Mobile banking is struggling to grow in the United States compared to other countries as millennial and Gen X customers focus on the quality of a bank’s application when deciding where to do business, according to a new report from Adobe.

The Adobe Digital Index report, State of Banking, found that the U.S. sees an average of 27 banking visits per year per citizen on smartphones compared to 103 for Australia, 78 for the Britain and 73 for Canada. With larger banks seeing a significantly higher share than smaller banks, part of what is holding back mobile banking in the U.S. is the fact that smaller regional banks and credit unions play a bigger role compared to other countries.

“Historically, consumers have selected their banks based on the location of the physical branch,” said Matt Roberts, senior analyst for Adobe Digital Index. “What we are seeing now with millennials and Gen Xers are that they are giving a lot of weight to the mobile app experience when selecting a bank.

“Banks need to think about investing in their apps and ease of use,” he said. “The smaller banks that don’t invest now, will be left behind.”

Adobe examined 86 billion banking sites, more than 600 million social impressions and surveyed 1,000 U.S. consumers for the report.

A fragmented landscape
One of the reasons why the U.S. is behind other countries in the adoption of mobile banking is because the landscape is so fragmented, with the top 10 largest banks holding a 59 percent market share. The leading banks hold an 80 percent share in Australia, 90 percent in Canada and 81 percent in Britain.

Many of the leading U.S. banks have made a big push into mobile.

However, the fragmented landscape and the large number of smaller, regional banks – which are either failing to take advantage of mobile or are providing subpar experiences – are inhibiting growth and scalability of mobile banking in the U.S.

By not delivering the convenient mobile experiences that consumers increasingly want, U.S. banks risk losing customers to other banks, including a growing number of mobile-only options.

Adobe found that mobile app quality is a significant motivational factor towards switching banks for millennials and Gen X. The report found that 39 percent of millennials and 36 percent of Gen X concerned about the quality of mobile apps compared with 13 percent of consumers between 50 and 64 years old. No consumers older than 65 expressed concerns about the quality of mobile apps.

Key findings include that 53 percent of millennials and 62 percent of Gen X do more than half of their banking online.

Credit applications
Adobe also took a look at credit applications and found that 40 percent of credit applications on mobile are completed and just 22 percent are approved. On desktop, 51 percent are completed and 39 percent are approved while on tablets, 50 percent are completed and 32 percent are approved.

The share by device for credit applications is 74 percent desktop, 16 percent smartphone and 10 percent tablet.

“That iPhone credit approvals lagged most of the other Android devices,” Mr. Roberts said. “IPhone users have historically been more affluent – they have higher rev per visit to retail sites based off of previous ADI retail data.

“This may be because a large share of millennials are iPhone users who have not established a solid credit history yet,” he said.