By allowing users to make payments and transfer money using regular “dumbphones”, M-PESA empowered millions of Kenyans to move money, and to circumvent traditional banking.
Instead of using bank accounts, customers could create an M-PESA “wallet”, and then use their phones’ basic SMS ability to make payments or transfer money.
More developed markets have a higher level of technology in the hands of customers. But we can see a similar pattern, with new approaches emerging. In the US, Square is targeting traditional payment models by allowing iPhones and iPads to replace credit card readers. Dwolla, an online and mobile payment network outside the traditional credit card network, recently received $5 million in financing. These agile, focussed companies can often make significant progress with minimal resources, and point the way for larger organisations.
At the heart of mobile banking is the question of what customers want to do on and with their mobile devices. The small screens of smart phones do not lend themselves to every application. However, the ability to provide balance checking, expense tracking and most of all payment are appealing offers. BBVA is now able to offer its customers mobile payment services, with the recipient’s phone number as a unique identifier.
The future is versatile
Near-Field Communication technology will make contactless payment systems like Google Wallet simpler and more popular. As screens get larger, more and more services can be migrated – Intuit’s Mint service recently launched an app for Android tablets. By 2015, 17% of people in the developed world with bank accounts will bank using mobile devices– and they will also be a gateway for the unbanked to perform financial transactions.
The possibilities for mobile banking are considerable, and also the challenges – most obviously security, but also value, service mix and a range of new competitors from outside traditional spaces.
However, we should not think of services in isolation. A smartphone is a device with a camera, and therefore a way to enter physical objects like receipts. It has Internet connectivity, to deliver real-time updates and connect customers and banks through social media. It can receive information and promotions by email, SMS and even on-screen augmented reality. It has GPS, to deliver location-appropriate services. It can even be used to talk to people!
True success in the mobile space depends on understanding and harnessing the remarkable synergy of mobility. For banks, they are not just a device for providing more information to customers, but a window into the customer’s needs. Requests for new services can be made on the move.
Location-based services can take into account not just how much a customer has, but where he or she is. Even something as simple as being able to direct a customer to a branch (on the rare occasions that a visit is required) or highlight the right desk or queue using augmented reality can make the difference between a confused customer and one who sees their bank as looking out for them.
Mobile communication brings people together: now it can do the same with customers and banks. What do you think the most interesting possibilities are for banking on the move?