Mobile banking services: finance's latest fad?

Matt Buttell

As technologies become more advanced, mobile banking services are becoming increasingly critical to the financial services industry. But the question now facing industry professionals is whether mobile banking is simply the sector's latest fad, or if it can truly prove itself as a sustainable method of banking.

Technology has changed the way we bank. Financial institutions now utilise technologies to make the way consumers and businesses bank all the more efficient. The rise in internet banking is now being matched as an increased focus on mobile banking, allowing consumers to access their account information and complete basic banking transactions via their mobile phones.

Back in July, for instance, Lloyds Banking Group - the 43 percent taxpayer-owned UK bank - announced it would be offering on-demand balance updates via text message to customers as part of its mobile phone service.

According to reports at the time, the service claimed to be a first for the UK, enabling customers to check account balances and details of their last six transactions - and was launched in response to customer demand for instant updates.

In fact, it was back in September 2008 that the banking giant launched its mobile offering, which includes high and low account balance text alerts, overdraft warnings and a top-up facility for pre-paid mobile phones. The service, available to customer at the monthly rate of GBP£2.50 was matched by other UK banking giants offering similar packages, such as Barclays and RBS.

Overseas

Meanwhile, in the US, a different approach to mobile banking services is underway. Currently 106 million Americans underbanked, suggesting that a significant portion of the population could benefit from innovative, low-cost financial schemes such as mobile banking services.

And in the Indian subcontinent and Africa, where hundreds of millions of people face financial exclusion, mobile banking services are becoming a hot new phenomenon. 

Put simply, the logic behind the growth of mobile banking services is based on one simple truth: if millions of people can't go to the bank, the bank must go to them.

New findings

For the European Union, however, new research conducted by leading advisory firm Celent, which examines the current penetration and growth opportunities for mobile banking services within the EU, shows how mobile banking services are being heavily influenced by the use internet banking services.

What's more, with Nokia - the world's top mobile phone maker - announcing in August that it's Nokia Money platform would be launching mobile banking services to target consumers with a phone but no bank account next year, the trend seems to be becoming more and more prevalent.

Of course, with more and more mobile devices on the market, so comes more and more security and risk management challenges. As such, analysts want to know that if mobile banking services do warrant a significant chunk of future market space, the significant gap between people - especially those in emerging markets - who have a mobile device but no bank account needs to be addressed.

As such, as mobile banking is really going to assert itself as one of the hottest topics in the wireless world, consumers, businesses and the financial services industry need to be prepared for it.

Related Articles:

Online banking & mobile banking evolution | Executive Roundtable: Mobile signatures | Building a virtual bank