational service to become a bi-directional, transactional platform which is used by banks to generate new revenue (through cross-selling and up-selling products), lower servicing costs, reduce fraud and increase customer satisfaction.

Subsequently, as technology and mobile adoption evolved, financial institutions began introducing Java-based applications such as mobile brokerage solutions for specific handsets. Around the same time, banks took a giant leap of faith and began offering mobile internet services using WAP technology. The problem was, most banks took this as an opportunity to shrink and squeeze online banking into small mobile devices. Little did banks know back then that customers would eventually use mobile phones to apply for mortgages, subscribe to pension plans or finance their children’s university education.

Today, thanks to a series of factors— each of significant importance to the telecom, digital media, and yes, the banking industry— the concept of mobile banking has transcended. What was once a service enabled by a feature phone (or “dumb phone” in common parlance), is today a channel offering a wide array of opportunity for financial institutions. The mobile channel allows financial institutions to engage in relationships with customers when they are outside of their common home/work environment, be it through a feature phone, a smartphone, a tablet, or even a Smart TV.

The common denominator in the mobile banking equation is no longer the device, but rather the context surrounding the customer’s need to engage in a specific banking relationship or transaction. Thus, the new challenge for banks and other service-driven industries comes in choosing the right technology and platform that helps them manage mobile content and maintain the user experience across all digital screens and interactions.

If we step back for a moment to understand the factors contributing to the transcendence of mobile banking from a device-enabled service to a context-driven channel, there are three principal factors which can best help understand this change. First and foremost, we can attribute the evolution to the proliferation of easily transportable connected devices. Smartphone production is slated to overtake that of PC and laptops by 2012; distribution of tablet-like devices such as the iPad and Galaxy are outpacing early-adoption figures for any other device known to date.

Secondly, this transcendence is attributable also to technologies enabling anywhere, anytime connectivity. Specifically, equipment manufacturers have developed technologies allowing carriers to roll out networks which offer enhanced access to increased bandwidth at lightning-quick speeds across the globe. This can be done independent of the device or preferred access technology. Today, bank customers can purchase life and accident insurance in real time from a 3G-enabled iPad while waiting to board an airplane bound for the Himalayas, locate a nearby office or ATM through a contextual search from a GPS-enabled smartphone using Augmented Reality, or pay an outstanding credit-card bill from a Smart TV at your hotel before purchasing a big-ticket item in NYC or engaging in a fine dining experience in Paris.

Lastly, digital content and social media have played a significant role in helping transform the mobile internet, and thereby mobile banking. By developing real-time services which are accessible anywhere, anytime, mobile internet usage is now mainstream. Mobile internet is outpacing adoption of desktop internet; capabilities such as messaging, location, presence and context, and application stores mean that richer interactions are possible with mobile devices than desktop PCs. These new service offerings, together with a ferocious pace of innovation by technology incumbents and start-ups are making it so that people can be more connected, with faster speeds, at a more affordable price and with ease of use.

Ironically, while mobile banking has traditionally been considered a subset of online banking in content, experience and organization, some are predicting that mobile-led feature enhancements and mobile internet adoption will lead the way for online to become a subset of mobile banking.

Whatever the purpose of mobile content— entertainment, personal finance, social media, etc— when the content provider knows the user’s context, it can make for a better distribution and delivery of mobile services and enrich the user experience from beginning to end.

DBS Bank, one of the largest retail banks in South East Asia, recently announced plans to launch a real-time SMS/text alert service after a $1 million ATM skimming scheme hit over 700 DBS Bank customers in Singapore.

Tom Wills, a fraud analyst for Javelin Strategy & Research, says financial institutions (FIs) in other markets, such as the United States and Europe, can learn from DBS’s example. “Offering SMS alerts to customers for ATM withdrawals is a smart move for any FI, because it takes advantage of the strengthened transaction security that mobile out-of-band messaging offers,” he says.

Phil Blank, who works in Javelin’s Security, Risk and Fraud Practice, agrees mobile technology is vastly underused as a means of communicating transactional information with consumers. He says most institutions, especially in the US, are not keeping up with fraud trends, and they fail to adequately leverage mobile technology for alerts.

