As a consequence TowerGroup believes the emerging revolution occurring for sending and receiving remittances may well undercut existing fee structures and traffic volume of incumbent brick-and-mortar money transfer operators, which already appear to be under pressure in this current economic climate.



TowerGroup believes the confluence of channel investments in mobile banking and payments by banks suggests that the benefactors of the combination of mobility and remittances may well be the banks as they emphasize more growth efforts among unbanked customer segments. On the sending side in developed markets, mobile remittances represent an avenue for banks to initiate relationships with unbanked consumers - who are heavy users of both remittance products and mobile phones - with an eye to fueling deposit inflows through later cross-sale of traditional banking products like checking accounts. On the receiving side, mobile remittances will spur evolution of the financial sector in developing countries and economies, so that recipients can direct remittances to checking accounts, bill payments, and microfinance applications.



"The inevitable convergence of remittances and mobility offers new opportunities for banks to grow this market by making payments faster, more convenient, more secure, and more accessible to a greater number of senders and recipients," said Virginia Garcia, co-author of the research and senior research director in the Cross-Industry practice.



Garcia also recently issued another report examining the overall evolution of mobility in the financial services sector, titled "Transforming Customer Interaction: Mobile Banking Delivers Adoption as Wheels of the Market Align." As with mobile remittances, mobile banking overall is fast emerging as an indispensable business asset for banks to retain customers and reach new segments (youth, ethnic, unbanked) to secure deposits.



"We believe the rise of next-generation mobile banki banking and payment solutions will forever change banks and payments companies," said Garcia. "Mobility has the potential to enable timely, relevant, and actionable outreach that will ignite customer engagement unlike any other channel. Ultimately, TowerGroup expects mobile phones will do for financial services what Apple iPods did for music - spur a sea change in the way consumers access services and suppliers deliver them."