Sybase Blog – Diarmuid Mallon

Earlier this year we published our Global Usage and Acceptance Survey Report. The survey looked at how consumers are using their mobile devices today, and what new services they would be interested in. We looked at three service areas: mobile commerce, mobile CRM and next generation carrier services.

The survey was completed by more than 4,100 mobile users, in sixteen countries using an online methodology, with at least 250 mobile phone users per country. The countries in the survey were Argentina, Australia, Canada, China, France, Germany, India, Indonesia, Italy, Malaysia, Mexico, Singapore, South Africa, Spain, United Kingdom, and USA. Read the rest of this entry »

Mobile phone usage is pervasive in both emerging and developed markets. As consumers shift more personal business to their mobile phones and smartphone ownership increases, financial institutions and mobile operators are now introducing a broad portfolio of mobile services. But what are the benefits for banks when it comes to mobile banking?

Financial institutions are adopting mobile banking to meet four primary objectives:

[1] Enables banks to deliver existing services via mobile phones so customers have access to accounts anytime, anywhere

[2] Reduces costs of delivering customer service over more expensive channels such as call centers, branch personnel and ATMs

[3] Improves security by adding another layer of security (customers use the phone or a message as an alternative to One-Time-PIN generator/tokens)

[4] Enhances marketing opportunities by introducing a more immediate and personalized communication over mobile phones

Mobile banking separates a bank from its competitors in a crowded marketplace. As more customers turn to their mobile phones not only to communicate, but also to work and relax, mobile banking and managing personal finances is another valuable service that financial institutions can offer the savvy, mobility-craving consumer. Customers are choosing financial institutions that offer them the greater ease of accessing their bank account information by mobile phone—and they are starting to expect mobile banking services to be an option in any service offering.

According to the June 2009 Yankee Group report “Mobile Banking Creates a Bright Spot Within the Struggling Financial Industry”, the potential audience in the United States for mBanking is 260 million consumers. The early adopters to date have been higher income individuals. Based on Yankee’s numbers, 62.5 percent of mobile banking users have incomes of more than $50,000. These affluent consumers, typically armed with a popular smartphone, are an attractive market for banks.

Introducing these new mobile banking services is not resource-intensive or outrageously expensive. In fact, many financial institutions are already showing a return on investment (ROI) for their mobile banking programs.

We will be shortly publishing a ROI white paper, that will provide greater detail on the business case for mobile banking, on the new Sybase mCommerce pages.

Recently I spoke at the Informa Mobile Financial Services conference in London. I been given the rather weighty subject “Bring Me Up To Speed:
What Technical Advancements Have Happened Over the Last Twelve Months? What More is to Come?”. A topic, that I joked in my opening remarks, would take half my allotted time just reading aloud.

Now pure technology is a subject I don’t often speak on, so before writing my presentation I sat down made a list of the all new mobile commerce/finance services that have launched in the last twelve months, and which (I knew of) that were coming down the line. For each service I made a note of the core mobile technology they utilised.

This is the list I ended up with: SMS, USSD, SIM Toolkit (STK), WAP (or mobile browser), some form of mobile widget, NFC (although most are/were trials) and Airtime topup/transfer. And a few companies have also repositioned PSMS as a means for paying for digital goods online, but it is debatable whether these are mobile commerce or not.

For those of you in the mobile industry, I can detect a rye smile on your face. For those of you new to mobile let be explain why they are smiling.

SMS “invented” in 1984
USSD “invented” in 1994
STK “invented” in 1995
WAP “invented” in 1997
(Mobile) APPS “invented” in 1997 or 2003
Widgets “invented” in 2003 or 2006
NFC “invented” in 2003 (or is that 1997)
Airtime transfer “invented” in 2007 (but most likely long before that)
PSMS “invented” in 1999 (but existed for voice long before)

As you can see, none of those new services are using any form of new technology. However, what has happen in the last year, is that companies have stopped worrying about the technology, but rather focused on the service: such as making the mobile commerce service easy to join, being smarter about how KYC and AML regulations are met, integrating marketing in stimulate repeated use, and so on.

So in the end my presentations message was rather simple: be a Luddite, you have all the technology today that you need to launch your mobile commerce service. The key to success is to focus on the service, and not the technology.

[What do I mean by "launch" - well tracking the start of any tech is tricky, so I've gone with either standards being defined (e.g. SMS in 1984), or an implementation that created that use case (e.g. the first Symbian phone in 1997, or Safaricom endorsing airtime transfer).]

Last week in Barcelona I had an Editorial published in the show daily for Mobile World Congress 2010. The brief was “a 1,000 words on mobile commerce”. My first draft weighted in at 2,500 words, and I spend far longer trying to cut the article down to the allotted length, than writing the original text.

So I though I would take advantage of the lack of word limits, and republish a longer cut of the article here.

