Amidst all the hype surrounding mobile banking, it is interesting to see how well online banking has fared in the United States. For instance, Bank of America says that both online and mobile services are becoming increasingly important with the rising trend of using the Internet or the smartphone to access checking accounts.

The American Bankers Association recently conducted a survey of 10,000 consumers to find that online banking had found favor with 36% of respondents – versus only 25% last year – making it the most popular banking channel ahead of the branch and ATM. This lends credence to the belief that online banking is the channel of the future, with young, tech-loving customers entering the customer base. But it’s not only Gen Y who have reposed their faith; online banking was the second most popular channel (after the branch) even among those above the age of 55.

U.S. consumers are looking towards the online channel to provide differentiation between banks, and are willing to shift allegiance to one that helps them manage their money better. In response, several vendors have strengthened their online banking offering with rich Personal Financial Management tools, which are easy to use, highly automated and personalized. At the same time, they have also reinforced the security of online banking login and transactions.

In contrast to the steady progress of online banking, U.S. mobile banking has skyrocketed in recent times, and may well eclipse 100 million users in another 3 years. Mobile banking has wildly exceeded growth expectations and several banks say that more than 10% of their online banking users have taken to it within the first year. Mobile payments could be the game changer as they grow at 70% annually, and if surveys are to be believed, would drive 5 out of 10 customers to switch providers.  Potential is also seen in corporate mobile banking which has currently very little to show. 

Not surprisingly, mobile banking vendors have been as busy as their online banking counterparts, launching a variety of apps as well as facilities such as remote deposit capture for mobile banking.

But, the fact remains that mobile banking adoption is still languishing in low single digits, while online is clearly the preferred banking channel. Even Bank of America, which leads both Internet and mobile banking users, has 29 million of the former versus only 6.5 million of the latter.

It may take a while for the hare to outsmart the tortoise in this particular race.