Why mobile is changing the banking planet

Back in 2004, I asked a group of bankers when mobile would take off in banking. They all said: “not in our lifetimes”.

In 2007, Bank of America launched their mobile banking applications and has seen a rapid uptake of users. In less than a year, they reached a million customers on mobile, and saw a further 300% growth in 2008. It took them over a year to get the first million customers; a pregnancy period of just nine months to get the second million; and a short six months to get the third.

According to Doug Brown, the man responsible for mobile banking at Bank of America, the speed of take-up is accelerating even faster in 2009, with 150,000 new mobile customers in September 2009, 210,000 in August and 220,000 in July.

What are they doing?

99% of mobile users’ view balances, 90% view transaction details and about $10 billion of funds have been moved via mobile.

But this is not just for existing accountholders wanting account access. The bank has gained over 150,000 new accountholders from competitors during 2009, just because they wanted mobile banking.

So far so good.

Now jump to Africa.

M-PESA is the story in Africa.

M-PESA is the mobile text service introduced by Vodafone’s subsidiary, Safaricom, back in 2007. Suddenly a country with zero electronic methods for making payments for the masses had an electronic access which has revolutionised the country.

Within a year, one in five Safaricom users were using M-PESA to make payments, and one in ten Kenyans had used the service. By November 2009, M-PESA had become the world’s biggest mobile money service with over 10% of Kenya’s GDP moved by mobile payments. Accidentally, Safaricom had become the biggest bank in Kenya with 8 million users registered and over $2 billion transferred by mobile.

Now M-PESA is being expanded into Nigeria, South Africa and other African countries, whilst banks are saying that customers are actually switching banks to get mobile channel access.

Now jump to Japan.

A bank launched in Japan in June 2008 called Jibun Bank.

Jibun Bank is a mobile only bank. The Bank is designed for access via mobile only. You try to use the bank online, and it’s rubbish. As for branches, forget it. This is a multimedia rich, mobile only bank.

The bank is a joint venture between the Bank of Tokyo-Mitsubishi UFJ and telecom operator KDDI.

Jibun Bank, which means my bank, gained 500,000 account openings in just eight months and, after eighteen months, had Y140 billion ($1.5 billion) of deposits by December 2009, from over 850,000 accounts.

At the start of March 2010, the bank opened their millionth account.

What is the point of these three short case studies?

Well, there are many, many examples of banks innovating with mobile worldwide today, but the lesson is this.

In 2004, bankers believed this revolution would not take place in their lifetime.

One banker actually said to me, in writing: “I think this idea is way out there – ten to twenty years – before this plays out in any sizable way.”

Six years later, the battleground is already defined and being won.

Are you fighting in this space?

Have you lost already?

I wonder ...

Mobile Trends 2020

View more presentations from rudydw.

Mobile Banking in 2020 - Mobile World Congress Report

View more presentations from Nadejda Tatarciuc.

Comments

[John Copping]

Not to forget the impact that mobile banking had in New Zealand that, when launched by the post office bank (Kiwibank) took it from the bottom of the market to near the top (capturing some 25% of the youth market along the way).

Of course, as our mobile phones are starting to turn into mini pc's, some banks will believe that the existing internet service could just be accessed from the phone. This would not be a good experience from a customer point of view, especially when it comes to ad-hoc payments to friends, etc.

This is going to be a very innovative area to be in.