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The Business Case for Mobile Banking - 2nd Edition
Description: This report uses data, exclusive interviews and original case studies from over twenty different
countries to give a detailed overview of the fast developing world of mobile banking.
The report presents:
- The lessons from the first doomed attempt to create mass mobile banking in the early 2000’s;
- The short term wins from mobile banking and the opportunities over the next 10 years including
‘Bill Pay’, remote transaction authorisations, real-time loans and third party offers;
- A simple explanation of the key technology issues such as platforms, security and usability;
- The impact of mobile banking on financial services, including ‘Banking the Unbanked’, delivery
channels, marketing, payments, remittances, SME and corporate banking;
- The opportunities and threats provided by telecommunication providers.
The Business Case for Mobile Banking
Mobile phone usage worldwide is much higher than that of the internet and offers tremendous
potential as a financial channel. Banks are under pressure to develop and implement mobile
banking strategies but face uncertainty. In these vital early stages, when crucial decisions are being
made, executives will benefit from the insights and recommendations contained in this report.
After abandoning initial rollouts following poor consumer take up, banks are rushing to re-enter the
market. Consumer demand remains uncertain and cost reduction through channel substitution (in
particular by deflecting calls from the call centre) is the key driver, although there is little empirical
support for this.
This report explains how banks all over the world can develop and implement mobile banking. A
one size fits all approach is not appropriate as each market has unique requirements.
Questions answered by this report include:
What is the case for mobile banking?
Customer retention and brand enhancement image are compelling short term arguments, although
the importance of these will diminish as mobile banking becomes more commonplace. The most
powerful argument in the short term is in the cost savings and customer value generated by fraud
prevention alerts. In the longer term success will come from leveraging the unique characteristics
of the mobile to complement the capabilities of other channels such as ATMs, branches
sales managers and call centres. Profitable new services generated by the mobile channel will
include last minute bill pay, remote transaction authorisations, payments and remittances, real-
time loans and third party offers.
What is the size and commercial potential of the market?
The introduction and country profiles within this report discuss mobile phone penetration, usage
patterns and the main players. The introduction presents the business case for mobile banking, the
benefits of mobile banking and why it has so much potential. The section on marketing discusses
the key demographics with the greatest demand for the service.
What technology platform is the most suitable?
Perhaps the most important choice facing banks is the choice of technology platform. The three
main platforms are SMS-based, browser or WAP-based and client applicationbased. Each has
strengths and weaknesses and none has gained dominance so far. The initial failure of WAP-based
solutions is discussed at length, with an update on how it has since improved. The author cautions
banks to avoid the common tendency of dismissing this platform based on past experience.
What are the main security issues to be addressed?
Although security threats are present, mobile is regarded as a securer channel than the internet.
The real challenges lie in optimizing the balance between security and usability, overcoming
negative consumer perceptions surrounding security and educating consumers on the steps they
can take to maximize their level of protection.
What are the opportunities 5-10 years from now?
Mobile payments are viewed as one of the ‘end games’ of mobile banking. While banks are wise to
keep a close eye on the development of NFC POS payments, widespread adoption is not
guaranteed. Banks should focus on developing revenue generating payment services which can be
rolled out with relatively low costs including airtime top-ups, remittances and P2P payments.
Partnering with telcos and third party payment vendors is an effective way of achieving this.
Marketing to mobile banking customers is also an opportunity. Banks have a wealth of consumer
data. When combined with the location specific capabilities of the mobile device, it can be a
powerful platform for targeted and contextual marketing. This can be used to cross-sell the banks’
own products and services or provide offers from third parties. Banks entering this space must
carefully consider their customers´ privacy. They must carefully understand consumer appetite for
such advertising and the potential impacts on their brand from providing third party offers.
Who should read this report?
CEO’s, Heads of Retail Banking, e-channels, IT,
Strategic Planners, Marketing Managers…in:
- Financial institutions
- Technology solutions vendors
- Consultants
- Telcos
What are they looking for?
- To understand the evolving market and business case for mobile banking.
- To understand the operational requirements across the organisation, including: sales, marketing,
customer service and IT.
- The future direction of the market.
Key issues
- What is the case for mobile banking?
- What is the size and commercial potential of the market?
- What technology platform is the most suitable?
- What are the main security issues to be addressed?
- What are the opportunities 5-10 years from now?
