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I’ve been watching with increasing fascination at the explosive growth in mobile banking, now dubbed by those in the know as M-Banking. The $100bn floatation of Facebook this week clearly demonstrates how quickly a technology based service can rapidly take over the world, the figures for M-Banking certainly suggest this is an area to watch closely.

It is estimated that there are 1.7 billion people in the world who own a mobile phone but do not possess a bank account. M-Banking is already widely used in the developing world where there is little or no infrastructure and banks can only be found in major cities. Countries such as Kenya, Somalia, Iran, Pakistan and Bangladesh have embraced M-Banking enthusiastically.

The opportunities for European banks are obvious as at least 80% of consumers use a mobile phone. M-Banking is likely to appeal even more as services such as peer-to-peer payments, mobile top ups and commercial payment processing become increasingly accessible for consumers. The marketers amongst you are probably already thinking of the possibilities involving brand development, customer engagement, lead generation and cross selling.

Do you think that we are now on an unstoppable path towards a fully functioning “mobile wallet”? Are the barriers to growth – such as encryption security problems and the diverse array of devices in circulation – going to prove insurmountable?  Would you be happy to you use such as service yourself?

Comments, as ever, would be appreciated.

Andrew McIntee is Director of Financial Services at Interim Partners.


4 Comments » for The M-Banking revolution

  1. Graham Clark says:

    Andrew
    Yes I do think we are on an unstoppable path. History tells us that technology generally overcomes the obstacles we put in front of it. 10 years ago many of us would not have banked online, 30 years ago people queued in branches because they didn’t trust ATMs. Today those services are part of the community that people take for granted.
    I think the mobile wallet is a great opportunity for the financial services industry as well as the telecoms folk. Assuming technology prevails and security is adequate I would use my mobile for a wider range of services

    Graham

  2. Fred Metzgen says:

    Mobile banking can be seen as complicated or as simple as the application dictates. Imagine receiving a text message on your mobile from your bank, telling you that you have insufficient funds in your account, and that your account is about to be overdrawn and all this happens on a Friday evening. Imagine, that with just a few clicks on your phone, you can transfer funds from your savings account to your checking account. Problem solved.

    This is only one aspect of mobile banking, or m-banking, enabling mobile phone users to access basic financial services even when they are miles away from their nearest branch, home computer, PC or i-Pad. In Japan and other parts of the world such as Africa, mobile banking is flourishing. That’s not to say, it is Global yet. For example in the US, the phone companies pretty well dictate how mobile phones are used, and in India, money transfers are highly regulated and restrictive.

    A big influence on the growth of mobile banking, I believe, will be in the growth of NFC (Near Field Communication) enabled handsets, enabling users to use their phones like an oyster card, with the ability to handle automatic payments. (* Transport for London (TfL) and TranSys, the consortium that delivers the Oyster smartcard, have joined forces with O2 to trial a mobile handset that will incorporate Oyster technology.) In parallel, there is a progressive move by major cellular carriers to upgrade their networks to deliver faster data speeds. Even though less sophisticated cell phones are capable of delivering mobile banking services, the public’s confidence seems more reliant on more advanced, web-ready phones. Most new mobile phones coming onto the market today are NFC enabled.

    *http://www.tfl.gov.uk/static/corporate/media/newscentre/archive/6592.html

  3. Yes, Andrew.
    I would agree that we are on the “unstoppable path towards a fully functioning mobile wallet”, but on the journey to “fully functioning” there will casualties and money wasted.
    PayPal who have just launched their own Digital Wallet have stated, “the Payment Industry has just entered a “battleground” time period, where over the next three years competitors will be “vying for position” in terms of long-term market share.

    Emerging technologies will invariably be pushed forwards by technology enthusiasts, but ultimately the Consumer will decide if the services offered based on these technologies bring value to their lives or not.
    Your article starts with mBanking and ends on the roll-out of the mWallet. While both are important contributors, we need to look even broader to mCommerce to see the real potential value.

    What do I mean by that?
    Take NFC. There is a slow take-up and low awareness of Contactless cards. While Contactless cards have been around for years, according to a YouGov study, only 12% of UK pop. believe they have a contactless card vs. 19.6 million contactless cards activated. Actually, 80% of contactless owners state that they have never used their card for a contactless transaction.
    Purely moving this contactless capability into a Smartphone with an NFC chip for Mobile Payments will not excite the masses.
    And the NFC chip implementation into SmartPhones will take time. According to Sybase365, 81% of mobile industry executives believe that NFC will not emerge as a driver for mass adoption of mobile payment services for another two to five years.

