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Posts Tagged ‘Mobile Banking’

Applying Developing-Market Mobile Banking Models in the Developed World

November 27, 2012 in Uncategorized | Comments (0)

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A U.S. federal report released in September found that 8.2 percent of households in the country are unbanked. That’s nearly 10 million households, and 17 million adults. Another 20.4 percent are underbanked—or 24 million households, and 51 million adults. Those numbers add up to more than a quarter of the population of the U.S.

The percentage of both unbanked and underbanked has increased slightly since the last survey (conducted in 2009). Americans are also using alternative financial services more, including payday loans, check cashing, money orders, pawn shops, etc. Both increases are most likely due to the economic recession and resulting high unemployment rates.

Given that the recession is global, I’m guessing that if other countries were to conduct similar surveys, they would see similar results. And that has me thinking.

With mobile financial services bringing more people into the formal banking system in emerging markets around the world like South Africa, Mexico, Peru, Colombia, Pakistan, Sri Lanka, India, and Indonesia, etc., I’m wondering if the same models could be applied in developed markets.

Lack of access is often the major hurdle in emerging markets. Bank branches are few and far between. Roads are poor or nonexistent. Transportation options are slow (walking) and/or unreliable. That’s obviously not the issue in most of the developed world. In fact, the U.S. survey respondents cited insufficient funds, and the fact that they don’t need or want an account.

Prepaid debit cards and payroll cards are relatively new products. With a prepaid debit card, you load an amount of money on the card, and then use it for purchases at points of sale. Payroll cards are similar, but can receive payroll funds directly from employers. Neither card was considered an “alternative financial service” in this survey, but continue to be increasingly popular especially among the unbanked and underbanked.

Some banks are offering these cards now—and they’re smart. Everyone else is missing a market opportunity. The business model is similar to what we’re seeing work in emerging markets with simple accounts accepted by a wide range of merchants. More important, almost half (49.2 percent) of unbanked households that have used a prepaid card report being likely to open a bank account in the future.

Prepaid cards don’t build a credit history like secured credit cards do. That’s a drawback, for sure. They also have a myriad of fees. But they do help create financial literacy and a familiarity with credit that can be a step in the right direction.

As we move away from cash and toward mobile payments, I think we need to consider that those without bank accounts will get left even farther behind unless there are mobile services that meet their unique needs. There are sufficient numbers to create a real opportunity, and we have already seen such success with programs like Standard Bank’s AccessAccount in South Africa, which can be opened in less than 8 minutes via mobile at a local sales agent with no minimum balance and a low fee structure. Launched in March of this year, the bank reports opening 140,000 of these accounts every month.

Good News for the 90% Unbanked in Pakistan

October 24, 2012 in Uncategorized | Comments (0)

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According to the World Bank’s Financial Inclusion Data, just 10 percent of the population of Pakistan has a bank account. That leaves 90 percent without one. As I mentioned in an earlier post, Pakistan is the fifth largest mobile phone market in Asia. With approximately 130 million mobile phone users, Pakistan has one of the fastest-developing branchless banking markets in the world.

Two recent Sybase 365 partnerships promise are part of this mobile banking expansion. We’ve joined forces with Habib Bank Limited (HBL) and Allied Bank Limited (ABL) to offer mobile financial services to customers across the country.

These deployments will enable both banks to enhance the mobile banking currently available to customers. Perhaps more important, they provide a new avenue into the formal banking system for the large unbanked and under-banked populations living in remote areas. With limited access to ATMs and the Internet, people living in rural areas have traditionally had to spend a day or more traveling to banks and utility providers to cash checks and pay bills, often waiting in a long lines when they arrive. The proliferation of mobile phones and mobile banking continues to help these communities by saving time, simplifying lives, improving security, and fuelling local economies.

The HBL deployment should launch before the end of this year. ABL has its sights set on 2013. While both banks are early to enter the market, United Bank Limited (UBL) Omni was the first bank in the country to offer branchless banking, launching in 2010. Easypaisa, by operator Telenor Pakistan, is a well-established and popular mobile commerce service that anyone can use.

Mobile is undoubtedly emerging as a vital banking channel in emerging and developed markets alike. Both of these branchless banking initiatives will help change the way Pakistanis interact with their financial institutions and communities—and undoubtedly bring more people into the formal banking system.

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.

