Mobile banking is the next big thing in the banking and finance industry all across the world. According to Nielsen, World’s leading Research Company, there was a clear change in the mobile usage in 2013. In the report published, highest ranking countries across the world with respect to smartphone penetration, number of app downloads, mobile banking, and mobile commerce are as follows:
In another research conducted by Nielsen, average time spent by people in December 2013 on TV, Online and Mobile are:
It clearly shows that people are spending more time on mobile instead of the internet. So, here is a big opportunity for the banks to jump into the mobile banking solutions.
According to Nielsen, following are the categories of smartphone apps on which people spend most of their time:
There is a major shift in the banking trends recently. Nielsen says in its report published in November 2013, customers now prefer mobile banking and the internet as well. The important thing is that mobile banking is gaining momentum at the highest speed while traditional means of banking i.e. call centers, ATM machines, branches are trending in the opposite direction.
People prefer paying bills online now. According to Nielsen, online payments ranks at first number in payment channels with 77%.
Challenges For Banks
Mobile banking trends are changing the way banks and financial institutions do business recently. This industry is growing fast and bring challenges more than ever. Some of the major challenges which banks face before jumping into the mobile banking are as follows:
- Non-Banks Capturing the Market Share:
Many non-banks have started providing mobile banking service to its existing customers and that too with creative and innovation solution. Some of those companies are giants like Vodafone, MTN, Orange, Airtel, Western Union, MoneyGram, Visa, MasterCard, Amex, PayPal, Google etc. To compete companies like these in mobile banking is a big challenge now.
- Mobile Device Compatibility:
In this era of tech and mobile, each day new devices are being released in the market each supporting different systems i.e. Java ME, SIM Application Toolkit, WAP, SMS only etc. We also know that customers like to use latest gadgets available in the market. So, the challenge is to provide such a mobile banking solution which is independent of mobile device compatibility issues.
- High Rate of Business Failure:
Mobile banking is the complex service and it is difficult for any bank to launch it as a proper service without the help of experts. A number of banks and financial institutions have failed in adopting mobile banking as a full service to their customers recently. It has also given a setback to the giants like NetWest and Nokia Money in India.
- Mobile Payments Security:
Security is the most important factor for any bank or financial institution all across the world. Involvement of mobile devices and remote payment can breach this security easily if not addressed properly by the experts. Security measures must be taken with the collaboration of all the stakeholders’ i.e. mobile application developers, wireless network service providers, and the banks’ IT departments.
Numbers show that mobile banking is growing with fast momentum and millions and millions of users are switching from the traditional banking to mobile banking. High infrastructure is required to cope with high numbers of customers. It is yet another challenge for new entrants in the mobile banking.
Opportunities For Banks
Banks can tap this huge untapped market by jumping into two different services i.e. mobile banking and mobile commerce. Most of the times, the bank decides to go for both but the most favorable option for banks is to go for mobile banking first.
In mobile banking, bank customers can use their mobile phones too;
- Check their account balances
- Access their bank statements
- Maintain beneficiaries
- Receive debit/credit alerts and statements
- Donate to charity organizations
- Check balances and recent transactions
- Transfer funds and pay bills
- Locate ATM machines nearby
- Contact management for issues
- Follow the bank on social media to keep up-to-date with latest offerings
Technology Options for Mobile Banking:
Each technology available has its own pros and cons. Banks must choose smartly which technology they want to go for.
- Mobile Website
- Native Mobile App
SMS is fast and cheap for mobile banking but it only provides limited options. i.e. keeping the track record of all the transactions, account balances, funds received alerts etc.
