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Archive for August, 2012

Banks Now Lead the Charge in Developing Markets

August 16, 2012 in Uncategorized | Comments (0)

The M-PESA mobile money transfer and payments service took the world by surprise in 2007 when it debuted a successful business based on serving an previously underserved population: the rural poor. Mobile technology made it possible to reach unbanked and under-banked people in developing markets without having to build, staff and secure brick-and-mortar branches.

Mobile operator Safaricom, part of the Vodafone group, developed the idea and launched the service. Many operators recognized the same opportunity in their own coverage areas and followed its lead, including Cellcom Malaysia (AirCash), Globe Telecom (G-Cash), Mobicom Africa (MobiKash), MTN Uganda (Mobile Money), Orange (Orange Money) and Smart (SMART Money).

So far, it’s been the operators leading the charge in developing markets. But now, we’re seeing a shift, as more banks are beginning to invest in their own mobile financial services.

Dutch Bangla-Bank Limited (see my colleague Haridas Nair’s blog post about DBBL) launched a suite of award-winning mobile banking services early this year, aimed at bringing mobile financial services to the unbanked and under-banked. ONE Bank Limited is planning to jump in to mobile in Bangladesh as well, and there’s plenty of room for competition in the country, where 45 percent of the population has mobile phones and just 13 percent have bank accounts.

Two of Pakistan’s largest banks, Allied Bank Limited and Habib Bank Limited, will also soon offer mobile banking services, both with the aim of reaching the unbanked and under-banked population of the country. With approximately 130 million mobile users, Pakistan is the fifth largest mobile phone market in Asia, and one of the fastest developing markets for branchless banking in the world.

The momentum of mobile finance is increasing, and banks are pulling into the lead.

Banks and Social Media: Where Is It Going?

August 7, 2012 in Uncategorized | Comments (0)

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A year ago, I blogged about how banks and financial institutions like Amex were starting to experiment with social media (see “Banking on Social Media”), following consumers there, promoting their products and services and generally testing the waters. Now, banks have gone a step beyond: social payments.

In February of this year, Philippine telecommunications giant Globe Telecom offered its well-established GCASH mobile commerce service as an iPhone app that enables customers to send money not only to people in their phonebook but also to their email and Facebook contacts. In June, Poland’s Alior Bank announced Alior Sync, a separate business and all-digital financial services firm, which offers (among other things, see below) Facebook-based payments. Social media and banking is now very real.

In the case of Alior customers, they can transfer money directly to friends on Facebook through the surprising channel of photos. Both senders and recipients must use the Alior Sync application. The payments are authorized with single-use codes sent via SMS and protected with captcha. Recipients can transfer the funds they collect to any bank account in Poland. Targeted at young, tech-savvy consumers, Alior Sync, unlike Globe Telecom, is actually relying on technology for all of its customer interactions. The digital bank has no physical branches; only a web-based, virtual branch with live “tellers” available for video, audio, or text chat to help customers do whatever they need to do, and mobile apps (Android and iOS) that provide basic services including balance and budget tracking, funds transfer, and invoice payment. Customers can also make PayPal payments through email.

ASB Bank in New Zealand originally broke Facebook ground in the fall of 2010 with its virtual branch, available from the bank’s Facebook page. A number of agents are available via chat to answer questions from anyone who asks, ASB customer or not. Incidentally, ASB also recently launched a Facebook-friends payment service coming soon to its mobile app, which customers already use to send payments to anyone with an email or mobile number (similar to Commonwealth Bank Australia with its Kaching app.)

It’s clear that banks are connecting to the Facebook Platform API and moving forward. What’s not clear at this point is how consumers are going to respond. ASB’s virtual branch has been popular, garnering thousands of “likes” and serving enough customers that the bank has kept it alive for going on two years. But, ASB is just answering questions, not handling financial transactions.

Currently banks look to be best positioned to be successful when it comes to payments. In a survey Sybase 365 conducted late last year, banks scored highest when it came to who consumers would prefer to provide a mobile payments service. (See “Mobile Consumers Trust in Banks.”)

For that reason, it’s interesting to me that banks are looking to use Facebook as their channel network. I like to see the innovation, and my wife and I are giving the Kaching app a try. I’m very curious to see how this will evolve over the coming year.