Mobile Banking and Payments – 2nd Edition

Report predicts 894 million mobile banking users by 2015

According to a new research report by Berg Insight, the worldwide number of users of mobile banking and related services is forecasted to grow from 55 million users in 2009 at a compound annual growth rate (CAGR) of 59.2 percent to reach 894 million users in 2015. Over the past year many of the leading players in both the telecom industry and financial sector have intensified their efforts to bring financial services to the world’s unbanked population. Asia-Pacific is expected to become the most important regional market, accounting for more than half of the total user base. Mobile banking is also anticipated to play a key role in bringing financial services to people in the Middle East and Africa. In Europe and North America, the technology will mainly serve as an extension of existing online banks as mobile handsets become more widely used for Internet access. By 2015, Berg Insight forecasts that mobile banking will attract 115 million users in Europe and 86 million users in North America. “The global number of mobile banking users more than doubled between 2008 and 2009, and is expected to almost double again in 2010. Mobile handsets are in an excellent position to become the primary digital channel for providers of banking and related financial services on emerging markets,” said Marcus Persson, Telecom Analyst, Berg Insight. “People who sign up for their first mobile subscription today will likely open their first bank account in the coming years and thus join the modern financial system. Mobile operators can play a vital role in this development and will have the opportunity to take an active part in the creation of some of tomorrow’s most important financial institutions based in Asia and Africa.” In addition to traditional retail banking, the report also identifies international money transfer as an important revenue source for mobile industry players. Berg Insight forecasts that 3–15 percent of the international money transfers currently handled by various formal or informal agent networks will be carried out using a mobile handset by 2015, generating US$ 1.2–6.2 billion in service revenues.

Mobile Banking and Payments is the second consecutive report from berg Insight analysing the rise of the mobile handset as a device for payments, money transfer and banking worldwide.

This strategic research report from Berg Insight provides you with 130+ pages of unique business intelligence and expert commentary on which to base your business decisions.

This report will allow you to understand the dynamics of: Payment services based on premium SMS, WAP billing, transactional networks and credit cards.

Money transfer services for subscriber-to-subscriber financial transactions within and between countries. Mobile banking services for banked populations in the Western World and unbanked populations in emerging markets.

NFC as an enabling technology, fusing the mobile handset and the credit card into a unified payment device. The ecosystem required for providing financial transaction services in the mobile environment.

This report answers the following questions:

- How can mobile technology be applied to extend the reach of today’s online banks?
- What is the true potential for providing mobile financial services to the unbanked population?
- Who are the most important players to watch in the mobile banking and payments industry?
- What are the business opportunities for mobile operators in international money transfer?
- How will mobile payments evolve beyond premium SMS?
- Why are public transport organisations adopting mobile ticketing technology?
- What is the current status for network independent WAP billing?
- What will be the future role for transactional networks and credit cards in mobile payments?
- When will NFC allow integration of payment cards in mobile handsets?

Who Should Buy this Report?

Mobile Banking and Payments is the foremost source of information about the status, future trends and technology developments on this market. Whether you are a bank, telecom vendor, mobile operator, investor, consultant or application developer, you will gain valuable insights from our in-depth research.

About the Author

Marcus Persson is a Telecom Analyst with a Masters degree in Electrical Engineering from Chalmers University of Technology. He joined Berg Insight in 2008 and his areas of expertise include Mobile Value Added Services and the market for mobile broadband. SHOW LESS READ MORE >

List of Figures
Executive summary

1 Premium SMS and other text or voice based payments
1.1 Introduction
1.1.1 Setting up a premium SMS payment gateway
1.1.2 Advantages and disadvantages for consumers and merchants
1.1.3 Examples of applications
1.2 Mobile content sales
1.2.1 Market overview
1.2.2 Payment methods
1.3 Public transport ticketing
1.3.1 Single journey ticketing
1.3.2 SMS public transport ticketing in European cities
1.4 Parking payments
1.5 Other micro-payments and voting
1.6 Case studies
1.6.1 Telenor: Mobile payment service enabler
1.6.2 Plusdial: Premium SMS public transport ticketing provider
1.6.3 NOW! Innovations: Mobile parking payment provider

2 Next generation mobile payments
2.1 Mobile operator billing
2.1.1 WAP billing
2.1.2 Other operator billing methods
2.1.3 Payment intermediaries and payment platforms
2.1.4 Case study: Payforit enables cross-operator WAP billing in the UK
2.2 Transactional networks
2.2.1 Online payment networks
2.2.2 Mobile transactional networks
2.2.3 Case study: Canadian operators team up to deliver mobile transactions
2.3 Credit/debit card billing
2.3.1 Safety aspects of credit card usage
2.3.2 Credit/debit card usage for mobile commerce
2.3.3 Case study: App stores generate millions of credit card purchases
2.4 NFC technology – enabling integration of credit cards into handsets
2.4.1 Contactless smartcards
2.4.2 Mobile NFC
2.4.3 Case studies from Europe and Asia

