Finacle Blog

Mobile banking as we know it has run its course. Most banks offer basic information and transaction services over a mobile platform, which have been accepted by some customers and ignored by most. The trick to achieving large-scale adoption, à la the ATM, is usability and easy experience, and this is where mobile banking must go next. If you want people to pick up their handset rather than trudge across to the nearest ATM, you need to give them a well-rounded mobile banking offering which fulfils most of their personal financial management requirements, including cheque deposit, a significant miss in the current avatar. More importantly, such an offering must be the last word in convenience.

Incidentally, some markets have already set off on this path. In the US., the Mobile Remote Deposit Capture facility to deposit cheques by sending a camera-phone image to the bank via mobile instead of the paper instrument is fast catching on. Positive Pay, which allows issuers to accept or reject a cheque with typographical errors after seeing its digital image, is another example of a value-adding mobile banking feature.

What are the other possibilities for Mobile banking 2.0? A real alternative to branch and ATM banking must deliver most, if not all of their services - hence, mobile banking must replace the advisory element of branch banking with simple tools which help users compare various financial products to decide what works for them, and take this to its logical conclusion by fulfilling the purchase. It should further enable lifestyle by facilitating purchase of digital and information goods, delivering context-relevant offers and information etc. This means technology vendors must be more innovative in their Mobile banking product development, approaching it from a consumer perspective, rather than a technology perspective. I'd go so far to say that the present obsession with computers is clouding the thinking around mobile innovation, because most developers overlay their experience with the PC and Internet onto the mobile. And that's where we could go wrong, because mobile banking must not be viewed as an evolution of Internet Banking (which is already quite sophisticated), but rather a simple, user-friendly, out and out consumer product, which - to turn the argument on its head - may be the gateway to online banking!

With pricing of the channel usage and security taken care of, I believe that there are no real barriers to adoption of mobile banking other than its current lack of usability. Hence, the mandate for Mobile banking 2.0 is clear:
• Keep it simple
• Offer what customers want
• Leave out what they don't!
And once you've got more customers on-board mobile banking 2.0, I bet you'll see several of the same faces on your Internet channel as well !

Posted by Chandrashekar Rao Kuthyar at 5:22 AM | Permalink | Comments (1) | TrackBacks (0)

Mobile commerce has been discussed in practically every forum that matters in the past two years. If it's so fashionable, how come we're yet to see real action? Before you protest, I agree that mCommerce is growing, but compare it with card-based commerce to put it in perspective. Plastic rules. While the number of mobile financial service users is expected to near the USD 650 billion mark by 2014, most analysts say that this does not mean that mobile commerce will grow as much. Compare this with USD 6 Trillion worth of card-based transactions (current values) and the penetration of the mobile wallet takes on a new perspective.

There is primarily a problem of acceptance of the existing models of mCommerce, which are in need of innovation. Present day mCommerce is patterned on either a 'virtual wallet on server' model in which the mobile is purely a channel of delivery, or the more comprehensive NFC technology-based model where the device itself is used to confirm the transaction. The first is geared to universality - any phone, no problem - but lacks usability. Think time delay in confirming a transaction via SMS while standing in a long checkout queue, and you get the picture.

The NFC model has quite the opposite issues. But first its advantages. Since the wallet resides on the phone which transmits and receives data, the transaction is virtually instantaneous. Japan is the first mover which started 'tap and go' mobile payments five years ago. The obvious problem with this model is that it doesn't work for ordinary devices which must be upgraded to become compatible.  Also, retailers have to invest in an expensive NFC receiver before they can accept these payments. Is it a wonder that the mobile commerce idea hasn't lived up to its promise?

I believe that a possible way to trigger the big mCommerce penetration is to create a merchant acceptance model which can ride on existing infrastructure. This way we can create a massive acceptance of mobile currency as a way to pay for day to day transactions. Then, the trick would be to incentivise the usage of  mobile currency by the merchant network.
Do you know of a viable technology solution to this problem? Is there a way to bring down merchant setup costs? How can banks, telcos and other interested parties convince retailers that the mobile is a great alternative to card and cash? What will it take to clinch this deal?

