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The Business Case for Mobile Banking - 2nd Edition
VRL Publishing Ltd, March 2009, Pages: 211
This report uses data, exclusive interviews and original case studies from over twenty different countries to give a detailed overview of the fast developing world of mobile banking.
The report presents:
- The lessons from the first doomed attempt to create mass mobile banking in the early 2000’s;
- The short term wins from mobile banking and the opportunities over the next 10 years including ‘Bill Pay’, remote transaction authorisations, real-time loans and third party offers;
- A simple explanation of the key technology issues such as platforms, security and usability;
- The impact of mobile banking on financial services, including ‘Banking the Unbanked’, delivery channels, marketing, payments, remittances, SME and corporate banking;
- The opportunities and threats provided by telecommunication providers.
The Business Case for Mobile Banking
Mobile phone usage worldwide is much higher than that of the internet and offers tremendous potential as a financial channel. Banks are under pressure to develop and implement mobile banking strategies but face uncertainty. In these vital early stages, when crucial decisions are being made, executives will benefit from the insights and recommendations contained in this report.
After abandoning initial rollouts following poor consumer take up, banks are rushing to re-enter the market. Consumer demand remains uncertain and cost reduction through channel substitution (in particular by deflecting calls from the call centre) is the key driver, although there is little empirical support for this.
This report explains how banks all over the world can develop and implement mobile banking. A one size fits all approach is not appropriate as each market has unique requirements.
Questions answered by this report include:
What is the case for mobile banking?
Customer retention and brand enhancement image are compelling short term arguments, although the importance of these will diminish as mobile banking becomes more commonplace. The most powerful argument in the short term is in the cost savings and customer value generated by fraud prevention alerts. In the longer term success will come from leveraging the unique characteristics of the mobile to complement the capabilities of other channels such as ATMs, branches
sales managers and call centres. Profitable new services generated by the mobile channel will include last minute bill pay, remote transaction authorisations, payments and remittances, real-time loans and third party offers.
What is the size and commercial potential of the market?
The introduction and country profiles within this report discuss mobile phone penetration, usage patterns and the main players. The introduction presents the business case for mobile banking, the benefits of mobile banking and why it has so much potential. The section on marketing discusses the key demographics with the greatest demand for the service.
What technology platform is the most suitable?
Perhaps the most important choice facing banks is the choice of technology platform. The three main platforms are SMS-based, browser or WAP-based and client applicationbased. Each has strengths and weaknesses and none has gained dominance so far. The initial failure of WAP-based solutions is discussed at length, with an update on how it has since improved. The author cautions banks to avoid the common tendency of dismissing this platform based on past experience.
What are the main security issues to be addressed?
Although security threats are present, mobile is regarded as a securer channel than the internet. The real challenges lie in optimizing the balance between security and usability, overcoming negative consumer perceptions surrounding security and educating consumers on the steps they can take to maximize their level of protection.
What are the opportunities 5-10 years from now?
Mobile payments are viewed as one of the ‘end games’ of mobile banking. While banks are wise to keep a close eye on the development of NFC POS payments, widespread adoption is not guaranteed. Banks should focus on developing revenue generating payment services which can be rolled out with relatively low costs including airtime top-ups, remittances and P2P payments. Partnering with telcos and third party payment vendors is an effective way of achieving this.
Marketing to mobile banking customers is also an opportunity. Banks have a wealth of consumer data. When combined with the location specific capabilities of the mobile device, it can be a powerful platform for targeted and contextual marketing. This can be used to cross-sell the banks’ own products and services or provide offers from third parties. Banks entering this space must carefully consider their customers´ privacy. They must carefully understand consumer appetite for such advertising and the potential impacts on their brand from providing third party offers.
Who should read this report?
CEO’s, Heads of Retail Banking, e-channels, IT,
Strategic Planners, Marketing Managers…in:
- Financial institutions
- Technology solutions vendors
- Consultants
- Telcos
What are they looking for?
- To understand the evolving market and business case for mobile banking.
- To understand the operational requirements across the organisation, including: sales, marketing, customer service and IT.
- The future direction of the market.
Key issues
- What is the case for mobile banking?
- What is the size and commercial potential of the market?
- What technology platform is the most suitable?
- What are the main security issues to be addressed?
- What are the opportunities 5-10 years from now?
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