The convergence of financial services and mobile technology in the global drive towards ubiquitous financial inclusion and digitalised currency has produced different business models for developed and developing nations, offering distinct target markets, trends, and opportunities. In developed nations where the banked population is approaching 100%, mBanking is largely additive and bank-led, integrating the physical product with the digital in forming a complete banking package, particularly targeting young banking customers who organise most of their lives through the mobile device. This has been reinforced by heightened usage of applications and substantial tablet uptake. In developing countries, mBanking is prospering enormously, primarily as a powerful platform for delivering financial services to un-banked populations at the base of the socio-economic pyramid.
Branchless banking is a banking strategy beginning to be widely adopted in many developed as well as developing countries over the world. Banks and FIs opting for branchless banking will not have any kind of physical presence or branches – whether expanding their network or starting a new network – in any of the markets. For example, First Direct in the UK launched branchless banking as early as 1989 and operates only via phone, post and online.
The economics of physical retail is under threat with the increasing demand for 24/7 access and real-time capabilities. Indeed, banks are becoming increasingly concerned that their market position is being undermined by MNOs or third-party vendors now also enabled by online technology to enter the marketplace and provide banking services.
Green Dot’s GoBank, launched this week, offers mobile banking by making banking completely branchless and via mobile-only. GoBank is designed to give access to many traditional features from a bank, including account security, just from their iPhone or Android device. Reportedly, the new bank is launching in a small beta but is expected to be available to everyone later this year. It is meant to offer many of the features of traditional banks, but without a lot of fees or the long waits.
Crucially, this recent industry shift highlights why banks must respond rapidly to retain market share by cultivating new revenue channels through sustained innovation. Simultaneously, such developments offer an opportunity for banks to realise their key objectives, namely reducing operational costs whilst retaining QoS, improving efficiency, and essentially reducing bricks and mortar.
Consequently, our latest research finds that over 1 billion mobile phone users will have made use of their mobile devices for banking purposes by the end of 2017, compared to just over 590 million this year. You can access this latest study here.