The
report made available to DigitalSENSE Business News compiled by the Value
Partners Management Consulting, entitled ‘Mobile Financial Services: Acompetitive (and fragmented) landscape’ and published by Fiserve in
collaboration with Payments Cards and Mobile as the premier payment industry
intelligence, showed that this has led to the establishment of a number of
successful business models and value propositions.
They
report noted that though m-banking and m-payments have propositions and
implications covers retail banking, private banking and corporate banking,
hence it assesses the situation in both developed and developing regions of the
world.
The
renewed interest, the report pointed out has led to the establishment of a
number of successful business models and value propositions.
With a
foreword from the duo of Serge Van Dam, vice president, market development at
Mobile Solutions Fiserve and Francesco Burelli, Partner, Value Partners,
emphasised that financial institutions generally have been slow to implement
this new form of service delivery, in contrast to many technology and
telecommunications companies.
“This is
because of uncertainties regarding whether a tangible return on investment
exists, the lack of a clear mobile strategy at board level and a risk-adverse
attitude when it comes to taking the lead in an entirely new and unproven
sector,” stressing that this hesitance has left a gap that non-bank players
have exploited, with potentially disruptive consequences for the traditional
bank-customer relationship.
The time
of mobile financial services, the report stated seems to have finally arrived,
with the rapidly developing sector, thus providing a valuable snap-shot of the
state of an emerging industry and highlights some of the issues and questions
to which ‘traditional’ financial institutions must respond if they are to
maintain their historic level of control over the bank-customer relationship.
The
report also showed the Executive summary that financial institutions are
finally beginning to realise the potential of the mobile platform as a means to
offer their services, with mobile payment transactions in 2011 estimated to
have been worth $163 billion.
Telecom
operators, the report said, have already spotted the potential benefits of
mobile financial services, with more recent interest coming from internet-based
third-parties and technology providers. Maintaining that there have been three
main drivers for the growth of mobile financial services, namely the increased
mobile service penetration; generally in excess of 100 per cent in the
developed world, device and infrastructure evolution with the smartphone and
tablet offering ground-breaking new service platforms, while the development of
increasingly sophisticated and attractive mobile services.
The
report further discover existing dichotomy between the developed and developing
worlds, with affordability being a key barrier to the rollout of many complex
and high-end services in emerging markets.
In such
a rapidly developing space, the need for a comprehensive overview of the
competitive landscape is clear, insisting that in light of this, Value Partners
have undertaken an analysis of the retail, corporate and private banking
sectors, with a view to gaining insights regarding the propositions available
and their implications.
Interoperability
was another issue topping issues within the mass market and is obviously key to
development of this mobile technology, thus helping to promote network effects
that facilitate service expansion.
This
expansion becomes increasingly likely if financial service providers are able
to leverage pre-existing assets such as a large customer base and/or brand
power.
“It is
in the mass market sector of retail banking that most propositions in the
mobile financial services landscape are currently located, with the service
propositions grouped into two categories,” part of the executive summary read.
They
explained that m-payment propositions are concerned with the making of
payments, whilst m-banking relates to the management of personal accounts. It
is interesting to note that mobile payments have become particularly common in
the developing world where underlying infrastructure is not able to support
other forms of cashless payment.
In
comparison to retail m-banking, the report stated that corporate banking
solutions have been slow to develop yet appeared to have huge potential. Even
as the 24/7 nature of mobile applications, user-friendly operating systems and
inherent portability should make them very attractive in the fast-moving
business world. Again, it is important that consideration is given to the
interoperability between multiple financial service providers within a business
if this proposition is to develop.
In the
private banking sector, mobile solutions are gradually being deployed onto more
advanced devices.
This has
included both the development of smartphone technology and the take-up of
tablet devices which, with their greater screen size and enhanced graphics,
have the potential to improve the high-end customer experience. With this
ongoing technological development and the adoption of these new technologies,
it is likely that private m-banking solutions will become the norm in the
future. For early-movers in the financial services industry, the incorporation
of these services may prove to be a key differentiating factor between
competing institutions.
However,
a direct return on investment is difficult to quantify, since most m-banking
services are offered free of charge.
In order
to be successful within the competitive landscape, it is important that players
entering the mobile financial services market position themselves correctly. It
is important they understand their clients’ needs, and seek to develop an
appropriate business case that makes the most of the opportunities afforded by
this fluid and emergent sector. Ensuring a strong presence in this area will be
essential for the long-term growth of financial service providers and may
represent an area in which new market entrants could gain a foothold.
Remmy Nweke/DSBNews
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