What (really) is Mobile Money? Banking? Payments? Commerce?Why mobile banking?In emerging/developed economies
Spot of naval-gazing perhaps but this is taken from the Barcelona keynote presentation currently on the MWC website“Incredible success” ???“proliferation of NFC-enabled handsets” ???
Majority of these apps categorised under finance actually are more like specialised spreadsheets and have little or no integration with any core financial services. Some may take feeds of data such as exchange rates or share prices and others just provide a simple way for budgeters to enter expenses to get a better idea of what spare cash they have each month – a very worthy and useful service but not really novel.
A slightly closer look at the free iPhone finance apps shows a few official, branded bank applications allowing simple “ATM-style” services like balance enquiry, ministatement and in some cases intra-account transfers (Lloyds, NatWest, HSBC) so it would appear there is a strong desire for these services over and above those budgetting or information apps.
Reflects the remainder of the presentation – adjust as necessary
No “Where are we now and what’s coming?” section would be complete without a Hype Cycle so here’s mine (subset from Gartner 2011)So what about the future of mobile banking.“Mobile Banking” has come through the hype and, since 2010, the disillusionment phases (not helped by global banking crisis generally) and into the upwards slope of enlightenment. This is being led by financial industry themselves with companies like Visa and Mastercardinvesting considerably in technology enabling platforms like Fundamo and Monitise mobile money managerMobile ticketing has almost bottomed out and there are definite signs in Paris metro and other places (outside Japan) where tickets are going mobile using in some cases fairly simple technologies like camera or SMS to get the tickets (see NFC). Japan got NFC ticketing across the rail network 10 years ago and at the time we implemented i-mode (which supplied the “Felica” flavour of NFC) the Japanese analysts said it would take ten years from the first NFC services for it to become mainstream in UK so the date of 2020 for when we all buy tickets using NFC is about right.Mobile Money Transfer is still up at the inflated expectation level in spite of stellar success in emerging markets it has not taken hold in developed markets and this is the reason why it is not considered universally productive yet – will it bypass the trough and go straight to productivity?Finally the sad story of NFC. Interestingly, Gartner has moved NFC back UP to the very peak of inflated expectations on the hype cycle given some recent increases of the hype of NFC in high profile launches like the Google Wallet and Apple’s entry being strongly anticipated. I think this is right unfortunately as there are a number of threats and issues with adoption of NFC that still cause major concerns and will take another 5-10 years to resolve for mainstream adoption (say Gartner)Other related topics like mobile OTA payments and Mobile coupons are more in the proof of concept and early adopter stage but could quickly overtake NFC given the sudden increase in a technology that’s not actually included on this slide of “QR” or “2D Bar codes” that are appearing everywhere and work with easily downloadable Apps on iPhone and Android.
For Over 5 thousand years the continuous evolution of communications through society, culture and later technological inventions has enabled the development and growth of banking in the world.Similar growth and development of communications methods, money and banking concepts and practices, throughout the world with spread relatively slow until the 20th Century for worldwide standards.History of communications has always led exploitation of those new inventions by banksThe early symbols and writing developments by the Phoenicians preceded the production of coins with markings to denote different valuesThe invention of paper for communication was quickly followed by using paper bank notes to represent currencyJust as today the mobile banking developments follow developments of the technologies and take up for other servicesbut true world-wide adoption only in last 50-60 years, backed by technology and other factors such as better travel and mobility of people (and peace)For example, the Bank of England has been around over 300 years but central banking in Nigeria, which is not the least economically developed country in Africa only came about in around 1960 (on the other hand, customers of the bank of Nigeria quickly cottoned on to use of email communications and phishing scams ).Still, the majority of emerging nations are considered underbanked or “unbanked” which is where communications and in particular mobile communications is now almost pressing ahead of banks to implement commerce and “payment” networks almost independently of the core banking networks.It feels like we are on the cusp now of mCommerce, which was coined some time back in the 80s or 90s really becoming mainstream and I will explain why we think that is and how to keep ahead of the curve with new developments like NFC contactless payments
