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The latest Online Banking Report: 2011 to 2020 Online & Mobile Banking Forecast is now available. It was mailed over the weekend to all OBR subscribers. It’s also available online here. There’s no charge for current subscribers; others may download it immediately for US$495.

The report includes our latest 10-year online & mobile banking and bill-pay forecast. While our reading of the tea leaves is unlikely to be perfect, it seems clear that the demand for online banking in the United States has reached a plateau (note 1); in fact, we are likely within a year or two of online banking penetration peaking and slowly heading down.

How could that be? Mobile of course. In fact, through the end of 2020, we project an increase of 40 to 45 million U.S. households using mobile banking, to a total of nearly 60 million. During the same period, online banking penetration is actually expected to drop by a few million households.

If we are right, sometime near the end of the decade mobile banking will surpass online (note 2), although by then, the two will look pretty similar.

The report also includes a revised 10-year forecast for U.S. peer-to-peer lending. After more than doubling in 2010, we expect continued strong growth of around 40% compounded annually through 2020.

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Top innovations & trends of 2010
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The report includes a summary of the top ten innovations or trends during the past year (in alphabetic order):

In-statement merchant rewards goes from zero to 100 financial institutions
Loan preapproval wizards reduce uncertainty for applicants
Location-aware mobile services for banking debut
Mobile banking goes mainstream
Mobile capture removes the paper from commerce
Mobile payments gains real momentum
Online personal financial management (outside of the bank) struggles
P2P lending solidifies its niche
Social media proves it can have real impact in financial promotions
Transaction streaming and sharing gain a foothold

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New entrants on the list of the top 43 innovations of all time
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Each year we rank the top online/mobile innovations of all time (North America). There are a total of 43 products listed from 42 unique companies:

15 banks
5 credit unions
9 non-bank financial services companies
13 technology companies

The class of 2010, which was unusual for being all technology companies rather than financial institutions (note 3):

Blippy for its automated transaction-sharing network
Cardlytics for its merchant-funded in-statement online rewards service
Finsphere for its location-aware fraud-targeting service, PinPoint
Mitek Systems for its mobile photo bill pay

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Notes:
1. The penetration of online banking into U.S. households is relatively flat going forward. However, because each households accesses a larger number of financial accounts, growth at individual financial institutions is still growing on average.
2. Forecast is for the United States. Mobile has already surpassed all types of banking in some developing countries.
3. Perhaps this can be explained by the necessary focus of financial institutions on getting through the global banking crisis beginning in 2008.

One of the best innovations to come out of this recession is in-statement, merchant-funded rewards. First-mover Cardlytics launched at last year’s BAI Retail Delivery (see post).

A year later, it was already reaching 30 million consumers through relationships with more than 100 card-issuing banks and 100 merchants (see notes 1, 2). That’s unheard of growth in financial services. If just one-third of the 30 million customers look at their statements each month, Cardlytics would have more unique visitors than Groupon (note 3), which has been called the “fastest growing company ever.”

We’re not saying Cardlytics has anywhere near the $60-70 million in monthly revenues attributed to Groupon, nor the $6 billion valuation. But enough similarities can be seen in their business models that I’d be very, very happy if I were an early Cardlytics investor (note 3). For example:

Both earn revenue directly from merchants who pay only when sales are made
Both leverage online channels to deliver significant discounts to targeted users
Both are first movers with aggressive growth tactics

And Cardlytics is different too:

Cardlytics focus (for now) is national merchants, whereas Groupon is closely associated with local merchants (but is adding national merchants)
Cardlytics can target much more precisely and keep offers out of the hands of the merchant’s existing customers, a huge and unique benefit
Cardlytics does not need to market its own site to consumers; it rides on the coattails, and leverages the trust, of its banking partners

Mobile opportunity
Cardlytics operates at the intersection of payments and advertising. And while the online card statement is the place to be in 2010 (see screenshot below), clearly the future for any shopping-related service is mobile.

Although no specific products or partners were revealed, the startup signaled its intention to go mobile with its ClairMail partnership announced today (press release).

Cardlytics example: in-statement McDonald’s offer made to Burger King customers

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Notes:
1. Cardlytics will be demoing the latest innovations in its service at our Finovate Europe conference on Feb. 1, 2011.
2. BillShrink won a Best of Show award at Finovate Fall for its take on the concept (video).
3. On the strength of its early growth, Cardlytics landed a huge $18 million C-round in August.
4. According to Compete, Groupon had more than 8 million unique U.S. visitors in October.

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Cardlytics

New Online Banking Report Available: Online & Mobile Banking Forecast through 2020

Cardlytics Partners with ClairMail to Take Merchant-Funded Rewards Mobile