successful banking report, The Business Case for Mobile Banking.
While many banks remain wary of the channel, there were some
outstanding success stories from around the world in 2008 – and the
ongoing integration of mobile into the distribution mix now seems
inevitable.
As of September 2008 there
were 3.8 billion mobile phone subscribers worldwide and the number
is growing at around 50 million new connections per month – some 20
per second. Mobile networks now cover 80 percent of the world’s
population, double the level in 2000. Subscription growth is
fastest in Africa (27 percent), the Middle East (25 percent) and
Asia Pacific (23.8 percent).
Go deeper with GlobalData
Despite huge interest in mobile financial
services in 2008 and numerous services launched across the year, it
is early days for mobile banking and adoption is still relatively
low. A global survey released by software specialist Sybase 365 in
October 2008 found customer adoption averages at 6 percent among
banks that offer mobile banking. Banks already offering mobile
banking expect an average of 16 percent of customers will be using
the service by 2010, according to the survey. Combined with new
banks introducing the service, the overall number of users could
increase by a factor of four to five over this period.
Still, there are already some very successful
m-banking and m-payments products and services that are now
established and ‘mainstream’ in mature and developing markets
alike: Bank of America now boasts around two million users signed
up to its high-functionality m-banking service; Safaricom’s M-Pesa
mobile payments service has over five million customers in Kenya
(see M-Pesa: Kenya’s revolutionary new bank); India’s
ICICI says 100,000 people signed up to its i-mobile service in the
first six months last year; and HSBC’s First Direct subsidiary in
the UK says it sends around 30 million SMS text messages to the
360,000 customers signed up to the service (out of 1.2 million in
total).
SMS: the most compelling
case
SMS fraud alerts have perhaps the most
compelling business case of all mobile banking services at present.
Identity theft and fraud cost financial institutions and consumers
billions of dollars each year. Due to consumer protection rules,
financial institutions bear the majority of these costs. In 2006
total losses from identity theft in the US alone totalled $56.6
billion (Javelin Strategy and Research), and this does not take
into account other costs such as the recovery of stolen funds, and
negative customer sentiment. Identity theft victims incur an
average of $500 in personal expenses and take 30 hours to resolve
issues.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataResearch shows the longer identity fraud goes
undetected the more money is stolen. A US Federal Trade Commission
survey found that when cases of identity theft were not discovered
for more than six months, more than $5,000 was stolen 44 percent of
the time. When the fraud was discovered in between one and five
months this dropped to 18 percent.
The ability to contact the customer
immediately also eliminates the need for banks to freeze the
customer’s account as a precautionary measure until the customer
can be reached, and all the potential inconveniences for the
customer that this entails.
The potential cost savings for banks offering
fraud alerts are huge. In addition to the reduction in direct
losses through fraud, personnel and operating costs are also
reduced. UK-based MBlox, the world’s largest mobile transaction
network, maintains banks may have to make as many as 30 calls to
detect one instance of fraud. With an SMS the cost of handling is
reduced from more than $5 to $0.05 or less. With this reduced cost
and efficiency the fraud threshold can also be lowered, meaning
that more transactions are screened and more fraudulent activity is
caught.
Turkey’s GarantiBank claims to have saved
€800,000 ($1.1 million) in the first year of using SMS fraud
alerts.
Smartphones lead the way
Research from Compass Intelligence
finds that smartphone and mobile banking adoption is closely
correlated. Currently 20.5 percent of smartphone users utilise
mobile banking compared to 2.7 percent of consumers with regular
mobile phones.
According to Aite Group senior analyst Nick
Holland, 78 percent of the major mobile banking vendors in North
America either have an iPhone offering or are planning one for
2009. US banks with iPhone applications include Bank of America,
Chase and Wells Fargo.
The majority of Bank of America’s 1.9 million
browser-based m-banking subscribers are smartphone users, according
to the bank. It adds that almost all customers use the service to
view account balances, eight in 10 review transactions, and four in
10 transfer funds or pay bills.
Bank of America also states that its research
indicates that over 80 percent of all mobile phone subscribers in
the US currently have the capability to access the web through
their mobile phones.
*The above is a very brief,
edited extract from an updated version of The Business Case for
Mobile Banking. Written by Ray Cain, the 300-page report looks in
comprehensive detail at the fast-developing global m-banking and
m-payments markets, and contains case studies, statistics,
interviews and key take-aways. Contact Kirsten Lamb at
kirsten.lamb@vrlfinancialnews.com for more details
