Mobile SMS banking for the masses
The noises coming from the recent Mobile Money Summit in Barcelona bode well for the widespread adoption of mobile banking applications by financial institutions, particularly in poorer, less developed countries where formal banking infrastructure is limited. The Summit saw the launch of the Mobile Money Exchange initiative which aims to provide a common voice and formal business forum for business collaboration amongst financial services companies who are entering the mobile environment.
Although account fraud alerts, ‘point-of-sale receipting’ and account balance enquiries have become increasingly common SMS banking functions, mobile transfers and payments are still in the very early stages. Banking customers in the developed world already have access to internet and telephone banking and tend to be more cautious about using mobile banking, partly as a consequence of perceived security issues that could arise. The greatest potential for mobile banking then, is in developing countries, especially those in Africa.
The need or demand for mobile money services in Africa is apparent (currently 77% of Africans cannot access banking opportunities), combine this with the fastest growing market for cellphone usage and you have a potential cash cow. The falling costs of mobile phones have encouraged more than 40% of African consumers to purchase cellphones and this is expected to reach 70% penetration within the next four years. South Africa itself has close to 100% mobile penetration! The number of people across Africa, Latin America and Asia who do not have a bank account but do have a cellphone is expected to be 1.7 billion by 2012. This ‘unbanked’ portion of the population has the potential to be an extremely lucrative market for financial institutions who take the lead in mobile SMS banking.
Eric Auchard, a Reuters columnist’ points out the mobile phone industry has already made inroads into basic financial services such as money transfers, payment and transactions, especially in emerging markets where banks may have shallower roots. He says that although banks have long experience in managing financial risks and extending credit, mobile networks are used to billing millions of people in small amounts every month and already have a relationship with these potential banking customers. Combining these capabilities with bulk SMS messaging, they are able to package up a formidable mobile banking solution.
In South Africa, banks such as First National Bank and Standard have taken the lead in using SMS banking technology to offer additional value to their clients with great success, but if banks are too slow to adopt mobile banking options in Africa, mobile network operators such as MTN may even steal the market away from them with their MTN Banking offering. A fast growing mobile operator in East Africa, Zain, has already signed up 4 million users with a phone plan that allows immigrant workers to transfer money home to their families via their cellphones.
The unbanked population of Africa represents a tremendous untapped opportunity and both mobile application developers and financial institutions should look at how they can service those needs by offering mobile banking solutions. South African banks should not hesitate to dive into the rich potential of mobile money in Africa or they stand to risk losing out on this market altogether.
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Tags: Clickatell South Africa, mobile banking, mobile banking applications, mobile money, mobile money summit, mobile payments, mobile SMS banking, mobile transfers, MTN banking, SMS, SMS banking, South Africa
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One Comment On This Post
Mobile banking is safe at some extent. Mobile banking depends on the people and the location, because basically business man go with mobile banking.