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.