By Trevor Clawson.

Last week I took possession of a shiny new iPhone and minutes after the man from UPS had made the delivery, I began the setup process. Around two screens in,  the phone invited me to add my card details to Apple Pay and at that point, I had to stop and think.  Do I really need this particular app? What, if any, are the security risks?  What happens if my phone gets stolen? Do I have time this morning to find answers to these questions? Concluding that life was too short, I clicked the ‘next’ button without signing up. Maybe later.

And as it turns out, I’m not alone in occasionally taking a circumspect view of financial technology. According to a new report from the NatWest Bank, Britons have embraced financial apps in a big way, and generally speaking, they are seen as a way to save time and money. But there is a caveat. Significant numbers of us are missing out on the full range of benefits offered by mobile finance tools because we lack knowledge and confidence, while also being concerned about security.

The Smartphone Love Affair

It’s undoubtedly true that apps have revolutionised our financial lives. As the report points out millions of people are happily using their mobile devices to book tickets, shop, carry out a wide range of banking tasks and also – increasingly – actively manage money using savings and investment applications. Indeed you could say that the strength of Britain’s burgeoning fintech (financial technology) industry is overwhelmingly a product of the nation’s love affair with the smartphone.

Broken down into numbers, around 62% of Britons questioned in the NatWest poll are currently using their apps to save time, while a smaller proportion (24%) are shopping, banking and booking travel tickets.

Unsurprisingly, millennials – defined by the report as those aged 25 to 25 – are most enthusiastic about smartphone-enabled finance and around two-thirds of this age group have used a banking app.

Caution is the Watchword

But even among millennials, there are significant numbers of people from whom caution is the watchword. One in ten say of those questioned told NatWest they lacked confidence and knowledge and that this was a barrier to using their phone to carry out everyday tasks.

In the case of banking and financial apps, the caution meter bounces higher, with more than half of those who haven’t banked using their mobiles citing concerns about security as the main barrier.  In particular, many were worried about what would happen to their bank details should their phones be stolen.

Setting up financial apps was also seen as a problem – albeit one that affected only a minority of phone owners. One in ten said they would use banking tools if they could receive professional help in doing so.

As Frans Woelders, Chief Digital Officer, Personal Banking at NatWest said:

“The research shows that once people feel comfortable using digital services, they really benefit. They see the positives of saving time and money. But for those who aren’t so familiar with digital services, it can be harder to take that first step.”

To some degree, this must be galling banks who are progressively shifting their service provision away from good old-fashioned branches and cashpoints and towards those who are happy to do most (or all) of their financial interactions using a combination of mobile apps and debit and credit cards. At the same time, any resistance to the mobile revolution must also impact on the ability of digital-only banks such as Monzo, Starling and Revolut to grow their market share beyond a pool of early adopters.

An Unfinished Revolution - Technophobia Puts the Brakes on Banking Apps

Security Concerns

According to Honey Lancaster-James, a behavioural psychologist cited by NatWest, reluctance to use mobile banking – and by extension online banking – is partly down to a natural aversion to using technologies that you don’t quite understand. But there is hope for the faint-hearted.

“The psychological barriers coming from a fear of the unknown and a lack of confidence in setting up new technology can now easily be overcome simply by seeking advice from a professional or free help from companies such as banks to get started,” she suggests.

However, there are undoubtedly some security issues associated with mobile banking. As is the case with desktop PCs and laptops, mobile devices can fall victim to various forms of malicious software, designed to harvest bank account details or passwords. In addition, mobile banking users may also be approached via e-mail or texts that appear to come from the bank ( perhaps asking for the customer to log in to check details ) or a third party asking for payment of a bill.  Again, these are risks that also affect PC users.

In addition, smartphone users may be at risk from mobile network threats, such as cybercriminals using unsecured WiFi as a means to suck up information.  Finally, there are so-called system vulnerabilities – in other words poorly written apps or weaknesses in the security surrounding the bank servers.  It has to be said that banks are among the most security-conscious organisations in the world,  but even so, research by consultancy Accenture and Security firm, NowSecure back in 2016, carried out in North America, found that every banking app had at least one security flaw.

On the plus side, those who use mobile banking apps are more likely spot fraud, simply because they look at their accounts more regularly and are thus likely to see unusual transactions.  Meanwhile, the banks themselves are continually upgrading their security and they will accept liability for any mobile-related losses that are not the fault of the user.   And arguably smartphone features such as facial or fingerprint recognition makes it much harder for thieves to access personal information should a phone be stolen.

Reducing Risk

Financial Fraud Action – a body set up to combat financial fraud –   suggests a number of ways that mobile users can reduce the risk of falling victim to crime. These include only using apps supplied directly by the bank or financial service provider, preferably through an official Apple or Android store.  In addition, mobile users should update both their apps and the phone operating system when asked as the latest versions also come with protection against new threats. Passwords should, of course, always be kept secure, and many banks also offer their own (free) security software, which should be installed.

That doesn’t necessarily address the slightly wider problem – from the bank’s perspective – that many consumers are deterred not by security concerns about by a perceived complexity. For its part, NatWest has deployed tech experts in every branch to advise users on how to get the most out of phone banking.

That assumes, of course, that there is a nearby branch.