Posted by Kiran KSR at 6:50 AM | Permalink | Comments (0) | TrackBacks (0)

As a father of a 6 year old and someone who has a keen interest in alternate models of education, I've been fascinated by some of the talks by Sir Ken Robinson on creativity and education reforms. Some of his observations about the current schooling system have a strong parallel in the way the banking system was and is being governed.

Structure & Focus: The features of both formal education and the banking system are rooted in the manufacturing principles of industrialism. This model is based on linearity, conformity and batching. A bank also follows a similar manufacturing model where the focus is on getting the customer, grouping people based on their wealth, offering them all the bank's services and realizing profit through fee, interest and loans, whereas ideally, the focus should be on understanding customer needs and customizing the offer based on that. This has now become even more important with the rise of the digital consumer who is increasingly becoming choosy, comparing every offer online before deciding where to put his money. Banks need to move from the manufacturing model to a relationship model, creating an environment in which the customer feels that he is getting greater value from his "relationship" with you.

Uniqueness: A lot of people go through their education without discovering their natural abilities. Majority of schools have their curriculum structured in a way that they offer everything under the sun but still certain disciplines (read math, language, science) get priority while certain others get marginalized (read sports, arts, music); students are judged based on grades through standardized testing. In the same way, most banks try to be everything to everyone. There is no clear strategy to understand how they are perceived by their customers or for that matter, to evolve a differentiated positioning within a crowded, competitive and commoditized market. How can a bank be seen as unique? How can they do the same things differently?  An example that comes to mind is The Co-operative Bank, UK that has positioned itself as an 'ethical bank' and this philosophy is built into the DNA of the bank in every aspect of the business that they operate in. They refuse to invest in companies that do not conform to their ethical standards and have turned away loans worth £1 billion in this process. They regularly update this policy to reflect their customer's latest views on issues that are important to them like human rights, sustainability to name a few. The point is that they want to stand for something in the minds of their consumers and having a clear strategy like this helps to build a connection. A bank that can connect with the consumer at an emotional or rational level has a much better chance of gaining customer trust and loyalty in the long run.

Creativity & Innovation: Sir Ken contends that schools must accord creativity the same importance as literacy. We don't teach our children to think differently or for that matter think...We stigmatize mistakes. And if we are not prepared to be wrong, we'll never come up with something original. In fact he goes on to say that "As a result we are educating people out of their creativity".  The same is true with banks, where I would equate creativity with innovation. True business model innovations in the banking industry have been few and far between. This is not due to a dearth of ideas but rather the absence of a structured approach to build an innovation culture within the organization. As someone said - if you make innovation someone's specific job then it becomes someone else's job. How can banks reward ideas? Could it be by having a structured mechanism for not just collecting ideas from the employee pool but also turning some of them into reality? Though I must admit that of late, many banks seem to have innovation at the back of their minds, and have dedicated budgets to turn their plans into reality. Bankinter in Spain recently did a systematic process of distilling over 600 ideas from across the employee pool, customers and other stakeholders to 3 big ideas that were selected for implementation. Similarly, many banks in Turkey have innovation projects as part of their annual strategic initiatives. Mobile banking and payments are two areas where a lot of work is happening from an innovation perspective. And now there's also a new category in most banking awards called 'Most Innovative Bank'.

Holistic Learning: One of the things that many schools still  lack is a holistic view of education. Real education happens by observing people and things and looking at different approaches of doing the same things. This refreshment occurs in many ways - by crossing borders and boundaries, thinking differently and taking advantage of the interaction of disciplines by applying ideas from one into another. In the same way, I believe banks can learn much from others in the retail, telecom and service industries.  Somebody articulated this beautifully - "Why can't banks manage queues as efficiently as McDonald's? Why can't there be a "standing-up" check-in for account opening as in 5 star hotels to speed up the process? If casinos can manage millions of dollars of cash without documents, surely banks can take a leaf from the gaming industry to go paperless." If players in other sectors like retail and telecom can enter the banking field, then it's important that banks too adopt and apply the best practices from these industries and beat them in their own game.

