M-Com - Making Money from Mobile Banking, M-Payments and M-Commerce: Winning Strategies for Banks

I was lucky enough to have found some time to attend a webinar event held yesterday by M-Com.  The informational session was to discuss some of the key issues or considerations in mobile banking and the attributes of a winning mobile strategy for banks based on M-Com’s industry experience.

To summarize, some of the key issues discussed are:

• What are the access modes for the mobile channel?  Discussions around communication protocols, application platforms, and functional considerations were provided.
• Who is the target market?  What are the demographics of early adopters and what are some of the impacts based on geographic deployments.
• Where do mobile operators fit into the ecosystem? Are they friends or foes?
• What are some of the technology impacts we see in the future?  Will device penetration be evolved from basic handsets to majority smartphones or netbooks and notebooks?

M-Com included many of the data points that were observed in the field.  One set of data point that I found most interesting was the cost reduction opportunity figures which compares channel costs figures within a typical banking operation.   For instance, costs per transaction was found to be approximately $4 for in branch, $3.75 for call center, $1.25 for IVR, $0.85 for ATM, $0.17 for Online and just $0.08 for the mobile channel.  There were no further breakdown of these cost figures, however, if we just take these cost figures at face value, then this suggests that the opportunity for cost savings when using the mobile channel are immense.  Although, I have to wonder how one can reduce online channel cost by more than 50% when migrating to mobile channel.  Was this figure based on the anticipated increase in transactional volume when dealing with the mobile channel?

M-Com also outlined some of the characteristics that they believe are responsible for successful mobile banking strategies.    The following is a summarized list of attributes that were discussed during the webinar:

• Working applications – all too often do you see an application that has been prematurely launched to the market.  Make sure your applications work, and are easy to use.
• Universal reach maximizes adoption – In most geographic deployments target multiple demographics.  Therefore, it is imperative that the target audience is able to access your services, i.e. SMS application for target market using basic mobile devices, whereas custom on-device applications for younger, more tech savvy users.  This point is easier said then done since in most cases, it is very difficult for banks to manage a spread of technologies, and application offerings.
• Strategy for different customer segments require different functions, for instance, SMS applications can be limited to balance inquiries, and simple peer-to-peer transfers, whereas an on-device application can include bill payment, repeat transactions, loan management, etc.
• Over 40 % of mobile banking users are not online bankers based on M-Com live customer data.  This means that the banking strategy must take into account the user’s infamiliarity with the concept of electronic banking.
• One of the attributes that are often overlooked, is the back office integration and the capability to efficiently support customers including:

-  Enrolment and Activation
-  Customer Care
-  Reporting and Analysis
-  Diagnostics and Performance
-  Service Configuration
-  Risk and Security

• Avoid fragmented technology deployments, and multi-vendor solutions should be avoided.  I’m not sure if I agreed with this since this reduces the company’s ability to implement best in class software for different verticals of the mobile financial services, i.e. top up vs, customer care, vs. payments services, processing, etc.
• Include payment services in the strategy since transactional fees introduce a new stream of revenue for banks.  This includes:

-  Billing
-  P2P
-  Remote Retailing
-  Merchants and POS

• Provide a consistent and seamless user experience across all banking channels.
• Deliver a Single View of the Bank, transactions are found in all channels, etc.
• Provide a 360-degree view of the customer so that customer support is seamless and consistent.

Overall, I felt the session was very informational.  Serge van Dam and Edward Massey did an excellent job of aligning M-Com’s real world experience to the guidelines suggested above.  You can find a recording of the webinar at this link here: http://tinyurl.com/oekcub.