3 International mobile money transfer
3.1 Global money transfer outlook
3.1.1 The money transfer market
3.1.2 Cost of remitting money
3.2 The GSMA Money Transfer Programme
3.2.1 Programme objectives
3.2.2 Ecosystem structure
3.3 Case Studies
3.3.1 Belgacom ISC and eServGlobal offer the HomeSend remittance platform
3.3.2 Etisalat offers mobile money transfer for expats
3.3.3 Western Union focus on mobile money transfers

4 Mobile banking
4.1 The banking sector
4.1.1 Retail banking
4.1.2 The Western European retail banking industry
4.1.3 The US retail banking industry
4.1.4 Trends in the retail banking industry
4.2 Telephone and online banking
4.3 Mobile banking
4.3.1 Utilising mobile devices for remote banking
4.3.2 Levels of functionality for mobile banking
4.3.3 Mobile banking in Europe and the US
4.3.4 Mobile banking in emerging markets
4.4 Case studies
4.4.1 Bank of America – Mobile banking adoption rises in the US
4.4.2 FNB – 20 percent of its customers use mobile banking
4.4.3 M-PESA – More than 8 million users in Kenya and Tanzania
4.4.4 The Philippines – GCASH and Smart Money attracts 7 million users

5 Forecasts and conclusions
5.1 Mobile payments
5.1.1 SMS payments
5.1.2 WAP payments
5.1.3 Mobile transactional networks
5.1.4 Credit cards
5.1.5 Mobile NFC payments
5.2 International mobile remittance
5.2.1 Value proposition for players in the ecosystem
5.2.2 Market analysis and forecasts
5.3 Mobile banking
5.3.1 Mobile banking in the US and Europe
5.3.2 Mobile banking in emerging markets
5.4 Industry player analysis
5.4.1 Consolidation trend and vertical integration by mobile operators
5.4.2 Service portfolios
5.4.3 Market positioning
5.4.4 Future role in the mobile and financial industries

6 Company profiles
6.1 Mobile payment providers
6.1.1 Bango
6.1.2 Ericsson IPX
6.1.3 Fronde Anywhere
6.1.4 Luup
6.1.5 mBlox
6.1.6 mChek
6.1.7 Netsize
6.1.8 Nokia
6.1.9 Obopay
6.1.10 Sybase 365
6.2 Mobile banking providers
6.2.1 Comviva
6.2.2 Firethorn
6.2.3 Fundamo
6.2.4 M-Com
6.2.5 mFoundry
6.2.6 Monitise
6.2.7 MShift
6.2.8 Utiba
6.2.9 VeriSign
6.2.10 YellowPepper
6.3 Financial institutions
6.3.1 Visa
6.3.2 MasterCard
6.3.3 Mobipay

Glossary

Index

List of Figures
Figure 1.1: Mobile content value chain overview
Figure 1.2: Public transport statistics for 15 European cities (2006)
Figure 1.3: Selection of mobile payment systems for public transport (Europe 2010)
Figure 1.4: Mobile parking solutions in some European cities
Figure 2.1: Payforit’s Accredited Payment Intermediaries (Q1-2010)
Figure 2.2: Examples of online payment services (Worldwide 2009)
Figure 2.3: Examples of mobile transactional service providers
Figure 2.4: Global market shares for general purpose cards (Worldwide 2009)
Figure 2.5: Shipments of contactless cards (2009)
Figure 2.6: Worldwide cumulative shipments of FeliCa contactless chips (July 2009)
Figure 2.7: NFC handset and reader
Figure 2.8: Examples of mobile contactless projects (Worldwide)
Figure 3.1: Top 10 remittance recipient countries in US$ billion (2009)
Figure 3.2: Remittance flows to different regions in US$ billion (2003–2009)
Figure 3.3: Sources of remittance in US$ billion by recipient regions (2009)
Figure 3.4: Main players in the international P2P remittance market (World 2007)
Figure 3.5: Average cost for sending US$ 200 between different countries (2009)
Figure 4.1: Top 10 banks (Worldwide 2008)
Figure 4.2: Retail banking revenues by region (2006)
Figure 4.3: Split of fees for retail banks by region (2009)
Figure 4.4: Average bank fees with local usage pattern by region (2009)
Figure 4.5: Major European retail banking players (2009)
Figure 4.6: Top 10 US banks (2009)
Figure 4.7: Monthly online banking users as share of adult population (2007)
Figure 4.8: Levels of mobile banking sophistication, examples of functions (2010)
Figure 4.9: First major US banks to launch mobile banking
Figure 4.10: Selection of European mobile banking launch dates
Figure 4.11: Mobile money deployments in Africa (January 2010)
Figure 4.12: Mobile money deployments in Asia (January 2010)
Figure 4.13: Mobile money deployments in Latin America (January 2010)
Figure 4.14: Bank of America’s mobile banking application
Figure 5.1: Primary areas of use for mobile payments
Figure 5.2: Application stores by vendor (2010)
Figure 5.3: Comparison of payout rates for WAP billing and credit cards
Figure 5.4: The largest receiving countries of remittance (2009)
Figure 5.5: Mobile international remittance revenue forecast (2009-2015)
Figure 5.6: Traditional business model for mobile banking and payments
Figure 5.7: Online banking and mobile banking in the US (1995–2009)
Figure 5.8: Forecast of active mobile banking users in the US and Europe (2009–2015)
Figure 5.9: Major mobile financial service deployments in emerging markets (2009)
Figure 5.10: Forecast of mobile financial services users (2009–2015)

