The recent re-awakening of initiatives in the mobile industry on mobile banking and payment services is causing a stream of media coverage, field trials and potential new revenue streams and customers for the financial services sector. The difference between recent developments and attempts at mobile banking seen first at least 10 years ago is the focus on emerging markets categorised with their high un-banked and under-banked communities.
Mobile Channel as a Reach to Market
There are three absolutely key attributes for the success of mobile banking, or any mobile payment services: - trust, security and convenience. It is the factor of convenience that is helping to drive take-up of mobile banking services in emerging markets which has poor access to existing banking infrastructure, and in developed markets where the mobile phone is increasingly becoming part of the converged payment wallet developments.
PayBuyMobile using NFC
In an NFC environment, the SIM is considered an integral element offering:
Standardisation with global acceptance and deployments
Security through a trusted and tested device
Service delivery platform enabling multiple payment applications
Remote management via OTA mechanisms
Portability between devices, as well as separation of service and device
Emergency mode enabling functionality with low battery power
Vodafone
Whilst trials and technical guidelines are all in place, the real business of establishing consumer adoption through valid business models is still to be finalised, and tested. One key element being debated among the various parties in the payment chain, are the age old question who owns the customer, and how will the service be branded?
In the evolving world of m-banking, some of these questions are already being addressed as new business models emerge. For example, in
Drawing on existing market experience, and global customer surveys, four key services are emerging as the most requested services in an m-banking environment:
- Balance Enquiry
- Airtime Purchases
- Money Transfer
- Bill Payment
Balance enquiries generate marginal revenues for banks, and typically SMS-driven, provide an additional channel for bank customers to check their bank accounts, whereas airtime purchases from the m-wallet can provide a lucrative revenue stream for banks based on commissions for airtime sales as seen in other prepaid distribution channels, but is outside the core business of a bank.
It is in the arena of money transfers that the greatest interest is being seen by the mobile industry, especially within the GSM community who is focusing efforts on a SIM-based mobile money transfer service enabling global and national remittances from one GSM customer to another.
In developed markets, mobile financial services are typically focused on enabling banks to include mobile within a greater multi-channel strategy, and the move towards contactless payments using the mobile device and SIM as the payment mechanism; whereas in developing markets the emphasis is on bringing financial services to under-banked or un-banked customers for the first time.
Moving Forward
Regulation still remains a big obstacle for true mobile banking services, as each market differs from the next with some financial services regulators more progressive than others. Additionally there are still commercial challenges in getting the business model right especially in terms of the relationship between the mobile operator and the bank, and more importantly the customer relationship each of these entities has with the consumer. The upper hand may lie with the party brining the initiative to market. To date, mobile operators have mainly driven the process as part of their widening market reach and service development, although banks and other financial service providers are beginning to drive the process through their realization of the potential in the market.
Whilst there is no set wining formula on overcoming these challenges, lessons are being learnt from different implementations including banks retaining the customer ownership, and merely using the mobile operator as a conduit to the customer as another channel to market, or joint ventures whereby the bank and operator enter into partnership under a new or existing brand name (e.g. MTN South Africa and Standard Bank’s MobileMoney Bank), or alternatively where the mobile operator becomes a licensed financial institution itself (e.g. Globe’s G-Cash in the Philippines).
The recent swarm of press coverage on mobile banking belies the actual development point of services. Lots of key industry players including vendors and industry associations, as well as development funds such as The World Bank,
The resurgence in mobile banking services is also helping with ongoing developments in other mobile payment channels such as near-field communications (NFC) being piloted in more developed markets.
No matter where you are located, the way you interact with your bank, insurance company and even shop merchant will change due to the continued profileration and personal proximity of the mobile device.
As Elizabeth Littleford, CEO C-GAP (The Consultative Group to Assist the Poor) which is housed within the World Bank, recently stated, “