“If FIs would encourage consumers to set alerts on their credit and or debit cards, a lot of this would be detected a whole lot sooner,” Blank says. “Skimming is only effective if there is a delay between the time of the skim charge and the time the consumer notices it on their statement. Without alerts, the fraudsters will always have the upper hand.”

Learn more about how mobile fraud alerts can help FIs to reduce fraud losses by downloading the Clairmail white paper, Fraud Solution: Leveraging Mobile to Combat Fraud.

EMI recently analyzed the 4Q11 financials from both JPMorgan Chase and Wells Fargo. Their analysis underlined the extent to which mobile banking has emerged as a key banking channel, while concurrently indicating that online penetration may have reached a ceiling.

• Chase:
• Between 4Q10 and 4Q11, Chase grew its active mobile banking customers by 57%, while during the same period active online banking customers increased by 3%.
• Active online banking customers as a percentage of total Chase checking customers rose from 62% in 4Q10 to 65% in 1Q11, but has remained at 65% for the three subsequent quarters.  Active mobile customers as a percentage of checking customers rose from 20% in 4Q10 to 32% in 4Q11.
• Active mobile customers as a percentage of active online customers rose from 32% in 4Q10 to 48% in 4Q11.
• The rate of growth in active mobile customers does not yet show signs of abating.  The quarterly growth rate fell from 13% in 1Q11 to 9% in 2Q11, but then increased to 10% in 3Q11 and again to 16% in the most recent quarter.

• Wells Fargo:
• Active mobile customers increased 55% between 4Q10 and 4Q11.  During this period, active online customers rose 8%.
• Active mobile customers as a percentage of active online customers rose from 26% in 4Q10 to 37% in 4Q11.

The number of mobile banking users worldwide will reach 530 million by 2013, up from just over 300 million last year, according to a new Juniper Research report.

According to Juniper’s Mobile Banking for Developed & Developing Markets report, mobile services are becoming a fundamental component of business strategies for financial institutions (FIs) as they respond to the current economic climate.

Mobile banking is particularly likely to gain impetus in Western markets, as consumers seek tighter control over their finances given uncertain economic conditions.

The report notes that the most successful mobile banking deployments will utilize all three mobile modes — client applications, text messaging and mobile web — rather than being solely app-focused.

The report also states that as banks migrate from traditional bricks-and-mortar approaches and seek competitive differentiation, mobile banking offers an opportunity for all banks to improve operational efficiencies and customer retention and acquisition as a cost-effective communication channel.

“Mobile Banking will be one of the greatest success stories of the mobile commerce industry over the next five years, as consumers observe the benefits of accessing banking services on the move,” said Sonia Lalli of Juniper Research.”As customers become comfortable with undertaking basic banking functions on their mobiles, an increasing number will adopt transactional-based banking enabled by the enhanced functionality afforded by smart devices, exposed to an all-immersive consumer experience.”

Download the Clairmail white paper, Mobile Banking Journey: Maximize Profitability Via an Enterprise-Wide Mobile Strategy, to learn how the mobile channel can help FIs to maximize profitability by reducing costs and improving monetization.

A recent Aite Group report, “Mobile Fraud: The Next Frontier”, advises financial institutions (FIs) to prepare themselves to fight mobile fraud. The Aite report, based on a survey of 24 global risk executives, states that while fraud has yet to become common through mobile banking channels, cyber criminals likely have mobile banking and mobile payments on their radar, and many FIs lack fraud protection that equally covers both mobile and online banking programs.

“The most surprising thing in compiling this report was that two-thirds of the respondents said they did not have integrated fraud protection between mobile and online channels at their financial institutions,” said Julie Conroy McNelley, senior analyst and fraud expert with Aite Group.

FIs have not yet built multiple layers of fraud protection for their mobile banking programs, because so far they have not noticed a lot of breaches in that arena – but stiffer fraud measures may soon become essential, if history is any guide McNelley says.

FIs experienced a similar situation five years ago when deploying fraud protection measures with online banking programs. Initially, FIs saw relatively low levels of online fraud, but when organized crime threw its weight behind online banking attacks, fraud prevention became a higher priority.

