Can Mobile Banking Reach its Potential?

Thu, 09/24/2009 - 5:14am
Alex Kwiatkowski

Editor's Note: We need to be very careful how we implement cash-managment functionality in portable devices. A lost cell phone could cost you quite a bit if it is also your credit card.

( - The use of mobile technology has been heralded as a potential revolution in the retail banking sector, enabling bank customers to manage their financial affairs regardless of their location. However, a decade after the arrival of the first mobile banking services, actual usage remains modest in many countries, and the industry is littered with the debris of discontinued projects, terminally fractured partnerships and shredded deployment plans, while failed niche technology vendors and service providers lie permanently marooned by the curbside. Is mobile banking an over-hyped gimmick, or is it in fact a credible 21st century banking channel?

Mobile banking is a credible channel, but usage in developed markets will remain low

From a purely operational and technological standpoint mobile banking is a credible channel in 2009. A range of services are commercially available – some simple, others relatively complex – and improvements in device functionality and data network transmission speeds have without doubt enhanced the overall user experience. Alas, credibility does not equal substantial customer adoption. The first mobile banking and payment services emerged in 1999. Fast-forward ten years and usage in many regions remains decidedly low, even within developed markets where mobile devices have become nearly ubiquitous (Western Europe and North America).

There are, of course, some exceptions to this rule. In certain Asian countries – notably the technologically advanced nations of Japan and South Korea – mobile banking and payment services have flourished over the past decade. Whether this equates to genuine maturity is a matter of conjecture. However, the growth of mobile banking in Asia must be viewed firmly in isolation, and it would be dangerous – reckless even – to compare mobile banking development in countries such as South Korea on a pure like-for-like basis with nations in other regions of the world.

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