Regulatory discussion

One of the discussion topics that is dominating progress with mobile banking, is the regulatory constraints/dispensations. This is especially relevant when the delivery of mobile banking is based on the creation of a "new account" for every subscriber. The banking law that would govern the opening of such an account is always a topic for discussion.

Based on what I have seen in the industry, I think that one can identify four categories of regulatory conformance in the provision mobile banking based on a new bank account. The four are:

• Full banking, where the underlying account that is created for a new subscriber conform to all the banking law requirements. The customer is properly identified and conforms to KYC prescriptions. The bank account is properly reflected on the deposit-taking balance sheet of a bank and all legal requirements have been met.
  
• Relaxed conformance, which is typically the same as a full bank account with some relaxation of the KYC requirements (both in content and in process), although the customer is still properly identified.
  
• Pre-paid debit, where the client is not identified. KYC requirements are postponed to a later stage where the client would be identified (for instance) where cash is to be withdrawn from the account, or when the balance is to exceed a specific limit.
  
• No conformance
  

In selecting a specific approach, the provider of mobile banking should consider all implications and the potential impact on the business case. A valid strategy could also be to deploy a platform where more than one of the categories above are supported.