By Magnus Jern, president DMI International
Mobile banking has revolutionised the way we interact with our banks and manage our money. Consumers now expect the same level of service from their bank as they do from a retail store – they want everything at their fingertips. And this trend towards mobile only banking is only set to grow. A report published by CACI and BBA ‘The Way We Bank Know’ predicts that by 2020 customers will use their mobile to manage their current account 2.3 billion times – more than internet, branch and telephone banking put together.
Unlike most of Europe, where mobile banking is used as a supplementary service to their physical store interactions, mobile banking has become the sole banking function for customers in emerging markets.
More than a billion people in emerging and developing markets have cell phones but no bank accounts. The introduction of new secure mobile banking options is often the first banking experience consumers in this market have access to.
M-Pesa in Kenya is one of the first and best examples of a mobile banking option that meets the needs of an emerging market. It offers digital services to send and receive money, pay for bills and transact easily, safely and conveniently.Furthermore, with Visa recently entering the African market with mVisa and Orange delivering Orange Money in multiple countries on the continent, mobile banking in Africa is both highly competitive and innovative, transforming not just the banking industry, but how people access their money.
Innovative banking solutions such as these are entering the market every month. We recently worked with mobile payment service provider Wing to enable mobile payments in Cambodia. In Cambodia, only 1.5 million people are in possession of bank cards amongst a population 15.5 million people and so Wing’s app enables its customers, both individuals and businesses, to transfer, deposit and withdraw money anywhere in Cambodia, via any mobile phone, at a low cost.
So why are these options so successful?
With no bank account, many low-income consumers store and transfer money using informal networks, but these often have high transaction costs and are prone to theft. The alternative is to simply store money on your person or at home and this is equally unsafe. For businesses carrying and transferring large amount of money in cash doesn’t feel safe and is sometimes not practical due to long distances. Therefore a trusted transfer of money between people and businesses is great revolutionises how individuals and small businesses operate.
As well as this, emerging markets such as Cambodia are experiencing strong urbanisation with people migrating from farming ways of life to more lucrative city employment. As there is no banking infrastructure in the provinces mobile banking services enable migrants to get set up instantly and are used to transfer funds securely and swiftly back to family in the provinces.
Mobile banking in emerging countries in comparison to western markets is very user focused. Where most western banks have tried to replicate their complete online presence in a mobile app, with no differentiation in service offering, emerging markets started with one or two features and focused on making these work as well and as intuitively as possible, even for illiterate users. From our experience with Wing it’s clear that future roadmaps are also targeted towards user needs rather than replicating traditional banking services. If the market doesn’t need money lending services then that will not become part of the service offering.
The key to success is understanding the customer needs in each countries and helping them solve their problems with ease of use and trust.
What’s in store for the future?
Technology transformation in banking is generally slow with 10 years from concept to mass market adoption. Therefore what we’re most likely to see is the services that are being deployed today becoming successful tomorrow. There are sure to be innovations but few with as big an impact on people’s everyday lives as we’ve already begun to see with the deployment of mobile banking and the transformative effect it can have on the previously ‘un-banked’ in those societies. While it may take at least ten years for the full impact to be felt on the banking industry, for consumers using mobile banking services the benefits are immediate.
Looking into the future, we can expect to see mobile money and payment services evolve and mature into fully-fledged banking experience offering services such as loans and bank accounts. This is a natural progression as they have access to a customer base that need these services – but it will remain the consumer and their experience, expectations and engagement that will continue to guide and inform the innovation that we see.