The enormous increase in the use of smart phones, tablets, and other technological devices by people in recent years.
In 2011, more smart phones and tablets were sold than PC’s, and the tendency shows no sign of change. In the USA, predictions point to a tablet penetration rate of 40% of American consumers, which is equivalent to 87 million people by the year 2016.
The typical conservatism that characterises the banking sector may explain why growth in mobile banking has not been even more spectacular. Otherwise, we couldn’t explain why, despite the fact that the most important European banking executives recognise that mobile banking will transform the face of banking, a large number of financial companies only continue to invest minimally in it, or more worryingly, not at all.
Mobile banking has a transforming nature and generates significant changes in the traditional relationship between bank and client. As an example, clients of Chase Bank can deposit a cheque by using an application on their mobile to take a photo of it, avoiding the need to visit the branch and deposit it in person.
It is true that changes in mobile technology occur rapidly, a fact that poses an important challenge for financial companies that offer mobile banking services: what services to launch on the market, for which Platforms, combination of security and usability… However, in this case the biggest challenge probably originates from outside the banking sector and is nothing more than outside influences willing to lead new initiatives.
- Starbucks has generated $42 M through its iPhone and Android application that allows customers to pay in-store with their mobiles. The feature is used by 3 million consumers, and involves buying credit in a personal account linked to the application and then scanning a virtual barcode to complete the transaction.
- Square Card Reader or PayPal Here are solutions that make card payments easier via an external device that is connected to the mobile phone.
- The GoogleWallet service by Google enables users with mobiles equipped with an NFC (Near Field Communication) chip to pay for goods in establishments that have cash registers which incorporate the MasterCard Pay-Pass system.
Banks have different strategies to respond to these threats, from differentiation based on a range of services that are considered as superior by the customer, to a joint scheme in which technology and telecommunications companies participate, an example being the Dutch consortium Sixpack.
Other challenges which banks must face are scalability, understood as the development of software for multiple operating systems (iOS, Android, Blackberry OS, Windows mobile…) and numerous devices (smartphones, iPads and tablets), or their need to re-educate the most skeptical clients about the benefits and appeal of mobile banking.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change”. Charles Darwin.