How Banks Can Approach Mobile Strategy

Here’ s a statistic that really drives home the pervasiveness of the mobile, like no other. Mobile connections are approaching the 6 billion mark, as we speak, making mobile connectivity more accessible than clean drinking water! Not to mention highly democratic, with the difference between the “have” and “have not nations” being merely a question of whether device penetration has already crossed 100% or is poised to do so in a few years.

Thanks to the smartphone, even mobile financial transactions, which had a sluggish past, have grown at a scorching pace in recent years. It is estimated that mobile payments alone will clock tenfold growth between 2011 and 2015, to go from US$ 50 billion to nearly US$ 550 billion, with an astonishing CAGR of more than 100%!

Now that the mobile financial services opportunity has proved to be real, banks are no longer looking at a go or no go decision, but rather, at how far and how fast they need to go. They’re also looking at a more nuanced mobile strategy, based on the following considerations:

Retail versus corporate focus: With the options in mobile banking, payments and commerce increasing, banks cannot rely on a one size fits all offering. They need to decide whether to go down the retail banking route of high volume, low value transactions or focus on providing business customers with services such as MIS, approval and authorization, alerts and so on. Banks focusing on retail customers must fine tune their strategy further depending on their goals and core audience. For instance, banks focusing on existing urban customers might want to improve user experience whereas those pursuing financial inclusion would look at reach and cost effective delivery.

Feature versus smartphone: Amidst all the hype around smartphones, let’s not forget that even today, feature phones constitute nearly 90 percent of the market. Although smartphones open up many opportunities at the high end – Value Added Services, contactless payments, advisory and so on – it’s the feature phones, which make up the numbers. Banks must take a considered decision on where to focus their energies.

International versus domestic: As banks and mobile network operators expand the global coverage of their operations, it is natural to ask if they should do the same with mobile banking. Should they consolidate their position in the domestic market or move quickly to gain a head start in unexplored foreign shores?

Going it alone, versus in partnership: It takes an ecosystem of banks, mobile operators, Internet Service Providers, device manufacturers, merchant establishments and even regulators to deliver mobile financial services. Hence, while formulating their mobile strategy banks also need to decide whether to strike out on their own, or enter into a collaborative or co-branded alliance with other participants.

Passive versus active: The introduction of any new service carries some risk, and mobile banking is no exception. Banks can mitigate it by testing the waters – for instance by starting out “passively”, with non-financial marketing initiatives on mobile, before branching out into financial transactions. Alternatively, they could test the working of their mobile platform with internal users – again by rendering non-financial services – before launching the real deal in the outside world.

Banking versus payment: Banks also need to decide between launching full fledged mobile banking services and a niche mobile payment offering, that starts out by replacing credit card transactions and works its way into all other forms of payment.