Since the last World War there have been major developments in roughly ten year cycles that have opened both banking networks and communicationsThe laying of transatlantic cables in 1940s opened up intercontinental telephony, around the same time as improvements in switching networks and signalling made world communications easier (leading to telephone exchanges, satellites, transistors, integrated circuits, computers, etc).In banking the first credit cards were coming into use through the 50s to 80s
What mobile money really meansIn the US, UK and other countries with high majority of people with bank accounts and ~100% mobile penetration“Essential” bank services such as getting a current account balance via SMS, weekly statementMore sensitive services need secure network transmission provided by SSL from installed application.Initially there was only Symbian-based Java MIDP, with some BREW (Qualcomm) then extended to iPhone when it cam out and Android market apps. Development of apps for banks very, very slow and services on the whole still very limited.In Africa on the other hand, there are >80% of population who do not have bank accounts but were instead relying on sending money via money networks like Western UnionPeer to peer paymentsWallets
Lots of bespoke solutionsText onlyThe iphone only
There are barriers because of trust and anti-competitive Google – Verizon for example
Survey carried out by the Future Foundation and Monitise Group found that concerns about security still were the main reason people don’t trust mobile banking. Ironically, the studies showed that the consumers trust operators more than banks.This is interesting as banks themselves put a LOT of preconditions and checks around the services and the services that have been launched in the UK typically don’t have much opportunity for fraud.I don’t know about other platforms but Monitise employed quite sophisticated encryption techniques on handset apps, with switching of keys, MAC security in links to bank networks and private network connections (or co-hosting in a data-centre)
Approach taken by Monitise, mFoundry and some others is to act as a hub between all the various operators, aggregators and the financial world, bridging it with common platforms and services that are adapted and branded.
Large, economically developing Country in East Africa 33rd biggest (in population) country in the worldTelecommunications hugely successful contributor to more than half GDPKenya, independence in 1963 from Britain~42 recognised different culturesAs of July 2011 there are 14 million registered M-PESA users in a population of ~41 million people
How do we explain this success and rapid roll-out?How can M-PESA have more “customers” than there are phones?Recruitment of “Super-agents” in the large cities where there is access to bricks and mortar banks with real cashAgent networks branch into towns where there are people wanting cashSub-agents spring up in smaller towns and even villages to “own” the mobile handset and manage the flows of cashLack of corruption as everyone benefitsOlder money transfer services like Western Union now focus on interoperability and international integrations
An example of transfer, with fee of 10% (fees are actually usually much lower)
USSD not found favour in European operators who focus instead on higher services like mobile internet as the infrastructure, handsets and consumers are there.In Africe, India and other emerging markets the roll out of 3G has stalled but GSM services now covering large percentagesTherefore, simple, text-based services are successful due to their ubiquity and reliabilityVisa’s work with Monitise in India was focused very much on USSD as the delivery technology
Announcements like this have become common-placeAccording to Gartner we are still 5-10 years from maturity of NFC technologyWhy?
Most of the time the phone interacts through it’s standard (GSM/3G) band radio interface, establishing an IP context for Mobile Internet over the same channel.For NFC there is a different mechanism, based on the RF band around 13.56MHz working over distances up to ~20cmTwo modes of operation: Active and Passive.initial communication speed from the set of 106, 212 and 424 kbit/sBTW – there are also other interfaces like Bluetooth and Infrared to consider (not shown here)
EMV – Europay-Mastercard-VisaThe main foreseen use for NFC at the moment is to tap and pay for small itemsThe established payment interfaces and point of sale terminals are changing to accept these type of cardsIt is now up to mobile phone users to roll it outThe pace of delivery depends on Speed of market developmentAdoption of contactless and mobile payment technologyInter-industry cooperative modelsMigration of provisioning systems to open standardsMulti-application, multi-user, multi-brand systems
These are pretty much niche services and can charge quite a lot for real benefitsNot something I have ever had a problem with managing my assets
What (really) is Mobile Money? Banking? Payments? Commerce?Why mobile banking?In emerging/developed economies