Contents: Chapter 1: Executive summary
Mobile banking defined
The development of mobile banking
The relationship between banks and mobile carriers
Summary
Report contents
Chapter 2: The business case for mobile banking
Cost reduction through channel substitution
Customer satisfaction and retention
Brand differentiation
Summary
Chapter 3: Generating revenue through value-added services
Leveraging the unique characteristics of the mobile channel
Mobile banking products
Basic transactions
SMS alerts
Mobile brokerage
Transaction authentications
Mobile remote cheque deposit
Mobile payments
Non-contactless mobile POS payments
Mobile content payments
Remittances
Instant SMS loans
Personal Financial Management
Summary
Chapter 4: Enhancing other delivery channels
Online channel
ATM channel
Call centre and IVR channel
Branch channel
Mobile sales force channel
Cards
Summary
Chapter 5: Marketing via the mobile channel
Advantages of mobile marketing
The mobile marketing industry
Consumer reaction to mobile marketing
The role of customer permission
Regulatory considerations
OCBC bank Singapore – integrating CRM into the mobile channel
Seven mobile marketing campaigns
Citi – Interactive mobile advertisements in USA Today
HSBC UK – Bluetooth messages sent to people passing its branches
HSBC US – Text interactions in street performances
Barclays – SMS game for youth accounts
BBVA – Offering mobile downloads in CSR campaign
Banesto Bank – Mobile interactivity with in-branch digital signage
JP Morgan Chase – Text-to-win US Open tickets
Mobile delivery of merchant coupons and offers
Alternative payments providers combining marketing with payments
Banks linking promotions with mobile payments
Tyfone and Bank of Oswego – An early trial
Visa & Chase Bank mobile coupons
Firethorn Holdings
ClairMail’s Free Money
Should banks be delivering merchant coupons and offers?
Summary
Chapter 6: Banking the unbanked
The unbanked market
Mobile as a distribution channel
Mobile as a gateway product
Summary
Chapter 7: Choosing a technology platform
Voice-based platforms
Call centre / interactive voice response
Message-based platforms
SMS
USSD
MMS
Mobile email
Instant messaging
Browser-based platforms
Yodlee
Accessing regular online banking on the mobile phone
Application-based platforms
WAP versus app
Back-end integration
Customer support functionality
Summary
Chapter 8: Security considerations
User authentication
Finding the balance between security and usability
Voice authentication
Encryption
Security of device
MoPho phishing
Viruses
Summary
Chapter 9: Usability considerations
OCBC Singapore – A lesson in the importance of interoperability
Summary
Chapter 10: Marketing considerations
Phased rollout is better
Marketing for brand enhancement
The importance of consumer education
Target offerings to specific customer segments
Summary
Chapter 11: United States
The relationship between banks and carriers
Firethorn
mFoundry
‘Carrier agnostic’ platforms
ClairMail
MShift
Bank of America
Multiple platforms
Wells Fargo
Future developments
Summary
Chapter 12: United Kingdom
The mobile banking market
Monilink
First Direct
Barclays
Future developments
Summary
Chapter 13: Germany
The mobile banking market
Mobile banking offerings
Deutsche Postbank
Future developments
Summary
Chapter 14: South Africa
The mobile banking market
First National Bank
MTN Banking
Wizzit Bank
Future developments
Summary
Chapter 15: New Zealand
THE MOBILE BANKING MARKET
National Bank of New Zealand
KIWIBANK
PSIS
Future developments
Mobile banking in Australia
Summary
Chapter 16: Key emerging markets
China
India
Indonesia
Nigeria
Brazil
Summary
China
India
Indonesia
Nigeria
Brazil
Chapter 17: Glossary
List of figures
Executive summary
Figure 1: Banks’ mobile provision plans in Asia, Europe, and US
Figure 2: Screenshot of RaboMobiel home page (Source: RaboMobiel)
Chapter 1: The business case for mobile banking
Figure 3: Channel transaction costs for US banks
Chapter 2: Generating revenue through value-added services
Figure 4: Most common online banking activities, US consumers, 2007
Figure 5: Expectations of cost of mobile banking, US consumers, 2007
Figure 6: Screenshot of Wausau mobile bill presentment (Source: Wausau)
Figure 7: Screenshot of E*TRADE mobile brokerage home page (Source: E*TRADE)
Figure 8: Screenshot of Mitek Systems’ mobile deposit capture home page (Source: Mitek Systems)
Figure 9: Octopus cards (Source: Mobileslate.com)
Figure 10: Suica Card (Source: Various travel blogs)
Figure 11: Oyster Card (Source: Transport for London)
Figure 12: Screenshot of Mobibucks home page (Source: Mobibucks)
Figure 13: Screenshot of PayMate home page (Source: PayMate)
Figure 14: Verrus parking sticker (Source: Verrus)
Figure 15: Screenshot of Citi Obopay home page (Source: Citi)
Figure 16: M-Pesa marketing poster from Safaricom (Source: Safaricom)
Figure 17: Financial inclusion in Kenya, 2007
Figure 18: Screenshot of Smart Money home page (Source: Smart Communications)
Figure 19: Screenshot of GCASH home page (Source: Globe)