There have been some sparks in both these sectors in the recent times with some schools taking a student centric approach and some banks clearly articulating their 'niche' and connecting with consumers on their terms. But there is still a lot of work that needs to be done to break the internal inertia towards such change.

Education needs to play an important role in freeing the spirit of human imagination. A quote I read goes like this - "Education needs a complete transformation - from the cocoon a butterfly should emerge and not a faster caterpillar." Similarly, banks should break free of the 'patch up' mindset that they are cocooned within to take a holistic look at their business model, innovation agenda and the way in which they connect with their customers...'genuinely'.

Posted by Navin Rammohan at 6:10 AM | Permalink | Comments (1) | TrackBacks (0)

During the 90s, we witnessed the emergence of a trend-setting technology that completely changed the way businesses functioned. 'E-Commerce' or Electronic Commerce brought about a path-breaking shift by offering us the ease of carrying out transactions online, from anywhere at any time. And today we witness the growing popularity of an edgier adaptation of e-commerce: M-Commerce, an extension of e-commerce offers us the same convenience, but at a more personal level. It refers to carrying out transactions online, using a mobile device. And the best bet about m-commerce is that it takes e-commerce to that section of the population which cannot afford computers, but widely use mobile phones.

But one question that I commonly come across is whether m-commerce is here to stay despite the immense popularity being enjoyed by computer-based e-commerce. The answer is yes. And that is because m-commerce goes one step ahead to bring products, services and information directly to our pockets.

This technology is currently in its nascent stages. But we're sure to see it boom in the coming years considering the growing sophistication and falling prices of mobile handsets. And according to a recent research conducted by Acquity Group, an e-commerce and m-commerce research and consulting firm, 5% of the top 500 e-retailers currently offer m-commerce sites or iPhone-optimized m-commerce sites. And taking into account the soaring sales of Smartphone, and the growing popularity of mobile web browsing in the recent years, it is predicted that this figure will reach 50% in the next five years.

So where can m-commerce make a difference?

M-Commerce has immense potential in the Financial Services space. Mobile banking service, an extension of Internet banking is now being widely used. It allows us to use digital signatures and certificates, to carry out funds transfer, electronic payments and helps us easily manage our personal bank accounts. And another added benefit in m-commerce is 'Instant Alerts'. By enabling instant alerts we are immediately intimated about transactions taking place through our registered accounts.

Another popular application of M-Commerce is in ticketing. Booking/purchasing tickets, and paying for them, is made much easier through a mobile device. Physical tickets are slowly being replaced by virtual ones, and most of us are already using this feature extensively. Moreover, since this feature eliminates the need for a computer/laptop for the purpose, it is sure to be more widely used in railways, airways, movies etc. So, m-commerce applications can further simplify and promote online ticketing.

The opportunities presented by m-commerce in the retail space are limitless. Be it is enabling shopping applications on the mobile phone to purchase or place orders, or connecting retailers to manufacturers to ensure a streamlined supply chain, m-commerce offers immense capabilities that retailers can leverage.

Mobile marketing has opened up a more personalized opportunity for marketing. Unlike cold-calling, permission-based mobile marketing enables timely, targeted, two-way communication, which can generate instant responses. And by using m-commerce applications for automated marketing businesses can surely benefit. So, we are sure to witness increased use of m-commerce in this sphere as well.

Also, we should not neglect the extensive opportunities for m-commerce presented by prepaid accounts. According to a market intelligence company, it is expected that by 2015, 8% of the world's e-commerce will be conducted over a mobile phone. And this prediction is not surprising given the fact that in some nations, mobile phones are pretty much the only gateway to the internet, and prepaid subscribers account for a large percentage of mobile users in these countries.   

Therefore, in my opinion, the future of m-commerce is very optimistic. Its ability to convert a hand-held device into a debit/credit card, a travel agent, or a shopping guide, makes it more promising. While this technology is still in its infancy, we should not underestimate its versatility and convenience.

Posted by Gautam Bandyopadhyay at 6:02 AM | Permalink | Comments (0) | TrackBacks (0)