Additional key data from the Aite report:

• 75% of respondents agreed that mobile banking creates exposure to risks that are not yet completely understood because cyber criminals are always developing new attack methods.
• 57% of respondents fear mobile banking service innovations may outpace the ability of risk management and fraud protection tools to protect them.
• Only 37% of respondents have the same fraud protection measures in place for mobile and online banking programs, which is troubling inasmuch as fraudsters typically create attacks that capitalize on the lack of similar protection measures in place when monetary transactions cross channels at the bank.
• 67% of respondents said they are already working on deploying increased fraud prevention technology over the next two years to protect the mobile channel and 25% are waiting to see what kinds of threats emerge; only 8% have no plans to increase mobile fraud prevention technology.

With its real-time mobile alerting capabilities, Clairmail empowers FIs to enlist the customer in the fight against fraud and to fully leverage the mobile channel for fraud prevention, detection and resolution.

Learn more by downloading the Clairmail white paper, Fraud Solution: Leveraging Mobile to Combat Fraud.

Mobile banking is on the rise, and chances are you’re one of the 52 percent of consumers who have accessed some form of mobile banking in the past six months. Yet perceived security risks remain a hindrance to full adoption of the technology. In truth, accessing your account via your bank’s mobile website or using your bank’s mobile app is as secure, if not more secure, than banking online via PC. Why?

People always know where their phones are: Studies by Morgan Stanley have shown that the average American (91 percent of those surveyed) has his or her cell phone within arm’s reach 24 hours a day. Think about the last time you lost your wallet or credit card. How much time passed before you noticed? Your mobile phone is always on and available.

Your mobile banking “identity” is tied to a specific phone: Done correctly, your mobile “identity” can be linked to a specific device, making traditional “man in the middle” security compromises much less relevant.

Consumers can mitigate fraud in real time: SMS (short message service) and push messages for smartphones allow consumers to help banks monitor for fraudulent transactions as they happen.

Geolocation helps curtail fraud: Smart mobile companies are leveraging the GPS capabilities of smartphones to stop fraud before it happens. If a physical credit card is used hundreds of miles from a
phone’s location, for example, chances are that one or the other has been stolen.

Future biometric-based security: New smartphones are already being released to leverage this sort of capability. The newest version of the Android mobile operating system, Ice Cream Sandwich, uses facial recognition technology to unlock a user’s phone. And Apple’s introduction of Siri on the iPhone is setting the stage for voice recognition capabilities to come.

Confused by the myriad players and alliances in the growing mobile wallet space? This infographic from Mashable.com may help clear things up:

Click here to view the full infographic.

A new report by PwC indicates that by 2015, mobile banking will overtake branch networks as the dominant channel of customers interaction for financial institutions (FIs), based on strong demand for digital banking products and consumers’ willingness to pay for them.

The PwC report, The new digital tipping point, suggests that banks are missing a vital new source of revenue growth as they have been too slow to respond to the digital innovations that have radically changed business models and redefined customer experience.  This is despite strong demand for digital banking products from consumers and the fact they are willing to pay for these.

PwC conducted research with over 3,000 banking customers across nine developed and emerging markets and found that most consumers are willing to pay up to $15 per month for mobile banking services that offer convenience and value.

The research reveals that there is customer demand for innovative mobile offerings such as social media notifications, an electronic wallet for loyalty cards and financial tools provided by banks, and that these are the products consumers are most willing to pay for.

In the UK, almost two thirds (65%) of respondents said they are willing to pay just over £4 a month for their bank to store loyalty card information and convert accumulated points into cash. This amounts to an annual fee income for banks of approximately £50 per customer.

Stephen Whitehouse, retail and commercial banking partner at PwC, said: “Despite customers’ appetite for new and innovative digital banking offerings, and the fact they are willing to pay for these, the majority of banks still only provide basic mobile and Internet banking services. Banks are clearly missing a trick if they don’t start to invest in their digital offerings and only see digital as a way to reduce costs.

“Banks have generally been too slow to embrace the digital innovation customers now expect from other industries, such as retail or travel. This needs to improve if banks are to hold on to their existing customers and attract the next generation, as the quality of a bank’s digital offering will become an increasingly important factor for consumers.”

Download the Clairmail white paper, Mobile Banking Journey: Maximize Profitability Via an Enterprise-Wide Mobile Strategy, to learn how the mobile channel can help FIs not only reduce costs, but also to improve monetization by preserving existing fees, optimizing cross-selling, enabling new fee-based products, maximizing interchange, driving customer acquisition, improving customer retention and facilitating new revenue sources.