Mobile financial services include a range of various applications and usage areas. Most of these services could be classified as mobile payments, mobile money transfer or mobile banking. The mobile handset is now established as a means for payments in certain niches such as digital services and ticketing using premium SMS. Berg Insight believes that this type of applications will continue to grow with WAP billing and credit card payments gradually increasing their market shares. Mobile money transfer is expected to achieve a market breakthrough in the coming years, generating revenues in the range of US$ 1.2–6.2 billion in 2015. Berg Insight also anticipates that mobile banking will become highly popular among existing Internet bank users and also become the main digital channel for retail banks in emerging markets. As a result the number of active users of mobile banking and related financial services worldwide is forecasted to increase from 55 million in 2009 to 894 million in 2015.

Mobile payments refer to the utilization of mobile handsets for making purchases. Traditionally, mobile payments have focused on purchasing mobile content, but over time the application area has diversified to include goods and services. Initially, premium SMS was the vehicle for payments as it offered unmatched reach and a simple process familiar to the vast majority of the subscribers. As the number of people using their phones for data services increases a range of alternative methods opens up. Today, many content providers are moving over to WAP billing, which offers practical advantages and higher payout rates. Furthermore, the mobile devices are converging with PCs and a natural step is to utilize the payment methods already established on the Internet, which offer better payout rates and do not rely on operators. These methods are primarily transactional networks and credit cards. In a long term perspective the mobile handset has also been identified as a vehicle for delivering contactless payments using NFC technology and we are starting to see commercial roll-outs in a number of markets.

The money transfer market has grown considerably over the past years, however the current global economic downturn has constrained the remittance volumes temporarily. Still remittance is a growing market in a long term perspective, driven by a number of factors such as migration, globalization and urbanization. Many mobile banking and payment providers are glancing at the US$ 600 billion flowing every year to developing countries, which generates about US$ 60 billion in remittance service revenues. There are over 4 billion mobile subscribers in the world and extensive networks of airtime agents have been built up giving the mobile media unmatched reach and it has been identified as a vehicle for remittance. Today, there are a number of international mobile remittance services available in the US, Europe and the Gulf states. Yet, money transfer networks such as Western Union and informal value transfer systems still dominate the market.

Mobile banking is an evolution of telephone and Internet banking that provides mobile subscribers with access to standard banking services such as account information and payments. There is a major difference between mobile banking for the banked population in the US and Europe compared to the unbanked population in Africa, Asia and Latin America. The services differ significantly as they fill different needs and builds upon different business models. In Europe the service is at the initial stage and is seen as a convenience service that does not generate additional revenues, but more a service to build value-added applications upon. In emerging markets the service targets unbanked or under-banked people that do not have access to other official banking systems.

There is a wide range of players of every size in the mobile banking and payments industry. Since the different services are strongly interconnected most firms dedicated to developing platforms for mobile commerce offer a number of services. Many platforms comprise for example banking services, over the air payments, proximity payments (NFC), remittance, airtime top-up as well as other functions such as marketing and vouchers. In addition to these players there are also large IT firms with the capabilities of delivering tailored solutions to operators or financial institutions that integrate with the current systems. Large banks such as Citigroup or Bank of America have the competence to develop mobile banking and payment schemes in-house. There have also been initiatives from the international card payment giants Visa and MasterCard.

- Bango
- Comviva
- Ericsson IPX
- Firethorn
- Fronde Anywhere
- Fundamo
- Luup
- MasterCard
- mBlox
- mChek
- M-Com
- mFoundry
- Mobipay
- Monitise
- MShift
- Netsize
- Nokia
- Obopay
- Sybase
- Utiba
- VeriSign
- Visa
- YellowPepper