Figure 20: Screenshot of ShopText home page (Source: ShopText)
Figure 21: Figure 21 Screenshot of Mobot home page (Source: Mobot)
Figure 22: Screenshot of Ferratum home page (Source: Ferratum)
Figure 23: Screenshot of Wesabe’s mobile transaction tracking tool (Source: Wesabe)
Chapter 4: Marketing via the mobile channel
Figure 24: Acceptance of different advertising media: consumers from the UK, US and India, 2006
Figure 25: Most preferable forms of advertising: consumers from the UK, US and India, 2006
Figure 26: Most preferable forms of advertising: consumers from the UK, US and India, by age and
frequency of using mobile Internet, 2006
Figure 27: Acceptance of advertising on mobile Internet: consumers from the UK, US and India, by
age, 2006
Figure 28: Preference for targeted advertising on mobile Internet: consumers from the UK, the US
and India, 2006
Figure 29: Preference for targeted advertising on mobile Internet: consumers from the UK, the US
and India, 2006
Figure 30: Preference for targeted advertising on mobile Internet by analysis of personal data:
consumers from the UK, the US and India, 2006
Figure 31: Screenshot of Blyk home page (Source: Blyk)
Figure 32: Screenshot from OCBC mobile banking home page (Source: OCBC)
Figure 33: Screenshot of Mocapay home page (Source: Mocapay)
Chapter 5: Banking the unbanked
Figure 34: Use of text messaging by ethnicity, US, 2006
Figure 35: Use of Internet by mobile phone by ethnicity, US, 2006
Chapter 6: Choosing a technology platform
Figure 36: Preferred medium for accessing mobile services in five European countries, 2006
Chapter 9: Marketing considerations
Figure 37: Screenshot of Citi mobile banking commercial (Source: YouTube)
Figure 38: Screenshot of BankPlus 2Go mobile banking commercial (Source: YouTube)
Figure 39: Screenshot of Bank of America “Bank the Way You Live” microsite (Source: Bank of
America)
Figure 40: Green Payments logo ( Source: Wausau.com)
Figure 41: Screenshot of Bank of America “Morris on Campus” campaign (Source: Bank of America)
Figure 42: Screenshot of M&I Bank free mobile phone offer (Source: M&I Bank)
Figure 43: Screenshot of Regions Bank free mobile phone offer (Source: Regions Bank)
Chapter 10: United States
Figure 44: Screenshot of Bank of America online mobile banking demo (Source: Bank of America)
Figure 45: Screenshot of Wells Fargo mobile banking home page (Source: Wells Fargo)
Chapter 11: United Kingdom
Figure 46: Screenshot of First Direct mobile banking home page (Source: First Direct)
Figure 47: Screenshot of Barclays mobile banking home page (Source: Barclays)
Chapter 12: Germany
Figure 48: Mobile banking users by profession, Germany, 2005
Figure 49: Preferred mobile banking technology platform, German consumers, 2005
Figure 50: Screenshot of Deutsche Bank iPhone banking (Source: Deutsche Bank)
Chapter 13: South Africa
Figure 51: Screenshot of FNB mobile banking home page (Source: FNB)
Figure 52: MTN Banking home page (Source: MTN Banking)
Figure 53: Screenshot of Wizzit home page (Source: Wizzit)
Chapter 14: New Zealand
Figure 54: Screenshot of National Bank mobile banking home page (Source: National Bank)
Figure 55: Screenshot of Kiwibank mobile banking online demo (Source: Kiwibank)
Chapter 15: Key emerging markets
Figure 56: Screenshot of FlashMeCash home page (Source: First Inland Bank)
List of tables
Chapter 1: The business case for mobile banking
Table 1: Banks’ reasons for introducing mobile banking services, 2008
Chapter 2: Generating revenue through value-added services
Table 2: Table 2 Willingness to pay for basic mobile banking services, consumers in five Asia-Pacific
markets, 2007
Table 3: Interest in and willingness to pay for mobile fraud alerts, mobile users in five Asia-Pacific
markets, 2007
Table 4: Interest in and willingness to pay for mobile overdraft alerts, mobile users in five Asia-
Pacific markets, 2007
Table 5: Last minute bill pay price sensitivity, US consumers, 2007
Table 6: Means of money transfer used in Kenya, 2007
Chapter 4: Marketing via the mobile channel
Table 7: Interest in mobile marketing, mobile users in five Asia-Pacific markets, 2007
Chapter 13: South Africa
Table 8: Profile of mobile banking users, South Africa, 2008
Table 9: South Africa Mobile banking penetration 2008, % by race
Table 10: Cost of using a Wizzit, traditional bank, and Mzansi acounts, 2005–2006
Table 11: Average number of transactions conducted by Wizzit users, 2005–06
Table 12: Key demographic indicators for Wizzit users, 2005–06
Table 13: Views of mobile banking among South African consumers, 2006
Chapter 15: Key emerging markets
Table 14: Chinese mobile users’ interest in specific mobile banking services, 2007
Table 15: Chinese mobile users’ views on whether their bank offers mobile banking, 2007
Table 16: Indian mobile users’ views on whether their bank offers mobile banking, 2007
Table 17: Indian mobile users’ interest in specific mobile banking services, 2007
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