IT

There are now roughly 5.3 billion mobile subscribers on the globe, representing an incredible 77 per cent of the world population. No wonder mobiles make a great target for just about every business out there. Banking is no exception. Bankers and mobile operators have long been looking for ways to enable mobile banking and mobile payments and it looks like all the pieces are finally falling into place. The technology is here, devices are here, new services keep showing up trying to prove there are fewer boundaries out there and, last but perhaps most importantly, users want easy mobile banking to become a reality.

Mobile financial services explained

Mobile financial services can be split into two main types. One regards mobile as a channel. This is where mobile banking comes in as it enables mobile access to financial services. It is basically an extension of e-banking where banks prepare special applications for mobile devices. A more simple form, called SMS banking, is also involved as it offers users alerts, balance inquiries, simple predefined payments and so on.

The other aspect involves mobile payments. The definition of a mobile payment is as simple as it gets - it is all about payment for goods or services with a mobile device. Today there are many solutions enabling micro payments (bus and other similar fares, parking tickets and so on). There are several banked and unbanked options available to mobile users; the potential of these solutions is virtually limitless. As the technology and users evolve we should also see banks offering high value payments over mobile.

Mobile banking market

Mobile banking is still a relatively new concept. Until recently it was not very common and not used for many reasons, not least the lack of smart mobile phones and the unreasonably high data transfer prices. As there were numerous mobile phones with completely different operating systems on the market, banks were not motivated to create and support a bunch of different solutions. All of this has changed rapidly in the last decade. Smarter than smart phones, falling data transfer prices, and alignment of operating systems has increased m-banking demand substantially.

The growth now seems irreversible - it is expected that within a few years more transactions will be carried out via m-banking than e-banking. Mobile phones use is already a routine for the younger generations, and older users are getting accustomed to it too. Business and advanced users are already demanding to have access to the bank anytime and anywhere.

A research report from the analyst firm Berg Insight shows that the worldwide number of users of mobile banking and related services is forecasted to grow from 55 million in 2009 at a compound annual growth rate of 59.2 per cent to reach 894 million users in 2015. The eMarketer analysis and predictions support these finding.

Advantages for banks

There are very sound reasons why banks are pushing for the rapid adoption of mobile banking. Customer desire for mobile services is such that having a good m-banking system represents a competitive advantage, with existing customers reporting higher satisfaction and new customers generating new revenue and enhancing profit.

Starting easy

When choosing an approach that will convince most users that mobile banking and payments are easy, affordable and secure, most banks start with SMS mobile payments. Short text messages are a well-known form of communication and are easy to use for all generations. Therefore they are a great first step into mobile payments and e-invoices, with SMS utility bill payments getting the most attention at the moment. As there is no real mobile operator assistance needed, implementation of such solutions is relatively easy. But have no doubt: SMS is just the start of the mobile banking revolution. Much more is to come.