Mobile Banking

Mobile technology meets different needs in developed and developing markets.  As mobile penetration rates continue to rise globally, various industries and individual firms are utilizing the hand-held technology in innovative and profitable ways. A significant portion of innovation in the application of mobile technology to meet individual’s unique needs has begun in the developing world.

Health care, banking, and government services are a few examples of how unique user needs have been met by tapping into mobile technology’s convenience and large uptake within targeted market segments.

Developing World: Unlike the experience in developed markets, mobile network operators (MNOs) in the developing world led the charge into serving customers’ financial needs via mobile technology. The well-documented success of M-Pesa in Kenya is the product of Safaricom, a MNO partly owned by European telecom Vodafone. G-Cash, a mobile banking product in The Philippines, is the innovation of Globe Telecom. M-Paisa in Afghanistan is the effort of Roshon Telecom. With a robust infrastructure in place and an extensive network of customer-facing agents, it was a natural progression for MNOs to expand in this direction. In fact, numerous retail banks in these regions are deploying mobile banking services on the rails of MNO’s mobile banking infrastructure. Equity Bank in Kenya partnered with M-Pesa to deploy M-Khesho, interest-bearing savings accounts. Hope Micro, a microfinance institution in Sierra Leone enables customers to repay loans over Splash Mobile Money, a mobile payment system in the country.

Developed World: The differences between mobile banking models in developed markets and the developing world do not stop at MNO partnerships. The customer focus also tilts in a different direction: Financial institutions in developed markets are deepening their customer service for existing account holders where mobile banking in the developing world is primarily focused on new customer acquisition by serving the financial needs of unbanked populations. As mentioned above, MNOs in the developing world possess the necessary infrastructure to tap into this pent-up demand for financial services since banks in these regions cannot sustainably serve rural and low-income populations with a brick and mortar model.

Appropriately, each mobile banking model has been designed to unique market dynamics. Financial inclusion in developed markets is high with the majority of the population able to access basic financial services such as checking and savings accounts. With an extensive brick and mortar and ATM infrastructure in place, the mobile phone is currently seen by banks in the developed world as an effective tool to deepen customer service and differentiate themselves in the presence of high competition. The absence of a brick and mortar infrastructure usually leads to large unbanked populations, and as a result, the mobile phone is viewed a means to deliver financial services to meet unmet needs.

It is here the remaining content will divert attention to developed markets in the US and Western Europe to examine how banks in these markets are capitalizing on the mobile phone’s convenience and new data processing capabilities.

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About Mind Commerce

Analysis of telecom and ICT infrastructure, technologies, and applications.
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