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Latin America Telecom Insider / Vol. 2, No 2, Edition 7 - Smartphones and 3G to Create Mobile Banking Opportunity for Network Operators
Pyramid Research, Inc., July 2010, Pages: 17
The growth of smartphones in Latin America will provide the perfect ecosystem for the growth of mobile banking, enabling operators to offer new value-added services to their clients, reduce churn, and increase revenues, according to this new report.
Smartphones and 3G to Create Mobile Banking Opportunity for Network Operators analyzes the opportunities that mobile banking will create for mobile operators and banks in Latin America. It also examines some business models under which mobile banking can develop: Banks going it alone and hybrid models where banks and operators work side by side. Lastly, the report also warns about the dangers of poor regulation for the future of mobile banking.
Latin America will witness a sizable growth in 3G+ networks and the broad use of smartphones. '8.6 percent of all the new units sold in Latin America in 2010 will be smartphones,' says David Noe, Senior Analyst at Pyramid Research. 'However, this percentage will grow dramatically during the forecast period; our estimation is that almost one-third (32.2 percent) of the new handhelds sold by 2014 in Latin America will be smartphones,' Noe adds. Pyramid Research also forecasts that mobile banking in Latin America will grow among middle-to-higher income, technologically savvy users
with more advanced handhelds.'These conditions will create new business opportunities for mobile network operators (MNO) and banks, which will be able to offer mobile banking services to their clients,' says Noe.
The increased use of smartphones will give greater access to better mobile banking services, and the banks will not let the opportunity pass. But it is important that banks and operators do not apply a one-size-fits-all approach when they develop their mobile banking products. “The needs, mobile phone capabilities and education levels of end users vary wildly,” indicates Noe.
Key findings
- Internet banking has grown dramatically over the past few years, showing the broad interest in remote banking transactions both in the developed and developing world. 3G rollouts and the growth in the use of smartphones in Latin America will create a fertile ground for remote transactions to keep growing. But now they will be performed ubiquitously from people’s mobiles as well as from their computers.
- Mobile network operators will embrace the mobile banking opportunity. Mobile banking will be one of the reasons why subscribers will sign up for data services in the future. Pyramid Research expects that non–SMS data revenue in Latin America will reach $21bn by 2014. Mobile banking will also allow MNOs to reduce churn by offering new value-added services.
- Banks will also embrace mobile banking because it will allow them to improve the services they provide to their customers and reduce the number of people coming to their branches, thus reducing their operating costs. If by 2014 Latin America reached current OECD levels of Internet banking and every person with access to Internet banking shifted to their mobile, mobile banking could reach up to 47m users.
- It is not clear yet whether the bank-led model or a hybrid model will prevail. A business model where the banks lead will give banks independence but will be limited to offering services to those already within the financial system. A hybrid model, where groups of MNO and banks partner, is the best model to innovate in the services provided as well as to increase the reach of mobile banking.
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