Consumer demand for mobile money transfer services will see users exceed 500 million globally by 2014, principally in developing countries, according to Juniper Research. Signs point toward mobile money management as being the personal banking option of the near future. So why have banks been slow to roll out these services to the general public?
Financial institutions looking to develop mobile money management capabilities face challenges such as security concerns, inadequate technology and business ecosystems, high implementation costs and an uncertain regulatory environment.
Before embracing the future of banking, financial institutions must learn to do it efficiently.
Mobile money management refers to both mobile payment and mobile banking capabilities. In the area of mobile banking payments, the consumer uses a mobile device for initiating, authorizing and realizing a payment.
These transactions can take place either by using the device as an equivalent to a credit card or wallet - payments are taken directly through the phone - or by using near field communication (NFC) technology to execute a payment directly. NFC capabilities give a mobile device "point and click" functionality on a phone, making it a mobile "wallet."
Keys to success
Financial institutions must address several key factors if they are to reap the benefits of implementing mobile services:
- A flawless launch: Services prone to errors and breakdowns could permanently damage an institution's standing with both customers and industry colleagues. Execute a rapid transition from launch to low-cost operations.
- Protection against technology change: Cutting-edge technology has approximately 18 months before it becomes outdated and starts to drag on performance. Keep technology systems fresh without large ongoing capital investments.
- Low operational costs: Anticipate demand and build a solution that exceeds that demand.
- Maintain brand equity and credibility: Putting another company's brand on the offering risks confusing the consumer or detracting from the brand value of the financial institution itself, meaning the value of the entire operation is constrained by the brand value of the least important part of the value chain.
- Constant innovation and service evolution: Any mobile money management solution must be kept fresh and on pace with general industry developments.
- Regulatory experience: Mobile financial services come with a host of complex regulatory constraints, especially for global institutions. Consistent solutions can be hindered by varying governmental considerations in multiple markets.
- Security: Beware of fraud and privacy breaches. Ensure technical security capabilities are sound before launch.
All of these points lead to a single, overriding conclusion - deep knowledge and experience is required to effectively launch and operate mobile money management capabilities.
People have high expectations for what they should be able to accomplish through their mobile devices. Banks and mobile network operators must be careful not to disenfranchise customers who are just getting used to the idea of mobile money management. And institutions must act quickly to provide compelling and differentiating services if they wish to gain the type of customer loyalty that will carry them into the evolving digital future.
Michael Eagleton is Accenture's global lead for mobile money management