Mobile banking is here to stay. Research by Towergroup predicts that 53 million people in the US will be using mobile banking by 2013. This is, however, merely the beginning - if due attention is paid to the strategic implementation of mobile banking to ensure the rails for mobile commerce are built now, mobile banking service providers will develop and provide pragmatic services for today while keeping in mind that the current state of mobile banking should create the infrastructure future commerce will leverage.
Imagine: On the way to the station, you buy your train ticket by sending an SMS message. Payment is debited from your account, and your ticket is sent directly to your mobile phone as a 2D barcode. You buy your coffee at your usual shop by flashing your phone in front of the proximity reader. Then you are informed that you have received a 'buy one, get one free' coupon. As you sip your coffee on the train, you pay a couple of utility bills and send $200 dollars to your son's prepaid card. Upon arriving at the office, you hand your free coffee to the receptionist - and your wallet never left your pocket.
While this scenario can become a reality in the near future, Monitise Americas believes that a certain set of key frameworks must be put in place in order to enable mobile money to flourish and create these opportunities. A key importance is for solutions providers to enable FIs to maintain their direct relationship with the end-consumer. If the FI fails to be custodian of the association between the customer's account details and their mobile phone number, there are plenty of new players on the scene who will seek to disintermediate the FI and reduce them to the role of a bit-pipe.
Based on the real-time connection, ubiquity, and interactivity of the mobile phone, it is imperative that mobile banking becomes much more than just re-rendering of existing services on a mobile device. While the first wave of mobile banking saw a number of FIs take the easy route of re-rendering internet banking, FIs are now increasingly recognizing the limitations of this approach in terms of customer reach (only internet bankers), service range (only a subset of IB services) and proposition (not tapping into interactivity as illustrated in the scenario above). Strategically it does not deliver the critical account/cell number association referred to above.
As institutions roll out more mature solutions, it is key that the channel leverages existing banking infrastructure and adhere to appropriate security standards (e.g. PCI DSS and SAS70).
In setting your institution's mobile strategy, some important considerations should be kept in mind. Firstly, SMS, browser, and mobile applications should not be considered different services, but complementary channels that together create a best-of-breed solution. SMS is unbeatable for simple information services and alerts, whereas more complex FIs benefit from the superior user-experience and security of the downloaded application.
Secondly, customers want a single mobile solution that consolidates alerting and management of bank accounts, healthcare accounts, prepaid cards, bill payment, remote check deposit - not a mobile point solution for each service.
Thirdly, what really represents a valuable mobile service? Consumers are unlikely to manage mortgages through their mobile phone, but will greatly benefit from a low account balance alert combined with the ability to transfer funds or take out a short-term loan.
And finally, how do the mobile offerings fit together to create customer value? Is it really easier to flash a mobile device in front of a reader instead of running a card through? How does this scenario change when we combine the mobile payment with mobile couponing, loyalty management, and the ability to manage the source of payment based on the user's preferences?
By keeping in mind the above considerations, FIs will be positioned to take the first steps on a long-term mobile strategy that avoids costly and time-consuming point-integrations and cul-de-sacs.
Soren Bested is Monitise Americas' Managing Director. His primary responsibility is to extend the Monitise Ecosystem within the US by expanding relationship with cellular carriers, financial processors and institutions, card issuers and transaction networks. Prior to his current role, Soren spent more than 10 years in various high tech industries, most recently leading Operations for Monitise Americas and, before that, MONILINK, now fully-owned by Monitise plc, the world's leading mobile banking and payments partner.