Android Users More Interested in Mobile Financial Services, Report Shows

While the news in smart phones this week has been all about Verizon Wireless’s announcement that it will start marketing the iPhone next month, the news that may well be of more importance to mobile payments and mobile banking is the hot streak that Google Inc.’s Android operating system is on. “If you don’t have an Android plan in place, you’re already behind,” Mark Schwanhausser, a senior analyst at Javelin Strategy & Research, tells Digital Transactions News.

Indeed, Apple Inc.’s popular iPhone should get a lift from the fact that Verizon will be selling the smart phone in tandem with AT&T Mobility, up to now the device’s exclusive purveyor. Still, owners of smart phones powered by the Android OS are more interested than owners of other types of smart phones in using their handsets to buy things at the point of sale, buy tickets, track gift and loyalty cards, and make price comparisons. Android-phone owners are also younger, in general, than are owners of other smart phones. Plus, Android-phone ownership is exploding.

Yet 2-year-old Android’s fast ascent has caught many financial institutions and app developers flat-footed. Indeed, of 19 mobile-banking services Javelin surveyed, only 37% offer an Android version.

That’s according to a report issued this week by Pleasanton, Calif.-based Javelin and primarily authored by Schwanhausser. The report, “Keeping up with the Android,” documents the startling rise of Google’s mobile OS and its meaning for banks, merchants, and vendors of mobile-banking and mobile-payments technology.

As other research has recently shown, the Android OS is passing up Apple Inc.’s iOS, the software used in the iPhone and iPad, and bids fair to dethrone Research in Motion’s BlackBerry software. By the end of 2010, Android had already overtaken the iPhone in terms of adoption rate, with 27% of smart phone users having adopted it, compared with 30% for BlackBerry and 22% for the iPhone. That’s up from just 4% for Android in July 2009. By the end of this year, Google’s product will command a 37% adoption rate, Javelin predicts, topping both the iPhone (31%) and BlackBerry (26%).

Android also commands the lead among younger consumers and among women, the report says. This dominance among the younger demographic means Android could shortly cement its margin over its two primary rivals. “From a sheer numbers point of view, Android is a very compelling thing to do,” says Schwanhausser.

Even more compelling is this demographic’s willingness to try financial services on their handsets. While 34% of all smart-phone users are interested in using their device to make a POS purchase, 43% of Android owners are. The same numbers for buying event tickets are 41% and 51%; for organizing and tracking gift and loyalty cards, 38% and 48%; and for making price comparisons while shopping, 55% and 61%.

The iPhone still enjoys a security advantage over Android, Schwanhausser says, owing to Google’s open-source platform and Apple’s apparent insistence on vetting apps more closely. Javelin finds that while 38% of Android users consider the OS to be either unsafe or very unsafe, the corresponding number for the iPhone is 28%. Because security is critical in mobile payments, “a valid argument could be made the iPhone has an advantage,” Schwanhausser says, though he also points out that as more and more Android users perform functions without problems, they will grow in confidence. “The perception of security will be less of an issue,” he notes.

Indeed, though some financial institutions might be more comfortable with the iPhone for security reasons, they will have to reckon on Android’s surging popularity. “The flipside” to the security issue, says Schwanhausser, is “where are the numbers going to be?”