Mobile banking applications are being adopted at a surprisingly fast rate in Canada, but a new report on the industry to be released on Monday shows Canadians have lingering concerns about the security of banking through their smart phone.
More than 2.5 million people in Canada are using mobile banking applications for daily banking, says the report by Solutions Research Group, a Toronto-based firm that tracks emerging technology trends. That represents about 38 per cent of smart-phone users with data plans.
"Considering that the first bank app was introduced only 14 months ago, this is a very fast rate of adoption," said Kaan Yigit, an analyst with SRG. "This is one of the fastest adoption rates [for a new technology]I've seen in 10 years."
Online banking took more than four years to reach a similar level of market penetration in Canada, Mr. Yigit said, mostly due to early worries about the security of Internet transactions. The fact that mobile banking is merely an extension of online banking is helping fuel the rapid adoption of those apps, he said.
Still, not all Canadians who download the apps appear comfortable using them. About 46 per cent of those surveyed said they have download a mobile banking app - though only 38 per cent are actively using it. That suggests nearly one in five people who download the apps are reluctant to use them on a regular basis.
Several respondents raised concerns about the security of mobile transactions, particularly as the banking world moves toward using mobile phones for direct-debit payments at cash registers. That technology could start to be deployed widely within the next 12 months.
"If you go back, it was the same in the early days of ATMs [automated teller machines]" Mr. Yigit said. "People would say I don't want to trust a machine with my money."
Banking apps rank as the sixth most popular category of apps, behind more-established offerings such as games, weather, messaging, social networking and maps and navigation. Introduced in early 2010, they now outrank entertainment, music, news and video.
Men are more likely to download mobile banking apps than women. The survey said 48 per cent of male smart-phone users downloaded an app from their bank, compared to 43 per cent of women. The type of device also plays a role: 54 per cent of iPhone users surveyed say they have adopted banking apps, compared to 32 per cent of BlackBerry users.
However, the numbers suggested in the report, which surveyed more than 400 people in April, may be understating the use of banking apps in Canada. Toronto-Dominion Bank, Canada's second-largest bank, said it has reached 1 million downloads for its mobile app, which was introduced in April last year. Several other financial institutions, including Royal Bank of Canada, Canadian Imperial Bank of Commerce, Bank of Nova Scotia, Bank of Montreal, ING and Desjardins have also introduced apps.
Their popularity is expected to grow as more features are added. Several banks are close to launching mobile stock-trading apps, including TD which could have one on the market by the end of the year. As in mobile banking, ensuring the trading platforms are safe from blunders or identity theft is a key concern.
RBC, Canada's largest bank, is eyeing similar trading functions, along with other mobile enhancements. "You'll see evolutions of those apps," said Dave McKay, head of retail banking at RBC in a recent interview. "Whether it's helping you calculate a mortgage, which is pretty simple, or direct-investing apps to help you buy and sell stock or … alerts and advice around your accounts, everything you see online will be available in an app."
Grant Robertson