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An article relating to this blog post on Finextra:

Banking by mobile overtakes branch interactions - BBA

Banking by smartphone and tablet has become the leading way customers manage their finances, as mobile banking overtakes branches and the internet as the most popular way to bank, according to the Bri...

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If mobile is the future, where are the telco’s?

There’s a sense of inevitability about today’s announcement from the BBA, that in Britain customers are predominantly using mobile banking. Customers like to be able to do their basic transactions quickly, easily and conveniently – and the smartphone in your pocket with an app from your bank offers all three.

The rise of mobile banking has been a long time coming, but finally the figures (from the British Banker’s Association and Ernst & Yong in their publication “The Way We Bank Now”) show that inevitable has happened.  

Yet sometimes the obvious headline hides more interesting developments.

With hindsight, it is a surprise that it is the banks who have made mobile a success. There has been some very public hype from start-ups about how they will disrupt the financial services industry. To me the interesting thing is not that customers are moving money by mobile, but that they are doing so through the apps the banks have developed (the Lloyds Group reports £1.7bn per week moved by customers via apps).  The banks face many threats, and not all banks may survive, but they are showing signs of managing the mobile transition successfully and doing so when many commentators thought they might not.

For me it’s worth looking at who hasn’t managed to deliver in this mobile world. The losers are not so much the innovative payment companies (they still have a promising future), but are the big mobile and telco companies. Those with long memories will recall how from the late '90s onwards it was speculated that the big mobile operators might disintermediate the banks. Mobile operators had scale, capability, customer acccess and big IT systems that could handle payments on high transaction volumes. Vodafone began mobile payment trials in 2002 and the Finextra article at the time reported that although commencing with card payments, “…the system also enables wireless operators to internalise the payments through their own billing systems, opening up a potential threat to bank payment networks.”. 

Despite having a payments system (of sorts) in place and a lot of customer data, the mobile providers never managed to capture the value in western mobile banking. In emerging markets, where Safaricom and others have blazed a trail, this is much less the case.  In much of Africa, the mobile operators have managed to capture customer "accounts" and payments, but even here that is being challenged. I was very struck last week that FNB Bank in South Africa was launching its own mobile network and own SIM cards and counter-attacking the local telcos.

Given how mobile banking was first assessed as a huge opportunity for mobile providers, it’s quite a disruption that the winners so far are the banks and the smartphone companies who support the right app environments.


Comments: (8)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 June, 2015, 16:141 like 1 like

Nice post. TELCOs completely lost it somewhere along the way: 

Banks Have Nothing To Fear From TELCOs

Alex Noble
Alex Noble - McAfee - London 16 June, 2015, 16:26Be the first to give this comment the thumbs up 0 likes

Thank you!  I have to admit, I don't understand how the TELCOs managed to squander such a head start over the banks and the FinTech start ups.

What has happened in Africa shows that TELCOs (at least VMNOs) have the ability, the skills and can make a living from micro-payments. I know regulation is often cited as an obstacle in the US & Europe, but that's not stopping the FinTech start-ups, so it's unclear why it would stop a TELCO.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 June, 2015, 17:01Be the first to give this comment the thumbs up 0 likes

MNOs lost it because "it can be quite frustrating to strike partnerships with MNOs." as I'd highlighted from my personal experience in my post. Africa is too broad a territory to credit MVNOs with success for. Apart from Kenya and one or two other countries, they've fumbled in most parts of the continent including South Africa. Personally, I'll believe that fintech has succeeded only when it hops off the VC gravy train, is forced to make revenues and profits and still manages to provide better CX than banks. IMO, that day is a long way off, especially when banking consumers - including me - are increasingly reporting that "financial institutions excel at leveraging digital technology to meet convenience and access needs of customers" (

Alex Noble
Alex Noble - McAfee - London 16 June, 2015, 18:24Be the first to give this comment the thumbs up 0 likes

I'd agree with the comment about partnerships.  The TELCO industry (in broad terms) isn't as developed as parts of the banking industry at partnering, creating shared service bureaus and other ways of chopping up the value chain. Compared to how banks handle all the actors in payments (processors, acquirers, networks, etc...) and do so at scale and volume across multiple entities, the mobile operators just haven't had that experience.

Graham Seel
Graham Seel - BankTech Consulting - Concord 17 June, 2015, 16:251 like 1 like

There is something about being the incumbent in any market, and perhaps particularly so in a trust-based business like banking. In East Africa, where banks had no foothold among the rural poor, Safaricom and other Telcos were the incumbents, and now banks are trying to break in. In developed economies, the reverse is true. Regulation is another challenge - banks are better equipped to deal with (and charge for) regulatory overhead such as KYC and AML monitoring requirements. 

Alex Noble
Alex Noble - McAfee - London 17 June, 2015, 17:081 like 1 like

Hi Graham, it's a very good point and one that's often dismissed by start-up culture. Incumbency in a regulated environment is a powerful position and it makes disruption difficult, although not impossible. Obviously if the regulator starts supporting new entrants (as now in the UK), then incumbency becomes less of an advantage. Still, it's noticable that in the UK the most successful non-bank entrant to financial services is Tesco Bank, which is backed by a retailer using retail principles (...but no branches).

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 17 June, 2015, 17:28Be the first to give this comment the thumbs up 0 likes

Talking of how difficult it can be to strike partnerships with MNOs, this just in:

With its decision to go offline, Google seems to be signaling that even it's having a problem dealing with MNOs and taming their greed. In this day and age when people are crying hoarse at banks for charging 1-2% interchange fees for card payments, MNOs are apparently still demanding 30% transaction fees for carrier billing.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 June, 2015, 19:36Be the first to give this comment the thumbs up 0 likes

Brilliant one from Ron Shevlin about fintech:


Don't be a fool

Fintech won't rule

No doubt they're real cool

But they're just a bank's tool

Alex Noble

Account Director


Member since

10 Jan 2008



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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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