Mobilizing Relief Aid

July 31, 2012 in Uncategorized | Comments (0)

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Dutch Bangla Bank Limited (DBBL) recently kicked off a pilot program in cooperation with the United Nations’ World Food Programme (WFP) in Bangladesh, where over 200 beneficiaries will receive food aid via DBBL mobile banking.

That is, Bangladeshis will receive aid money in a mobile account on their mobile devices, and be able to use it to buy food from local merchants. Similar to other WFP mobile-based assistance programs (such as those in Niger and Zambia), this method of distribution provides assistance to people in need while also adding funds to the local economy.

Is mobile the new medium for distributing disaster aid?

After Haiti’s 2010 earthquake, the country’s mobile phone network was the first network to come back online. Many aid organizations used mobile to find survivors, collect donations (The American Red Cross collected $7 million in 24 hours by allowing people to donate $10 with a text message.), and share information about food supplies, shelter, medical facilities, keeping sanitary and other important topics.

A similar story arose out of Japan last year, following the earthquake and tsunami. Mobile donations poured in from around the world. People living in Japan checked in with family and friends through social media on their mobiles, and were able to receive public service announcements and other important information.

As mobile devices and mobile money become more widespread, it’s easy to imagine a future where aid agencies choose the mobile channel for their organization, collection and distribution efforts first, for its lower costs (no transportation or physical distribution points required), better privacy, higher security, and most important—its immediacy.

Mobilizing the Unbanked at Home

October 14, 2010 in Uncategorized | Comments (0)

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Partnering with Sybase, MobiKash Afrika launched a pilot of the first intra-region, mobile network- agnostic and bank-agnostic mobile commerce solution for sub-Saharan Africa in September. The pilot is in Kenya, which is already a much-quoted reference country for banking the unbanked, due to Safaricom’s successful M-Pesa solution, and 63 percent of households owning a mobile phone according to the 2009 census. (Compare that to the 3.6 percent with computers.)

It’s exciting news for a few reasons. First, mBanking is real, live and available today, and the Sybase 365 mobile commerce platform is on the leading edge. Second, due to MobiKash being operated by an independent third party, it’ll be available to all users irrespective of their Mobile Network Operator, leading to a greater network effect.

Third, and most important, MobiKash will provide a range of banking services to people who have never had access before. Less than 10 percent of Africans currently participate in formal banking for a variety of reasons. On the one side, banks have been unable to maintain the profitability of services to this population via standard channels. On the other, the target customers distrust traditional banks and lack efficient transportation to branches that are few and far between. Using the new service, Africans will be able to conduct commerce from their mobile phones, be it purchasing goods and services, securing loans, and (of course) traditional banking.

MobiKash plans to expand to other African countries in the near future, where mobile adoption rates are growing rapidly, and provide intra-country services where possible.

This mBanking revolution (if you’ll allow me the term) to bank the unbanked is happening all over the world. Internationally, the media has written quite a bit about it, but there hasn’t been as much coverage in the U.S. We seem generally less interested over here, and I don’t know why. Maybe we think we don’t have an unbanked population here, but we do.

A January 2009 FDIC survey reported that approximately 7.7 percent (9 million) U.S. households are unbanked, meaning they don’t have a checking or savings account. Another 18 percent on top of that (20 million) U.S. households are underbanked, meaning they rely on alternative financial services such as check cashers, loan sharks and pawnbrokers.

So why, when the vast majority of Americans own mobile phones — something like 90 percent — and mCommerce technology doesn’t require high-end devices, aren’t we doing more about it? The MobiKash service enables customers to access and conduct business with any financial institution via any mobile phone service provider, and includes integration into networks of ATMs, POS terminals, EPOS systems, the Internet and local agents. It would be great to see lessons learned in Asia and Africa being applied into the U.S. market. Aren’t the issues—banks unable to provide services at a profit, customers distrust and lack of transportation—the same? At present, we see a lot of activity in Latin America, but not yet in the U.S. We expect it to change as early as next year, with mobile carriers that serve the unbanked through their prepay offerings leading the way, and some banks putting some trials into the market, looking to see if mobility gives them the lower-cost channel they need to serve the unbanked market.

A service like MobiKash, which allows customers to pay bills, send money, manage their accounts and transfer funds could do a lot to create a gateway into the mainstream financial system. It could help the unbanked right here at home build savings, improve their credit score, secure lower rates for loans and fees for transactions, and reduce a source of personal stress.

This is not only a huge business opportunity, but also a huge do-the-right-thing opportunity. Who’s with me?

Read more on MobiKash Afrika: http://www.sybase.com/detail?id=1083733