By Karol Nita, Product Marketing Manager, MACH
The rise of ‘smart devices’ has led to an ever-broader range of activities being conducted via mobile. Mobile banking is also steadily being embraced, with Berg Insight recently forecasting that the number of mobile banking users worldwide will reach 894 million by 2015.
SMS-based services have traditionally been the mainstay of mobile banking, although this is changing with the advent of apps stores. Nonetheless, SMS will continue to play an important role in the structure of mobile banking services.
Most mobile banking apps require a high level of proactivity from the user – users generally have to log-on to the app in order to access the service. While this is suitable for services such as balance checks and money transfers, it means that some of the more useful services cannot be mobilised. For example, with SMS, a bank can send the customer alerts when they are approaching their overdraft limit, thereby helping them avoid surcharges. With apps, the user would only know this if they happened to log-in at the correct time.
SMS also goes a long way towards addressing the security issue. While apps may be a convenient way of interacting with your bank account, SMS has the power to make mobile banking much more secure. For example, SMS alerts can be employed as an early warning system to alert account holders to potentially fraudulent activity.
Despite the apparent strengths of SMS-based mobile banking services, the technology has yet to live up to its potential in developed markets. There is the critical question of who controls the relationship with the customer: the bank, the solutions provider, the handset manufacturer or the operator? The traditional model requires banks to hand over at least some control of the customer relationship to a partner. Unsurprisingly, many banks are loath to do this, preferring instead to retain complete control of the customer relationship.
However, banks can address this issue by working directly with a Global Messaging Carrier to run their own services over a third-party transaction network. While this is an outsourced model, the Global Messaging Carrier has no interest in ‘owning’ a portion of the customer and the financial relationship is strictly that of a service provider to a customer. Moreover, this model removes much of the complexity banks encounter when setting up an SMS mobile banking service.
To deliver a comprehensive mobile banking service, banks have been required to establish relationships with all of operators. As well as engendering additional operational costs, this takes them away from their core competencies. By working with a messaging specialist such as MACH, banks can effectively outsource this complexity and have just one relationship to manage with a partner which can provide connections to all of their customers in one go. As well as reducing costs, this liberates banks to concentrate more closely on their core business.