Tuesday, November 11, 2008

The Future of Mobile Banking

It has been some time since the first mobile payment solution was prototyped during the late 1990's. It would be correct to say that next year mobile payments and banking have been around for a decade. Many challenges were overcome and many deployments made. During the past ten years many mistakes were made and a lot of money has been invested (and lost!) to develop the industry to the current stage.

Mobile banking has come of age. The little baby is without doubt a teenager today and many banks and mobile operators have made serious commitments to making mobile banking real. Mobile banking moved from the maverick fringe to maintstream relevance with many success stories and case studies. The question is, what can we expect in the future... next year and (if it is possible to look that far in the future), the next ten years? This is some of the things that I believe will materialise:

In the short term, it is my expectation that the following would happen
  • I expect that we will see a massive increase in the number of subscribers to mobile banking functionality. The penetration of subscribers are already quite impressive, especially in countries like Kenya and South Africa, but this performance will be replicated in other countries as operators and banks get better at the products and increase investments in marketing and services.
  • As the numbers increase towards the end of the year, we ill see an exponential increase in transaction volumes, particularly phone to phone payments. The most important catalyst for this will be the cash-in and cash-out facilities created. With an increase in subscribers, increased value of cash held in values, transactions will follow.
  • I do not expect any mainstream standards emerging as different suppliers offer different solutions, but I expect an increase in the ability to inter-connect different solutions with one another. Even today it is possible to send money from a Western Union system to a GCash system. I expect more of these inter-connections to be built.
  • Most mainstream (relevant) banks would participate in mobile banking. At a stage not to far in the future all banks will realise that they will have to invest in this technology in order to stay relevant and they will.
In the longer term, I expect some of the following to occur
  • Because mobile banking holds the promise of extremely secure authentication (actual implementation of digital signatures), I expect the emergence of dedicated identification devices. These devices will hold your identity in digital format. Any transaction will be unlocked by this device in conjunction with your own private key or even possibly biometrics. This device will become the most important thing that you will have with you all the time. (Some people may even be happy for the device to be implanted in them).
  • With an exponential increase in the number of people with access to bank accounts, more people will be able to receive money, have access to funding and this will lead to a massive increased economic empowerment. This will directly lead to a better life for more.
  • Ultimately, I expect cash to totally disappear as people start recognising the problems associated with cash.

1 comment:

bankelele said...

I personaly think banks should not invest & develop mobile banking apps, they should leave that to mobile operators and third parties - like users themselves who are creative/innovative (and will bypass banks which they will inevitably find to be expensive). However cash will be around long after our lifetimes.