Part 1: Mobile banking 101 Version 0.09895439

The title to this post is somewhat hopeful, but bare with me as we go through some of my learning of the past 10 years. Let’s first qualify what we mean by mobile banking by asking some questions first:
1. Is mobile banking a need or a convenience to your customers?
2. Is the mobile channel a legitimate tool to expand your customer base?
3. Are you aligned as managers in what your mobile strategy should be?
4. Have you identified your lowest common denominator to address with this strategy?
5. Have you determined how you would measure the success of this strategy?
6. Does the strategy get you to your goal and satisfy your customer’s needs too?

Six basic questions to get us started. Let’s work through them measured against some of my experiences the past decade.

1. There is clearly a huge difference between the developed and developing economies in how we view banking and specifically mobile banking. I refer to this as ‘the convenience vs need’ challenge. In most of the developed countries the mobile channel grew in strength due to its convenience factor. Why visit a branch or a store or an outlet when you can simply turn to your phone to access the same information or service or item. We do this everyday often subconsciously selecting our channel of convenience depending on our circumstance or trust levels. In banking this is most obvious with many of us choosing the convenience of mobile banking over Internet or branch banking for basic transaction types, whilst we choose to do more complex transaction types on the Internet browser or in a branch. So as managers within the financial services industry we market our mobile channels as tools of convenience.

In developing economies and very evident in Africa where I am active the mobile channel is essential to many people as it is most often the only connection or channel they have. In the major urban centers it may be true that mobile is still a matter of convenience due to the presence of bank branches and ATM/POS networks, but this quickly becomes a matter of need as one reaches the rural areas where the bulk of the un-banked market resides. Planning your mobile banking features then becomes quite critical as you need to first understand the needs of both the convenience user and the needs user. Whilst they have some common requirements, both have unique needs you will have to fulfill to remain relevant in their lives.

Throw into this mix of BANKED / UNDER-BANKED customers the huge UN-BANKED market, and you realize quite quickly why carefully planning ‘who’ you wish to address and ‘how’ is so important. Critically you cannot approach mobile banking as a ‘me too’ project or you will be relegated to yet another failed or failing offer in the market. You have to understand your market, their needs and requirements of a service like you wish to offer and your ability to serve them with a reliable offer at a market relevant cost.

2. You may feel this question is silly considering the masses using mobile versus the few using Internet or branch today, but it is certainly key to anyone’s strategy. If you are a bank, you cannot develop a mobile banking and or mobile money strategy without some idea of how to bring the under-banked or un-banked portion of the channel’s users into the mainstream bank customer base. It simply is good business, yet few banks have mobile strategies that consider the one program a feeder for the other. Maturing your customer base into fully banked customers through whom the bank can maximize revenues, is in my mind one of the most critical reasons for a successful mobile banking / mobile money strategy. Unless you can figure out how to bring the under-banked and or un-banked market into the banked customer base for your institution, your mobile banking / money program will always run as two separately defined and measured projects, one addressing your own customer base, and most often the other addressing the masses of un-banked with a free lite version of your banking app, usually because your government has forced this on you through legislation, and never the two shall meet…

Let’s for the sake of this example consider your mobile banking strategy as the means to enrich the lives of your existing customer base ((under-)banked customers), and your mobile ‘money’ strategy as the means to satisfy legislation or a social program to reach the un-banked. The banks who seem most successful in mobile banking (in Africa banks such as GT Bank in Nigeria and FNB in South Africa) design the two strategies as one, using one as a feeder to the other. Using your mobile strategy to grow your actual customer base (increase the banked customers for your institution) is a key to success. For example your mobile banking product for your existing customers could have and should have a breakout feature in it to serve people who may not be a customer of yours at the moment. Usually this would be family, friends and business associates of the actual customer who can be paid by the customer through the mobile banking app. This is one of the easiest ways to reach people who would never usually set foot in your branch. The best way to enable them is to allow them access to these funds or payments by using your mobile ‘money’ app, a lite version of your mobile banking app that will enable access to card-less ATM withdrawals (for example) so that they can receive their payments in cash and more importantly present to these non-banking customers easy ways in which to spend the funds just received to their and your benefit, for example selling discounted airtime / short term insurance products / micro loans or sending some funds to another recipient again by accessing the bank’s mobile ‘money’ app.

There are many reasons to use mobile channels for your customers, but even more reasons to use it for people who are not your customers. Once they have become used to the mobile ‘money’ app because they are paid or benefited through it by your own customer base, encouraging them with further discounted value added services, micro loans and insurance benefits and so on, to switch to a proper account and access to the more sophisticated mobile banking app is the nirvana moment for your mobile banking program. This is where a proper mobile banking strategy becomes fully justified, not just as a tool of convenience or essential banking needs, but as a proper customer acquisition tool for your bank.

We will pause this post here and continue next week with Part 2, where we will discuss questions 3 and 4. Feel free to post your own views and opinions here anytime.


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