Mobile Banking: Over-hyped Gimmick or Credible 21st Century Banking Channel? (Strategic Focus)
Introduction
A decade after the arrival of the first mobile banking services, actual usage remains modest in many countries. This inevitably begs the question is mobile banking is an over-hyped gimmick, or is it in fact a credible 21st century banking channel?
Scope
*This report examines the impact and future growth of mobile banking, and assesses whether it will become a mainstream interaction channel.
*The report assesses the opportunity for mobile banking services in both developed and developing markets.
*Geographic coverage includes Europe, North America, Asia, sub-Saharan Africa and Latin America.
Highlights
The key findings of this report indicate that mobile banking is a credible channel, but usage in developed markets will remain low. IT spending on mobile banking is continuing, but it is not the highest priority channel for investment.
Mobile banking's greatest opportunity involves serving the needs of the unbanked, but financial institutions and technology vendors must be prepared to play the long game where revenue generation is concerned.
Reasons to Purchase
*Gain insight into why the growth of mobile banking will remain modest in developed markets.
*Understand the IT investment priorities of retail banks in Europe and North America in relation to the mobile banking channel.
*Receive guidance on why serving the unbanked segment of society represents mobile banking's best opportunity for significant growth.
Overview 1
Catalyst 1
Summary 1
Key Messages 2
Mobile banking is a credible channel, but usage in developed markets will remain low 2
IT spending on mobile banking is continuing, but it is not the highest priority channel 2
Mobile banking's greatest opportunity involves serving the needs of the unbanked 2
Retail banks and technology vendors must be prepared to play the long game 2
Table of Contents 3
Table of figures 4
Table of tables 4
Market Opportunity 5
There is no universally agreed definition of mobile banking, which doesn't help its cause 5
Separating mobile payments from contactless-card technologies 6
Mobile banking services have existed for a decade, but adoption is mostly modest at best 6
The growth of mobile banking services in South Korea demands careful interpretation 6
Mobile banking has struggled in Europe and North America: will this change in 2009/10? 7
The difficult economic climate is refocusing the attention of consumers to their personal finances 8
Mobile banking devices and interfaces have thankfully improved, thereby enhancing the user experience 9
iPhone, therefore iBank? Understanding the effect of Apple's flagship cellular device on mobile banking 10
After multiple false starts, the mobile banking ecosystem is entering its next phase of development in 2009 11
Catering to the unbanked will have a positive influence on the growth of mobile banking 13
Assessing the mobile banking market opportunity in developing regions 14
Investment programs have been launched to stimulate mobile banking services in developing countries 15
Charting the emergence of mobile banking services in developing countries 16
Case study: the remarkable growth of M-PESA 17
Other operators are seeking to mirror the success of M-PESA 18
The role of mobile banking in Afghanistan's road to economic and social recovery 18
Serving the unbanked in developed regions is also a natural fit for mobile banking services 19
Mobile banking services will replace traditional remittance flow methods 20
If you can't beat them, join them: Western Union's strategy to counter the threat of mobile remittances 21
Summarizing the market opportunity for mobile banking 21
Impact on Banks 23
In 2009, mobile banking features in the channel strategy plans of most retail banks 23
Mobile banking channel is not a high priority channel for IT investment in 2009 24
Retail banks must be willing to play the long game in order to achieve decent revenues 25
Banks will need to prepare themselves for inevitable operational and technological impacts 26
Banks must ensure they make adequate security provisions for mobile banking services 27
Banks will have to share revenues from mobile services with others in the ecosystem 27
Go to Market 28
Platform providers should capitalize on taking the development pain away from banks 28
Security vendors should ensure their product suites cover mobile banking solutions 29
Recommendations 29
Vendors should not overhype the potential of mobile banking services in developed markets 29
Technology vendors, like their banking industry clients, must be prepared to play the long game 29
Vendors should seek opportunities in emerging markets to capitalize on the unbanked segment 30
APPENDIX 31
Definitions 31
Acronyms 31
Methodology 31
Further reading 31
Ask the analyst 32
Datamonitor consulting 32
Disclaimer 32
List of Tables
Table 1: Mobile penetration growth rates for developing regions 14
Table 2: Mobile penetration and bank accounts in selected developing countries 14
Table 3: Remittance flow to developing countries, 2006 to 2008 20
Table 4: Summarizing the market opportunity of mobile banking 22
Table 5: The operational and technological impacts of mobile banking 26
List of Figures
Figure 1: The components of informational and transactional mobile banking services 5
Figure 2: The growth of registered mobile banking users in South Korea, 2007 to 2008 6
Figure 3: Factors inhibiting the growth of mobile banking services in Europe and North America 8
Figure 4: End users are satisfied with the performance of Apple's iPhone device 10
Figure 5: The mobile banking ecosystem in 2009 12
Figure 6: The alternative capabilities of a mobile device in developing regions 15
Figure 7: Snapshot of selected mobile banking services in developing regions, 2009 16
Figure 8: Mobile banking channel strategy in 2009 23
Figure 9: Retail banking technology investment priorities, 2009 24
Figure 10: The development phases of mobile banking in developed countries 25
Figure 11: Revenues received by players in the mobile banking and payments ecosystem 27
Figure 12: The relationship between the Monitise platform and the four phases of development 29
