Mobile banking growing in Canada

Mobile banking is finally gaining steam in Canada, long after U.S. consumers started paying bills on their Blackberrys and iPhones, but some analysts wonder whether Canadians will rush to embrace banking apps.

Mobile banking is finally gaining steam in Canada, long after U.S. consumers started paying bills on their Blackberrys and iPhones, but some analysts wonder whether Canadians will rush to embrace banking apps.

ING Direct is the latest Canadian financial institution to launch a full-featured mobile banking app that allows customers to transfer funds, check account balances and transactions, and search for the nearest ABM on a Blackberry or iPhone.

Last month, CIBC released an iPhone app that allows money transfers and bill payments. Scotiabank’s Blackberry and iPhone apps only allow users to find their nearest branch or ABM, while RBC and TD Bank don’t have an app but have optimized websites for banking on mobile phones.

In a report released last month, Forrester Research suggested Canadians are very happy with online banking and aren’t really all that interested in going mobile.

In a survey of nearly 6,000 Canadians, the most popular responses to why users hadn’t enrolled in mobile banking were: “I don’t see the point,” “I get everything I need from online banking,” and “my banking needs are not that urgent that I can’t wait to access my accounts through the phone, ATM, or the web.”

But CIBC says it’s pleased with the response to its app. It’s been downloaded more than 100,000 times in the seven weeks since being released and has received positive feedback, said Christina Kramer, executive vice president of distribution services. An estimated 100,000 clients are using mobile banking each week through the app and the bank’s mobile site, she added.

“It was important to set a leadership position in this space because we believe our clients are very interested in banking on the go and they want that flexibility and access,” she said.

“We will continue to focus on broadening their ability to perform other transactions on the mobile application, they’ve expressed interest to look at investments and those would be areas we’ll continue to focus on.”

The Canadian market for mobile banking is still relatively small but it will grow and it makes sense for banks to go after the early adopters, said IDC Canada analyst Robert Burbach, who predicts the other banks will release their own apps within the next 12 months or so.

“It’s a good group, Blackberry and iPhone users,” he said. “They tend to be younger and very tech savvy and probably are future high-income earners or they presently are. Smartphone adoption has definitely been more concentrated among high-income learners, so that’s who they’re targeting.”

Burbach expects the public will embrace mobile banking much more quickly than the time it took them to get used to online banking, and mobile apps could even replace online banking for some users.

“What we’ve been hearing from the States is the experience is actually a lot more intuitive than online banking and in some ways a lot simpler,” he said.

“This is not just online banking ported to the mobile phone, there’s a different look and feel about it.”

He also doesn’t expect security to be a major issue and thinks banks will offer the same assurances they give to online customers.

“They will promote the fact that the security levels are equivalent to the security offered for online banking and all the big Canadian banks offer pretty blanket security guarantees on online banking.”

But it will be interesting to see if security issues arise out of banking on the go, he added.

“Most online banking you do is in a private space (but) what kinds of situations will people do mobile banking in? Are they going to do it on a subway?”

ING Direct Canada’s president and CEO, Peter Aceto, said the company had started thinking about its mobile apps about 18 months ago and then prioritized the launch about a year ago.

Despite what some analysts might think, he believes Canadians will be quick to embrace mobile banking and said there were plenty of naysayers back in the early days of online banking too.

“We’ve got 1.7 million customers who were early to adopt banking online and banking over the phone and they’re ready to do banking on their mobile devices,” he said.