Earlier this week we reported in Mobile Banking by the Numbers: How Members Access Your Credit Union statistics and insight derived from the the Consumers and Mobile Financial Services 2015 survey reported by The Federal Reserve. One highlighted area focused on mobile banking in rural populations, where there has been a hope that mobile banking would help facilitate challenges that come with living in remote or rural areas:
Mobile financial services may offer convenience or access in different ways to different subpopulations. One group that could especially benefit from mobile services is rural residents. Because rural residents may have to travel longer distances to visit financial institutions compared to urban consumers, mobile banking services may be particularly convenient.
However, there are also countervailing factors that could make usage less likely. To learn more, the 2014 survey included an oversample of residents in rural areas. Thirty-three percent of residents in non-metropolitan (non-metro) areas reported using mobile banking services in the prior 12 months, compared with 39 percent of respondents in metropolitan (metro) areas. Similarly, a smaller percentage (17 percent) of non-metro respondents reported using mobile payments in the prior 12 months relative to respondents in metro areas (23 percent).
Rural residents appear to use mobile financial services at least somewhat less than those in non-rural areas, why would this be? Results from this survey point to some combination of differing technology, access to broadband services, services offered by financial institutions, and consumer awareness of those services.
Non-metro residents are slightly less likely than metro residents—84 versus 88 percent—to own a
mobile phone, but considerably less likely to own a smartphone—54 versus 63 percent. They are also less likely to report near-constant access. When asked to characterize their Internet access on a mobile phone through wifi or a wireless network, 57 percent of non-metro respondents described it as “nearly always available,” compared to 64 percent of respondents in metro areas.
This relative lack of smartphone ownership and constant mobile Internet access may make use of certain mobile services less attractive or perhaps not possible. When it comes to mobile banking, the supply of services also appears to differ. When asked whether mobile banking was offered by their financial institution, 65 percent of respondents in non-metro areas said yes, compared to 75 percent in metro areas. A higher share (30 percent) of respondents in non-metro areas also reported not knowing if mobile banking was offered by their financial institution, compared to 21 percent in urban areas.
Whether this represents a lack of interest by rural consumers or simply a lack of awareness, it would seem that fewer rural residents have access to mobile banking or are aware of available mobile banking services relative to residents of more urban areas.
Demographic differences between residents of metro and non-metro areas also may be a factor in
any observed differences in the use of technology or the adoption of mobile financial services across areas.
In addition, preferences regarding technology use may be correlated with residential location apart from these other demographic factors. Overall, respondents from non-metro areas are as likely to be “banked” as metro area respondents—86 versus 87 percent, respectively—but somewhat less likely to use either mobile banking services or mobile payments. The lower usages may be associated with lower availability of or consumers’ knowledge about mobile banking services by their financial institution, lower levels of smartphone adoption, and less continuous mobile broadband access. They could also be attributed to other factors, including differences between urban and rural residents in preferences, demographic characteristics, or demand for these services.
These results indicate that the promise of mobile technology as a way to bridge some challenges of living in rural areas may not yet be fully realized.