Mobile Website and Native Mobile App offers a wide range of features and are comparable.
||Native Mobile App
||Java (Android), Objective-C (iOS), and Visual C++ (Windows Mobile), etc.
||Yes. From App store
||Yes. Needs to be installed as a standalone application
||No need to install any new software on the phone
||Yes. Manual updates are required
||Yes but automatically installed on web server
|Access to Mobile Features
||Native apps can access almost all the features of the mobile device
||Mobile web apps can’t access all of the device’s features
||Yes. Some of the features are available offline
||No. Internet connection is mandatory
|Can Check Account Balance
|Access Bank Statements
|Receive Debit/Credit Alerts and Statements
|Check Balances and Recent Transactions
|Transfer Funds and Pay Bills
|Locate ATM Machines
|Shared on Social Media
In mobile commerce, users can use their mobile phones to purchase product and goods at run time without any difficulty. Usually, buyers use multiple types of devices i.e. cell phones, smartphones or notebooks.
In January 2013, BI Intelligence reported that 29% of mobile users made a purchase using their phones. Similarly, Walmart reported that 40% of all visits to their website are from a mobile device. Bank of America predicted that there are expected $67.1 billion in purchases by European and U.S. shoppers in 2015. Retail industries in UK expect that their revenues will grow up 31% by the end of FY 2014.
It is a win-win service for both customers and banks. Customers get their product delivery instantly i.e. click to download, e-mail or another form of electronic delivery. Similarly, banks get the payment easily and quickly as compared to traditional methods.
The important factor for banks is that they can reduce their operational costs by implementing the mobile commerce solutions. Usually, small banks or financial institutions need to set-up separate operations departments, but in a case of mobile commerce virtual offices can work easily because a seller can monitor the sales using online portals.
- No or Little Maintenance Required:
Mobile commerce is one-time pain for the banks or financial institutions. It usually takes a time to set-up an e-commerce or mobile commerce portal involving experts. Once set-up completely, then there is no need to maintain it until or unless there is an error or up-gradation in the technology.
It is a win-win situation for banks if they invest in mobile banking. It helps any bank in two ways. First, it saves the costs at massive level by eliminating the need for extra resources for simple facilities which mobile app can provide at any time and at no cost. Second, mobile banking helps in boosting the revenues of the banks because with mobile app comes the customer loyalty. Banks can also promote their other services and products via the mobile app which helps in cross-selling.
According to the research report, 70% of the banks who have already deployed mobile banking are always looking to add more functionalities in their app. But most of the banks do not have much resources dedicated to mobile.
To tap this opportunity banks can invest in their human resources by building their own development team. It usually involves not only the extensive hiring of developers but also training them. Its again a lengthy and costly process for the banks. What banks can do is opt for the collaborative opportunity. Banks can buy the tailor-made and white labelled product from service providing companies who already have the good reputation in providing the same to the other banks in the industry. With this collaboration, banks not only hire the team of professionals but also get to know about the latest practices in mobile banking.
DevBatch As MBanking And MCommerce Service Provider
DevBatch, an enterprise mobility firm, have expertise in banking and m-commerce. We have worked with leading banks of the Pakistan and Abu Dhabi and provided the them complete mobile banking solution.
Top Abu Dhabi, UAE Bank:
DevBatch developed native mobile apps for Android, iPhone, iPad, and BlackBerry for the bank using which customers can perform following activities:
1) Enquiries- Accounts
– Accounts& Loans & Deposits
2) Credit Cards
3) Self Service
– Report lost/ stolen ATM Card
– Change MPIN
– Request Transaction Password and status request
– Cheque Book Request
– View/Delete/Add Beneficiary
– Change Login / Transaction Password
– Change Mobile number or e-mail address
4) Fund Transfers
– Own Account
– Third Party Transfer
– P to P (Using mobile Number)
– Notifications and Alerts
– Post Paid & Pre –Paid
– Enquiry & EWA
– Add / delete Payee
– Credit Card Payment within CID
– Credit Card Payment within Bank outside CID
– To pay Multiple payees at the one click
– Notifications and alerts
– Interest Rates
– Fees & Charges
7) Branches and ATM Location
8) Contact Us
– Address & Phone Number
– Feedback Form
Muslim Commercial Bank of Pakistan:
DevBatch developed native mobile apps for Android and iPhone for the bank using which customers can access the complete catalogue of discounts offered by MCB to its card holders.