[Title]Get Ready For mCommerce 2.0

[RED TEXT BOX] Just as the “noughties” were the decade of the mobile device, the teens will be the decade of mobile financial services. In the last ten years we have seen the uptake of mobile devices go from 720 million devices in 2000, to more than 4.1 billion by the start of 2010. Today the mobile is the most ubiquitous form of technology and means of communication outnumbering fixed-line phones, PCs, TVs and even the Radio. In the next ten years mobile will move to also being at the centre of how we manage our finances. This will create opportunities for new entrants to the financial services industry, challenges for traditional service providers and force maturity of the current service offerings.

[MAIN ARTICLE] ‘Mobile’ is not new, but in the first decade of the twenty-first century we saw a clear step-change, as this was the decade that technology went mobile. Products that had been previously confined to a single location were replaced by ‘go anywhere’ equipment.

In 2008 the sales of laptops overtook those of desktops. The number one selling game console is the handheld Nintendo DS. The (longer) tradition of mobile music continues with the iPod; which unlike its tape-based predecessors is now replacing the home HiFi system in addition to music on the move. But, more than any other trend, it has been the decade of mobile communications, with the mobile phone having long passed fixed-line telephony in uptake and reach.

In the next ten years the focus will shift from mobilizing the technology to creating true mobile services, the next generation 2.0 services, that will fully realize the potential of mobile devices. Nowhere will this be truer than that of mobile financial services.

The first generation mCommerce services covered two basic service offerings; mobile banking provided by banks, and mobile payments typically offered by operators or independent service providers.

With mCommerce 1.0, the mBanking services were focused on squeezing existing Internet banking services on to a handset. Given the technologically limitations of handsets and those of mobile networks of the time, the failure of such services to get widespread adoption was, perhaps, not a surprise. Today mBanking is growing in usage, but the services in the majority of cases focused repurposing existing web-services, or offering nothing more than simple alerts. A few offerings are even more restrictive, and limit users to a handful of supported devices, or even force them to change mobile operator. At best these services have provided a limited service to consumers, at worst they invoke a negative response and add nothing to the customer service or the bottom line of the bank.

Mobile payments started at the being of the 2000s as a means to pay for digital good and services, and in many markets they have not moved passed this. However a number of markets have moved from digital to physical goods and services. In developed markets transportation has been the lighthouse service, whilst in developing markets money transfer services have lead the way.

Just as mCommerce 1.0 focused on mBanking, mCommerce 2.0 will focus on mPayments. Existing mBanking services will expand to include mPayments, and mPayments will evolve beyond money transfer to enabling services such as bill payment and remittance. In the mCommerce 2.0 world these will closely reflect local market needs and service requirements.

In developing markets such as Africa there are several fundamental financial transaction issues faced by hundreds of millions of adults on a daily basis, ranging from the ordering and payment of goods and services, to the challenges of traditional banking, bill/tax payments, salary withdrawals and international remittances. mCommerce 2.0 services will provide the opportunity for true financial inclusion for the unbanked and under-serviced that will have dramatic benefits for all.

Whilst the banks are deploying mobile banking across Africa, this has failed to address the real day-to-day issues. With a few notable exceptions, it is extremely difficult to open a bank account; banks remain inaccessible (location of branches and restrictive hours of opening) and charge relatively high fees that discourage many potential clients.

The mCommerce 1.0 services have included mobile operator mobile wallet person-to-person transfer services such as Zap, Orange Money, MTN Money and M-PESA (pan-Africa), and several strong national bank initiatives including Barclays Hello Money (Kenya), FinBank’s FlashmeCash (Nigeria), KCBConnect (Kenya) and particularly Wizzit (SA). Some of these have been dramatically successful in capturing latent demand and solving some of the challenges.

In an mCommerce 2.0 world, the rise of independent “financial portals” will service all aspects of financial life, thus enabling a plethora of financial transactions to take place from the home or locality at any time, at a low cost, and with the efficiency and reliability of the best banking practices.

mCommerce 2.0, is about to take off on a continental level with bank and mobile network independent service providers such as MobiKash in east and southern Africa, Mopay in South Africa, Moneybox in Nigeria taking a national or regional role as independent mobile commerce “portals” for financial inclusion. These include mobile wallets as found in the existing service providers, but add extensive banking, biller and merchant integration so as to offer a completely new type of service in the form of truly interoperable and accessible bank and MFI accounts. In turn, this approach now gives the banks the reach and range they have been seeking for many years whilst keeping costs to a minimum.

Just as the progression in developed markets will be the evolution of mobile banking services, in the developing markets, we will see mobile payments services evolve to include mobile banking services.