    In a Consumer-driven fashion, people are already happily embracing the convenience and immediacy realised in the omni-present Smartphone.
    - 24% of U.K. consumers have used a smartphone to access web sites while shopping, of which 50% accessed retail websites and 48% social media sites (Source: eDigitalResearch and IMRG Survey, 2011)
    - 69% of the “on-the-go” U.K. audience is willing to exchange their location in exchange for more relevant content and better information, including mobile deals (Source: JiWire, 2011)
    - 40% of U.K. consumers using a smartphone while shopping ultimately made a purchase in-store, online or via mobile (Source: eDigital Research and IMRG Survey, 2011)

    There are multiple touch-points for interaction between Brand and Consumer during Consumer’s Mobile Commerce experience.
    The REAL value to Consumers emerge when several of these are carefully (and cleverly) tapped into.
    The Brands on their side must be sure to be ready for Mobile Consumers.
    With increased SmartPhone usage comes high expectations to be treated with Mobile Optimized content.
    An estimated 50% of SmartPhone users will abandon a page if it hasn’t loaded in 10 seconds, whereof 3 out of 5 will never return to the site.

    The Consumer’s Mobile Commerce journey could like like below.

    1. During the DISCOVERY phase.
    Consumer will use mobile for SEARCH, will take input from FRIENDS via Social Media.
    Brands have the opportunity to deliver TARGET ADVERTISING (subject to Opt in) increasing conversion rates through VOUCHERS etc.

    2. As a part of the DECISION process
    Consumer will check REVIEWS, do PRICE COMPARISONS on the spot, check AVAILABILTY

    3. Doing the actual PURCHASE
    Pay now via MOBILE PAYMENT or other methods.
    Instore or ONLINE, ability to make choices belong to the Consumer.
    Convenient presentation of VOUCHERS for redemption and handling of LOYALTY POINTS.

    4. SHARING THE EXPERIENCE
    Consumers will share REVIEWS
    They will tell their friends through Social Media
    Increasingly all aspects of Customer services / complaints are done Online.

    At each single point of this journey, a Brand would need to investigate how to best interact and integrate with the overall Marketing strategy.
    Too often we hear “Yes. We have an app”, but is your Brand really DISCOVERABLE by the free-roaming Consumer…???

    Yes, you are right about Security issues being a barrier to adoption. The fear is probably exaggerated, but that’s a discussion for another day.

  4. Andrew

    Different research houses are forecasting the value of mobile payments to be between $500 and $1000 billion dollars by 2016. As a consequence both large and small companies are “feeling out” their positions on the value chain through trials, statements of co-operation and new services. The list includes banks, mobile operators, on and off line retailers and merchants, financial card networks, social networks, technology providers and mobile device manufacturers.

    I’m currently on assignment with a Spanish mobile payments company which is expanding into Latin America and recently joined them at the large US mobile conference, CTIA2012. Interestingly two of the biggest exhibitors and presenters at the show were Visa and Mastercard. Both were promoting their “mobile wallets”, V.me and Mastercard PayPass which are due for release in the UK in Q3 this year. These are competing with services such as Google Wallet, O2 Money, AmexServe.

    Visa and Mastercard are in essence asking consumers to load the details of all their credit and debit cards into one wallet that has one username and password. At online merchant checkouts that V.me and PayPass are options to pay, consumers decide which card in their “mobile wallet” to checkout with.

    The consumer benefits promoted at the show were the need to only remember one username and password and no need to fill in all your personal details with the merchant as the wallet will automatically do this (certainly a benefit if shopping at a new site or on a smartphone where keys are small). PayPass has signed up American Airlines and Barnes and Noble in the US and V.me is currently operational in the US with buy.com and pacsun.com. As NFC is rolled out both services will allow consumers to load all their cards into a NFC handset and then use them at every Visa/Mastercard NFC equipped point of sale.

    If you want to try things today in the UK its worth checking out O2Money which enables you to store bank cards in a mobile wallet (including an O2 card if required), transfer money, scan barcodes to get details of best buys and of course shop.

    I’m a firm believer that the winners will be those who understand and can deliver an excellent customer experience and who have a brand that their target market trusts.

    Angus

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