News From Telecom World

Mobile financial services: the whole picture

Posted on: January 25, 2009

By 2012, an estimated 150 million people worldwide will be using their mobile phones to access secure banking and payment services, according to Jupiter Research. Mobile network operators, financial institutions and other players in the infrastructure chain are harnessing the convenience, immediacy and ubiquity of mobile communications to deliver financial services to the banked and unbanked in both developed and high-growth markets.

Mobile financial services are gathering pace in emerging markets in particular, with a growing number of communities across Africa, the Middle East, Asia and Latin America relying on their mobile phones to securely manage and transfer money. Today 200 million international migrant workers regularly remit money to their home countries, with remittance flows totalling $300 billion annually, reports the Global Commission of International Migration

Meanwhile, the concept of mobile financial services is also making its mark in the developed world with leading banks introducing mobile payment functionality.

While the benefits of mobile financial services are finally being harnessed and delivered, the banking and carrier community must ensure that services do not rely on limiting technology.

The current, so called “point solution” technology enables specific pre-defined basic tasks such as sending remittances and topping up with prepaid credit. This is acceptable while the mobile banking industry is relatively unsophisticated. But point solution technology is incapable of evolving with the changing needs of mobile subscribers. In short, existing technology simply doesn’t go far enough.

As we have seen with the rapid development of mobile communications, customers quickly want more. Customers will want to use their phone to check their balance, pay bills, de-activate and re-activate their payment cards if they get lost or stolen, change their PIN, and so on.

And at present, the financial system excludes more people than it includes. Yet the mobile phone holds the potential to create a more inclusive financial system in high-growth markets, a more convenient system in developed markets, and to change the way that financial services are delivered around the world.

A better understanding of the varying regulatory environments, compliance procedures, and tight security measures inherent in the technology mean mobile financial services are moving increasingly towards mainstream adoption around the world. As this happens, requirements are shifting from short-term point solutions to service delivery platforms that have scope for growth, to serve both current and future subscriber needs.

Operators need the capability to deliver a complete standalone and secure banking solution with a fully functional and secure account, which the customer can use to manage their financial services from their mobile handset. With features and functions tailored to cater for specific consumer needs in each market, the bank account can be managed and maintained on the mobile device, as well as through the use of the Internet or a branded payment card. Operators need the capability to offer a rich set of applications such as local and international money remittances, airtime purchases, person-to-person payments, bill payments, and a full set of account management options including balance enquiries, and card and PIN management.

As consumers rely on the mobile device for more and more services, it will become essential that they have access to financial services at any time in any place.

Mobile financial services offers huge potential. It enables operators, and financial institutions, to achieve differentiation in an increasingly competitive marketplace, and for operators to maintain and increase subscriber revenue.

Mobile financial services can provide new channels to access existing financial services to current customers in developed markets, reducing costs and increasing margins. Basic financial services can be made available to new customers in high growth markets for the first time, and new financial services can be offered to customers in both high-growth and developed markets.

The strategic reasons for mobile financial services are extremely compelling. There is an increasing requirement for convenience from consumers in developed economies, and the essential need to provide access to financial services to consumers with limited access to other electronic channels.

Offering mobile financial services provides a significant opportunity to maximise existing infrastructure for operators and banks alike by opening up other potential revenue streams. In addition, banks and other financial organisations can use the power and reach of the mobile mechanism to improve their customers’ banking experience and build more loyal relationships.

The mobile device has changed communications and connectivity beyond recognition in two decades, and has created the foundations to enable financial services to undergo a far more rapid transformation. If banks are to maximize fully the potential of mobile financial services, it is imperative that they invest in the deployment of a mobile banking platform rather than point solutions.

Rolling out a mobile banking platform is the only way that banks can deliver technology that is capable of being modified and extended as the needs of subscribers change and new opportunities emerge.

Source: Total Telecom

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