One example of this is the concept of opening a mini-bank or MFI deposit account on the street via agents (street agents, kiosks, bars, fuel stations). This allows the public to gain confidence in opening and managing a basic bank account without ever visiting a bank branch. The KYC is minimal, the experience simple and non-intimidating. These accounts offer the stepping stone from mobile wallet to full banking whilst the service intrinsically provides full mobile banking features for all of the linked deposit or loan accounts as operated by the various banks and MFIs in the scheme. This means that the customer’s money can now be transacted from the access points of the mobile handset, local agent, ATM, POS terminal, and internet across the whole banking ecosystem.

Governments and local councils need to collect taxes, the utility companies to collect revenues, Schools and universities, insurance schemes, pensions and medical service providers rely on regular contributions to enable services. With mCommerce, the billing and payment process is greatly simplified and with full integration comes the opportunity for micro-payment plans. Instead of buying electricity for a month, customers can perform a real-time top-up of their pre-paid electricity meter on an as-needed basis. Salaries, pension/welfare payments, NGO disbursements can all be distributed to the user at their locality via such mCommerce projects.

In developed markets mobile payments has focused on enabling consumers to pay merchants for goods and services. In mCommerce 2.0 these services will focus on the benefits beyond being just another payment instrument. The best services will exploit the capability of a mobile payment to be location independent rather than location based service. For example the cross-operator mobile payment system in Austria enable consumers to not just pay for car parking, but to also extend their parking period without needing to return.

Rapid growth for mobile payments is expected as cooperation continues to increase and mobile advertising starts playing an important role. Currently it is estimated that the remote mobile payment transaction value for digital and physical goods will grow to gross payment transactions of over $300 billion by 2013.

mCommerce 2.0 will also see a third service – mobile remittance. Mobile remittance will be the mobile money service that joins developed and developing markets, as funds are remitted both North-South and East-West.

There are over 190 million migrant works worldwide, many sending money home each month, in excess of $550 billion globally. Such international remittance to and within country is hampered by exceptionally high transaction costs, limited sending options and limited outlets at the cash-out destination. This is being addressed by mCommerce projects adopting their own remittance approaches, new bank partnerships, last-mile ‘cash-out’ partnerships with the legacy remittance companies and new products. It is now possible to reduce the transaction fees by half whilst delivering the funds direct to the mobile wallet of the recipient for local cash-out.

With mCommerce 2.0 mobile banking, payments and remittance can not be seen as distinct services, but rather points on a continuum. The mobile commerce revolution has started its second phase and will bring the potential for financial inclusion to hundreds of millions, saving time, money and opportunity-lost through the use of exceptionally simple, efficient, low cost and ubiquitous financial tools accessible wherever and whenever needed. The resultant opportunity for job creation, income enhancement, money flow acceleration and GDP growth is sizable. The challenge now is for these projects to continue developing the ecosystems, niche products and territories in order to fulfil the hopes of those people that will come to use the services.

I’ve always been a big fan of the Gall-Peters’ projection. The world is sphere, so when you draw (or project) it on a flat surface you get distortions. For example, on a traditional map Greenland looks bigger that Africa, when in fact Africa is 14 times larger in area than Greenland. Gall and Peters try to address this by creating a map where the areas are correct, although in doing so created new distortions.

So what happens if we take a different lens to the world? Well a new website “Show” allows you to do just that.

First lets start with look at the world in terms of population. So here the area of each country is scaled by their population.

The world scaled by population

The “Show’ site allows you to apply many filters, so lets look at communication technology. So the obvious place to start is fixed line telephones.

The world scaled by number of fixed-line telephones

The difference between the two projects is huge. Africa almost disappears off the map. India, South America and much of Asia-Pacific shrinks, whilst Western Europe and North America grow.

So how does internet access compare?

The world scaled by internet users

Not surprisingly this follows the access to fixed line telephony very closely.

So finally, what about mobile?

The world scaled by cell phones

Unlike fixed and internet access, mobile is almost in perfect ratio to population.

The message is clear. If you want to reach the world, then you will use the mobile, not the internet or fixed telephony. And a corollary is that for many people in the world, their first experience of the web (or even phone) will be a mobile one.

To ease everyone back in to the 9-5 routine, here’s some recent Sybase mCommerce press coverage. Perfect reading with your morning coffee/tea or OJ.

Winning in mobile payments means balancing tough industry regulations with solid customer loyalty. New models in the mobile payments and remittance space are challenging traditional players in some markets and collaborating with them in others. (The Asian Banker)

Mobile Banking, Payments and Remittances is what Sybase is selling at Gitex 2009. The main focus is to attract more corporate clients and at the same time make the retail consumer aware of the product. (Alrroya.com, video)

It’s Getting to Be an mBanking World. Coverage from Asian e-Marketing.

Competition for mobile-phone based transactions in East and Southern Africa has gone a notch higher with the introduction of services by MobiKash Africa, an independent provider. Computer World covers the launch of a new mPayment service in Africa.

