Mobile Financial Services for Developed Economies
Over the past 10 years Mobile Money initiatives have popped up all over the globe. But there has been one distinct trend: Developing economies implement mobile wallets, while developed economies implement additive mobile banking, but why?
In developing economies such as the Philippines, Kenya, Cambodia, Uganda and Pakistan the mobile wallet has been seen as a way to offer bank accounts to previously unserviced market. The wallet is used in a similar manner to the Cash/Current account used in developed economies, a way to store your everyday transactional cash. Only in the developed markets, we have adopted Cards as the means for utilizing our money.
There have been a number of studies by the various banks that suggest that a card transaction costs the bank roughly 4 to 5 US cents per transaction, while a mobile transaction can be as low as 2 cents due to the reduce infrastructure required for a mobile transaction.
Having said that, there are also a number of cash replacement offerings in the market such as Oyster, Octopus, EZ-Link and NETS Flash Pay which implement pre-paid stored value card predominately for public transportation. But these pre paid cards aren’t really linked to the rest of the financial system. You can’t pay to them without a reader, you can push a payment from the value on the card and you lose the stored value if you lose the card. So why is it a WING Money or MTN Mobile Money customer gets greater utility from their cash account than consumers in developed economies? Why doesn’t a bank or payments company realize the opportunity to enhance the utility of a cash replacement offering?
Hence my suggestion that developed markets should learn from the experience of developing nations in building cash like offerings that plug into the rest of the financial eco-system, something like a mobile wallet that is used through a mobile device. An account that behaves like an MTN Mobile Money wallet than can be used to pay for public transport, food, exchange money between individuals, pay merchants and buy services, but remain stored in the formal financial eco-system so that the utility of the value store is greatly enhanced.
This I feel is the future of mobile banking in developed markets.