Wallets versus Smartphones: Mobile Banking in Canada and the Cashless Future [Infographic]

While security remains a major concern, mobile banking is nonetheless spreading like wildfire.

It appears that convenience trumps security worries as a new report reveals Canadians are adopting banking apps on their smartphone rapidly.

Well over 2.5 million Canadians are already banking on the go, according to the report by Solutions Research Group. The Toronto-based firm, which tracks emerging technology trends, noted that number represents more than a third of smartphone users with data plans—meaning that, effectively, at least one in three eligible Canadians are accessing mobile banking.

This is remarkable traction when one considers that the first mobile bank app launched just 14 months ago. Compare this stat to four years—that's how long it took online banking to earn the same level of penetration in Canada. And online banking is perceived as even more secure than mobile.

Which brings us to that ever-present barrier: security. About eight percent of Canadians who download banking apps don't end up using them, believed to be largely due to hesitation as a result of concerns over the level of security mobile devices offer.

Then again, people had the same fears with ATMs, and now they're considered commonplace and completely safe.

On the whole, banking apps are well-positioned: they're the sixth most popular app category, behind unbeatables like games, weather, messaging, navigation, and social networking. Despite being introduced in only 2010, banking apps have already surpassed music, news, video, and entertainment apps, many of which have existed since the early 2000s and virtually all of which have existed since at least 2007 when the first iPhone was introduced.

Most mobile bankers are men, and most mobile bankers are iPhone users.

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.”

Data from research conducted by Leger Marketing for PayPal Canada reveals that one in three Canadians would carry a mobile device as their wallet  than carry around change, and about the same amount would be willing to make payments with their phone for cheap or expensive goods. Many Canadians—about 40 percent—would also like to use their smartphone to send money to others instead of having to visit a bank machine.

“A Canadian uses PayPal as their digital wallet once every second because they want greater flexibility, security and convenience in how they pay and get paid,” said Darrell MacMullin, managing director, PayPal Canada. “From avoiding the search for ATMs, to finding easier ways to split restaurant bills with friends or making payments anytime, anywhere and from virtually any device, Canadians want easier, faster and safer ways to shop, share expenses, send money or get paid back.” 

PayPal expects the number of mobile transactions to increase significantly with greater smartphone usage by Canadians. According to a Canadian Wireless Telecommunications Association report in May 2011, 33 per cent of Canada’s 25 million mobile users have smartphones. Another driver of mobile transactions in Canada will be increased consumer trust in the security of their financial data when they use a smartphone or computer to pay or get paid.

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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes and author of Tempest Bound. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys hiking, tennis, and martial arts. more

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