“Mobile banking in Europe has clocked up its first decade, but much of the market’s potential is still unrealised. Graham Buck reviews how this ‘sleeping giant’ is likely to stir into life over the next few years from checking your account, making payments, to remittances, and a myriad of other uses, the mobile has the potential to take centre stage.” More here at FST.

“Emerging markets are ahead of the curve in deploying mobile payments, eclipsing some of the leading western mobile markets in terms of usage and adoption.” More at mobileSQUARED in their November 2009 newsletter (direct link to newsletter PDF here).

I’d like to take this opportunity to wish you all Happy Holidays and wish you a peaceful New Year.

Whether you are a regular visitor, or just stumbled upon this site for the first time – thanks for visiting. I’m constantly amazed by how far-and-wide the readers of this site come from.

Here’s a snapshot of the locations of the most recent visitors of this site:

Thanks again for popping by, and hope to see you 2010.

As is customary at this time of year, I’d like to do some crystal ball gazing and make a few predictions for the coming year (and perhaps a wee bit beyond). As with all predictions, some will spot on, but equally I expect time to be cruel to just as many.

2009 has been the year for mCommerce, with a huge array of services being launched across the globe. In 2010 the overall trend will be Banks, Operators and others building on this success, offering a wide range of services to increasing number of customers.

So here, in no particular order are our predictions for 2010:

Banks Getting Into The Business: Up until now mPayments (and mRemittance) services have be delivered by mobile operators and third-parties. Banks will join this space with the launch of mobile person-to-person payment services. In markets like North America and the UK this will accelerate the death of the cheque book.

Marketing: From a banking perspective, the customer will increasingly interact with the bank using the Internet and the mobile channel, rarely visiting the branch, and only using the ATM for cash withdrawals. So, the mobile phone becomes a powerful channel with which to keep bank customers informed about services they offer.

Mobile Banking: In developed markets Mobile banking has not taken off as expected, mainly because the solutions deployed were hard to use (remembering key words) and offered little functionality. Banks are now realising that and will look to fix these shortcomings with the next generation of mobile banking solutions. Customers want to self-select the channel that works best for them, and so Banks must be mobile multi-channel.

Bill Payment: From both the mobile operator and the bank’s perspective, offering bill payments via the mobile channel is an obvious enhancement to current alerting services. Mobile bill payment is advantageous from a cost, environment, and convenience perspective. Services like Expedited/Emergency bill pay create the potential for revenue generating services

Mobile Business Banking: As more consumers use mobile banking, they will start to demand similar services for Business Banking. For small businesses these services will focus on cash-flow related services such as alerts. For larger businesses decisioning and authorisation services will provide additional value.

TopUp: The ability to topup pre-paid mobile accounts using a bank account or credit card is of interest to almost all mobile operators. The cost of distribution of the pre-paid card system, as well as convenience, are factors driving this channel. Conversely adding TopUp to a Bank’s existing mBanking service provides addition revenue, and introduces mobile payments to their customers.

Funds Transfer: In a few markets Operators have had huge success in capturing the funds transfer market. In 2010, this will continue as there is a clear business case for mobile remittance in most markets, both “North to South” and “East to West”.

Micro Banking: Previously, the business case to add potentially millions of low-value customers to a bank’s traditional and core banking infrastructure did not stack up. This has changed with new applications supporting the mobile channel. Now branchless banking and typical branch services can be offered in the remotest parts of the country.

Micro Finance: As with micro banking, the ability to offer micro loans and insurance services to the unbanked market was hard to justify from a return on investment point of view. The addition of the mobile channel, both for the dispersement and tracking of this funds massively extends the reach of these services. Now, small value loans and insurance become products that can be brought to market with minimum investment.

New Payment Frontiers: Businesses and the public sector will look into other payment services. In 2010, mobile payments could finally become available for local taxes, utilities, mass transit, car parking, and the payments of fines.

Following on from a previous posts where we were looking at the “word clouds” for our Sybase blogs (here and here), I decided to try the same exercise with my twitter account.

The results are very different from the Wordle cloud for this blog. A lot of that is driven by the fact that on Twitter a good proportion of my posts are fowarding (re-tweeting) of other people’s tweets.

You can following tweets here, and thanks to Tweet Cloud for generating the graphic.

Where are we now? Today the majority of top 10 US banks have rolled out at least one mobile banking access channel. Many more Banks are now deploying a mixed model, where services are accessible across multiple mobile channels, in particular offering an SMS option. We are also seeing Banks using Mobile Financial Services as a differentiator for customer acquisition, and advertising these services, as confidence in their mobile servcies grows.

This confidence is also being reflected by consumers as uptake in mobile banking services steadily increases. By 2013, Tower Group are predicting, more than 53 million people in the US will be active users of mobile banking services.