On March 29, 2012, Director of the Federal Reserve’s Division of Consumer and Community Affairs Sandra Braunstein testified before the Senate Banking Committee on consumers’ use of mobile financial services.  Ms. Braunstein distinguished between “mobile banking,” which is a consumer’s use of a mobile device to interact with a financial institution, including checking balances and transferring funds, and “mobile payments,” which are purchases, bill payments, charitable donations, or payments to other persons using a mobile device.  After making this distinction, she referred to the Federal Reserve’s recent survey of consumers’ adoption of mobile banking and mobile payments.

The survey found that the most common reasons for consumers not adopting mobile banking were satisfaction with traditional banking services and concerns over security, including potential hackers and the perceived inadequacy of existing technology.  Consumers do not use mobile payments because of security concerns and because traditional payment forms such as cash or credit card can be regarded as being simpler or easier to use. 

These findings highlight the progress depository institutions must make to advance consumers’ use of mobile financial services: namely, enhance information security technology and inform consumers of the effectiveness of such technology.  Indeed, the survey concludes that “consumers’ perception that mobile banking and mobile payments are unsecure is currently one of the primary impediments to adoption.  If consumers’ perception of security issues changes—whether due to actual or perceived improvements—adoption rates may significantly increase.”