[Dave Birch] I gave a talk to executives at a financial services company, focusing on the relationship between banks and mobile operators. In the payments world, technology is pushing this relationship back up the agenda. In Japan, remember, they’re getting over the co-operation issue by getting in to bed together. KDDI Corporation and Mitsubishi-Tokyo-UFJ Bank have created a joint venture — the “Mobile Net Bank Development Corporation”, MNBDC — in preparation for the two companies to launch a mobile-centric bank, Shinginko (which just means “new bank” in Japanese). MNBDC has already started building the systems for the New Bank and, subject to regulatory approval, products and services will be offered to the public soon. The idea of Shinginko is to offer a full line-up of financial services to individual consumers, capitalising on the strengths of the mobile phone as a channel using operator expertise. We once did some work for a UK joint venture like this but it never went anywhere because the goals of the bank and the operator were too divergent. Perhaps in Japan, and with a few more years experience, it will be different. There is certainly an appetite for mobile banking in the region. As Ericson Chan, group head of systems development for consumer banking at Standard Chartered Bank, boted recently, although many of the bank’s current customers may not be comfortable with using smartphones to make payments, the next generation of consumers are apt at doing so. Banks aren’t the only option for operators looking for partners to expand payments services: in Italy, Vodafone has joined forces with Poste Italiana, home of the prepaid scheme that we look at from time to time. Poste Italiana sees scope to link up the new MVNO customers with electronic payment cards, for which the post has 9 million customers, allowing customers to make payments using their mobile phones. Mobile phones can be filled up with 200 or 500 euros of credit, which can then be spent in retail outlets. I’m not sure whether customers would really want to use SIM-based services for this kind of thing so it’s not transparently obvious that this side of the venture will be successfull. When the NFC handsets come along though, this could be big.

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Glancing across the pond, it’s not entirely clear what the demand for U.S. mobile banking is likely to be in the coming year or two. I thought Netbanker’s explanation for the widely differing forecasts was very good… Imagine the difference in response to these two questions:

  1. How would you like to press a button on your cellphone that gave you instant, secure, free access to your bank account balance so you didn’t ever bounce a check again, or
  2. At some point in the future, you might be able to download and install a Java application over the air for your mobile device that provided a subset of the functionality of online banking ported to a 2 inch screen. And, as long as you never left your phone somewhere by mistake, it should be as secure. How excited would you be about that?

Quite. But don’t listen to me about forecasting mobile services: as is occasionally pointed out by friends and enemies alike, I didn’t think prepaid mobile would be a big deal. (“You’re going to ask people to pay up front for a more expensive phone service? No way!) Nevertheless, banks and service providers are rolling mobile products that let customers check account balances, pay bills, transfer money and receive alerts about deposits and payments by mobile phone. By the end of 2007, TowerGroup (part of MasterCard) expects that eight of the ten largest banks will offer mobile banking and bill payment of some kind and predicts that, eventually, up to 25% of existing Internet banking customers will adopt mobile banking.

Celent Communications’ “US Mobile Banking: Beyond the Buzz” report says that estimate is too low. By 2010, Celent predicts, 35% of online banking households will use mobile banking, compared to just 1% today They say that consumers will be attracted by new capabilities such as mobile payments at the physical point of sale, which may well be true but is not obvious. Mobile (ie, NFC) payments look a no-brainer because they’re quick and easy, whereas paying a bill on your phone is neither. Having said that, I was talking with someone the other day about a home shopping using mobile phone experiment and they told me it had gone quite well: people really don’t care if it takes a few minutes and a few keystrokes, provided they’re watching a shopping channel.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

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