A couple of very good m-banking review articles
May 8th, 2008
m-banking
For those interested in mobile banking, here are a couple of recent articles I’ve found particularly helpful:
1) Gautam Ivatury and Ignacio Mas at CGAP have released yet another insightful focus note, this one on “the Early Experience With Branchless Banking“ (related blog post here). In part of the note, they integrate data from Brazil, Russia, and South Africa suggesting that (at this time) branchless banking customers use the payments and transfers features, more than the savings features. To me, this starts to peel back the layers on both the behavioral and the “mental models” questions, where data has been notably scarce. These early findings suggest that users may initially understand the services as virtual post offices, rather than virtual wallets. However we are still early in the domestication/structuration process – meaning, there is plenty of time for the social norms and use patterns to emerge in a different direction.
2) (via Jan Chipchase’s blog). Bill Maurer at UC Irvine has a draft concept paper, Retail Electronic Payments Systems for Value Transfers in the Developing World. Maurer presents a broad overview of the transfer functions of the m-banking space, and differentiates between emerging narratives (stories) that various interested communities apply to make sense of it. (Note again my interest in the mental models of m-banking). Depending on where one stands, the emerging story of m-transfers is one of empowerment, market share, new sources for fees, or the arrival of new strain of ‘tulips’.
I’m just finishing up a broad revision to this conference paper, and am grateful to have these two papers to draw on and reference. I’ll post or link to the revision when it is ready.
2 Responses
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jdonner May 13, 2008 at 5:43 pm
Hi Karthik,
One way to look at things is to distinguish between an m-banking service’s technological solution—for example (a) GPRS/mobile web vs. (b) SIM-based menus or (c) SMS—and its financial services solution, which could be(1) serving customers who have active bank accounts (2) opening ‘new’ bank accounts for customers when they sign up or (3) serving customers without bank accounts, where the operator or some third party holds the stored value.Each m-banking service combines a technological solution and a financial services solution. mChek combines a technological solution of (b) SIM-based application plus a financial solution of (1) serving customers with preexisting credit cards.
Each combination has advantages and disadvantages, vis-a-vis security, scalability, interoperability, ease-of-use, etc. , and depends on the players in the marketplace and the laws governing telecom and banking in each country.
The enthusiasm in the economic development community is focused around using m-banking to provide access to people who currently do not have a bank account—the ‘unbanked’. So in that sense, services which run on simple/inexpensive phones are attractive because they have more reach into low-income communities. Some think that the best way to do this is to have banks as partners, thus giving people bank accounts they access exclusively via the mobile channel. Others look to third-party or operator-led models where ‘unbanked’ users get access to payments, transfers and stored value functionality without opening an actual banking account. Only time will tell which model(s) will prove most successful at bringing financial services to the unbanked.
Mobile banking is really taking off and in India, we have mchek.com which does amazing service and very easy to use also.
Many of friends have used mchek and they find it extremely useful and easy. But, in India, GPRS users are minority and hence SMS based m-banking had found its way. Is this sustainable/scalable or is security good enough for banking?
But, if more users start using internet on mobile, then, these kind of services wont be neccessary since users might go to bank’s website and do transactions. What do you think?
PS:I query is not totally relevant to the post, btw.