Dial M for Banking

The plot thickens (not really)

2008-07-31T13:55:00.008+06:00

Alternative banking channels, especially m-banking has made some significant progress in the last few months since my last post. For one thing, Mobilink, Pakistan’s leading operator, has a downloadable mobile app called Genie for paying bills and buying credits using your credit card or bank account. More comments on this later.

Online bill payment solutions are also now being franchised out by NADRA (National Database and Registration Authority) to business setups across the country through their e-sahulat program, (read article here). This will increase the number of channels that customers can use for the most poplar m-banking transaction types and going further into actual m-banking products and services such as fund transfer.

The Reserve Bank of India is possibly going to be the first central bank to be offering full-fledged m-banking solutions very soon. There draft guidelines can be found here. However, full-fledged m-banking has been put on hold till the official guidelines are issued.

But here’s the real reason why I feel like blogging: my intern finally completed his market survey of e-banking products and services in Pakistan. Since it contains purely public domain information, there’s no reason why I shouldn’t share this research and finally contribute something back to our wonderful perpetual primary source of secondary information, the internet.

Ecommerce Banking Products in Pakistan v 1 5 Full - Upload a Document to Scribd

You can also download the paper from this location.

Might as well also mention Bank of America just published an article that discusses some initial hurdles that it faced and how it dealt with them. Good for a quick skim through.

Hold the phone! There’s a jack in the box

2008-04-24T13:58:00.003+05:00

Here’s something that just came up at the E-Banking conference yesterday that I hadn’t noticed before. It’s like looking for your keys when they’re sitting in your pocket.

I didn’t mention Austria and mobile commerce in the same breath previously. I should’ve, considering a demo (that could have taken place), showing how you can spend an entire day in the ordinary course of your life (and then some) in Vienna - home to paybox, with nothing more than a cell phone and some underwear. The fact pages have all turned up with price tags, so I can’t provide you any links due to my information sharing policy – free for me so free for you.

Anyway, this provides the answer to the dilemma that’s been worrying me so many days. Regarding how Etisalat, the United Arab Emirates national telecom provider, is going to go through with its plans of m-remittance.

Foreign workers in UAE transferred an estimated US$ 8.1 billion back to their families in 2007, according to paybox. A major portion of this goes to India, followed by all the other Asian countries that make up 80% of the working population. While India didn’t waste any time in setting up connections with Etisalat, the other countries including Philippines, Egypt, Pakistan, Jordan, Bangladesh, Sri Lanka and Nepal are to follow suit.

Recognised for having the broadest mobile Commerce offering worldwide, paybox has been chosen by leading companies such as Vodafone and o2 in Germany, mobilkom and ONE in Austria, Swisscom, Vodafone Egypt, Maxis Malaysia, Mastercard Int’l, ICSL Nigeria, and Lari Exchange in the UAE. Used by over five million end users and over 15,000 merchants, paybox enterprise solutions for worldwide mobile commerce are deployed across Europe, North and South America, North Africa, the Middle East and Asia.

Which means that the Philippines is now connected to its workers salaries abroad through the paybox strategic partnership with Lari Exchange.

Dr. Asad from Paybox Pakistan was the speaker that sprung out with some daring plans in this regard in the later part of the conference. He’s looking for a settlement bank to partner with and drive ahead having got the nod from the central bank. It seems Dr. Asad has also partnered with M-Net, one of Pakistan’s two major ATM switches, to implement an m-payment solution across the country. Paybox has already had some success with similar plans in Kuwait (coincidentally with a mobile payment solution that also goes by the name M-Net).

It’s a brave new world here though, with legal traps that can scare away most of the competition. So he’s more likely to secure some arrangements with banks round here than amaana, seen lurking around the corner stall with some sharp black-orange contrast tones to get your attention (where did these guys come from?).

However, the real competitors in the m-remittance from UAE to Pakistan are banks like UBL, that already have an established mobile banking setup integrated into its e-banking service (not that it works exactly like you'd wish it does), as well as an international presence in the Gulf region.

