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Banks use mobile technology to innovate
February 2006

Banks and financial institutions are looking keenly towards mobile technology, and mobile transacting in particular, as a means to provide new and innovative products and services to their existing customers and untapped markets.

The financial industry is one which is highly competitive and closely governed and players are forced to constantly come up with fresh ideas to satisfy and retain an increasingly demanding customer base. Add to that the need for banks to keep costs down, for themselves and customers, and you have a solid business rationale for the increased interest in mobile transacting. The word from the world is that mobile is king, analysts and industry alike are announcing phenomenal growth figures in these areas, and mobile companies which are only ten years old are already multi-billion Rand organisations.

Banks already have extensive physical infrastructure in place, and are increasingly looking to utilise that infrastructure for high value transactions, while driving routine transactions to more cost-effective and convenient channels such as ATMs, the internet and, now, mobile devices.

What mobile does for a financial institution is give it the opportunity to offer existing services to customers through a new channel and to utilise the nature of mobile technology to develop new services, such as real-time person-to-person transactions.

Internet banking enabled banks to meet customers' demand for convenient banking services, anywhere, anytime as long as you were in front of a PC and had an internet connection. Mobile takes that a step further - the barrier to entry is lower as users don't need a PC or Internet connection, it is more convenient, as most users carry their phones with them, and for the banks offers a much larger potential user base.

Additionally, mobile transactions create an opportunity for banks to provide new services, satisfy a need for anywhere, anytime transacting and create new revenue streams through partnerships, like Standard Bank and MTN's MTN Banking venture.

Mobile transacting puts the bank and the bank's brand onto the customer's cell phone. It puts the bank in the hands of the consumer, literally.

The costs associated with the managing and facilitating of mobile transactions are lower than through other channels, making it less expensive to manage mobile services. That given, a bank could pass these savings onto the customer, thus providing an incentive to customers to utilise alternatives to physical branch infrastructure.

Innovation in the form of mobile transacting or banking also enables banks to reach untapped markets such as the under- and unbanked, many of which do not have access to branch infrastructure but do have cellular telephones.

With all of that said, it is not a question of whether or not banks should be considering a mobile strategy, but how best to implement one. Different banks are taking different approaches, not only to the technology but to marketing and alliances too. The debate at present is around how to create a product, capture the public's imagination, and add value to the market whilst enhancing the bank's image as well as addressing cost and marketshare considerations.

Given that a large number of the new products released last year were mobile based, we can only expect this trend to continue as banks get their 'magic models' in place. For the consumer and the banks, this can only be good news.

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