The mobile money revolution is here
The mobile money revolution can be seen in the 590 million mobile phone owners who bank using their phones today, a number expected to top 1 billion by 2017. The trend is most notable in the developing world, where millions of people who lack bank accounts use their mobile phones as electronic wallets, accessing the financial system for the first time.
How is the banking industry coping with the challenges of the mobile money ecosystem? What strategies are emerging, and what pitfalls should be avoided in a landscape where competitors include businesses (telecoms and tech firms, for instance) that until recently had nothing to do with financial services?
Developed in collaboration with Knowledge@Wharton, our new enhanced eBook “Mobile Banking: Financial Services Meet the Electronic Wallet” explores these questions.
Mobile payment explosion
In 2001, there was only one mobile payment system in the market. Today, there are 150 in everyday use and 90 more in development.
Consumer demand for easy access to their money through electronic wallets has grown exponentially, driving the technology that enables mobile banking products and services. Consumers will soon expect mobile money to be accepted almost everywhere.
Demand in the developing world
In some countries, more people use phones for banking than they do banks. That number is expected to nearly double between 2013 and 2017, as hundreds of millions of people in the developing world adopt mobile banking as the centerpiece of their financial lives.
Businesses looking to break into the developing world’s mobile banking market must consider the unique challenges and opportunities of these economies, as well as relevant regulations. Some firms have successfully established mobile banking businesses in the emerging world, but a single model will not work for every market.
Capturing the mobile market
In the US, 87% of people carry a cell phone, and 45% carry a smartphone. The ubiquity of cell phones is central to the value proposition for mobile banking industry in the developed world.
But as consumers adopt mobile money services as their habitual method of payment, it’s possible that the mobile platform will be operated by an entity that is not a bank.
Battle for the electronic wallet
Even if “everyone knows” that we’ll all pay, buy and lend via mobile banking someday, no one knows how we’ll get there. What will be the business case that brings consumers, businesses and banks to mobile, and who will make it?
Banks can take the lead by leveraging their built-in advantages such as infrastructure, regulatory experience and consumer trust. These advantages can help them offer competitive rates, effective security, easy-to-use products and unmatched service.
Regulation and security
The continued growth of mobile money depends on more than technological breakthroughs and marketing campaigns. It also requires broad agreement on new forms of regulation and the development of effective tools to meet concerns over mobile banking security issues.
Mobile money makes it more challenging for regulators to identify the originator and recipient of a given payment, as well as exposing consumers to additional vulnerabilities around theft or identity fraud.