So unless Dr. Shah acts fast, or UBL is not interested, we’re likely to see some synergy with UBL and exchange companies in UAE, though paybox is not improbable. Etisalat may have some plans for exclusivity to keep the business within its own share of the telecom industry in Pakistan, which can dramatically improve the market share for ufone if the service is limited to their SIM.

So far it’s been mostly about strategic partnerships to facilitate the end user, but there could always be another jack in the box.

Whodunit? The race for m-banking

2008-03-26T10:31:00.003+05:00

While thriving in Africa and countries like the Philippines, mobile banking is gaining slow acceptance in developed economies such as the US, where leading banks are still considering its implementation. Asia and Africa are the forerunners leading the race for implementation of a viable financial service infrastructure for mobile phones, as leading banks in these countries are operating mobile banking. The European flavor for m-banking is a more cautious, protected system that is unlikely to break into a sudden sprint. UK's mobile banking network MONILINK was formed in 2003, but clocked up its first 25.000 users as late as last November. Australia has recently introduced m-banking services which are also a far cry from its potential, being one of the strongest internet banking countries.

The mobile phone is increasingly being recognized by banks in Asia and Africa region as a cost effective channel to deliver banking and trading services. A fellow blogger writes about the widespread use of m-banking in Africa. In Asia's technologically more advanced countries like Korea, Singapore, Hong Kong and Japan, mobile phone market penetration is above 40 percent and accessing customers through this unique and highly personal communication tool is proving highly successful. A report by AC Nielsen last year reported that uptake of mobile banking services in China is below par, though it was one of the first to enter the race. As of right now, India is positioned to have the highest growth rate of mobile banking in the world.

Sure enough, India has recent headlines announcing foreign banks such as Barclays having launched these services as recently as this month. Other countries that have joined of late the race are Brazil, Poland, and even Pakistan, but are likely to have to work around snags. European banks are increasingly focusing on efficiency. The Finnish bank NORDEA has reduced its distribution costs by 30 percent using mobile banking, for instance. And the French Société Générale uses mobile banking as a cost-effective distribution and revenue channel, circulating stock exchange news for a monthly fee of four euros. Malaysian mobile operator Celcom has teamed with mobile payment systems provider Paybox to deliver mobile banking and payment services. Nigeria has only 225 ATMs for a population of 129 million, but mobile phone use for banking services has grown dramatically, with some highly advanced functions.

The fact that mobile phone financial transaction are ideally suited for micro-payments and involve smaller amounts or potential loss make it more comfortable for users than using credit cards or disclosing personal information on the internet. Mobile banking is also the solution for the un-banked market of developing countries with a few payment alternatives to cash. For example, in the Philippines monthly salaries are credited to mobile accounts in the absence of personal bank accounts.

Users of mobile banking solutions are mostly our Generation Y, according to a study by Celent. The Gen-Yers are also more likely to be Asian rather than American, since a higher proportion of Asian Gen Y are early adapters, in my opinion. This may be due to easier access to new technology and a wider range of technology to choose from.

However, the winners are likely to have a business model with one key focus: simplicity. Users should ideally not have to download any apps, remember SMS syntax or go through a complex series of processes in order to make a transaction. The services should be able to be accessed from the most basic of mobile phones, hopefully with voice recognition or similar verification technology. The right kind of marketing can then easily build a critical mass of users, but the back end processing capabilities, risk management framework and effectively delivery of services will ensure its sustainability.

The master plan?

2008-03-20T12:16:00.004+05:00

This video presents a very interesting outlook for the face of mobile banking in the near future.

Let’s begin with the basics

2008-03-19T17:20:00.004+05:00

Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phones.

Mobile phone penetration is very high throughout the world in all major countries in the Asian subcontinent, across Asia, Europe and the United States, as well as Africa and Australasia.

This opens up huge markets for financial institutions interested in offering value added services. With mobile technology, banks can offer a wide range of services to their customers from transferring funds on the go, paying bills, making purchases and even stock trading.

Here in Pakistan, a number of banks offer mobile banking services such as SMS alerts and min statements, though only one progressive bank – United Bank Limited – allows financial transactions through their mobile banking infrastructure.

Like you, I’ll be using this blog to discover more about the mobile banking universe by sharing my research. This plot can be quite an interesting one.