Mobile Banking 2

Building off my last post, I have since begun doing extensive research into the concept of mobile banking (MB). In particular, a recent policy paper from CGAP has been especially helpful. The June 2008 paper, Banking on Mobiles: Why, How, for Whom? written by Ignacio Mas and Kabir Kumar. Outlines the key concepts, challenges and opportunites that MB has to offer microfinance institutions (MFI).

The first section lays out how a hypothetical mobile banking experience would be conducted by a customer--giving interesting hierarchical diagrams of the process.

The next section examines the benefits that mobile phones could have for banking, which include mobile phones being virtual bank cards, point of sale devices, ATMs and internet terminals. Additionally, mobile phones allow banks to interact with consumers in new ways such as marketing and account information.

Another point brought up is the issue of cash. How do banking clients access cash when there is mobile banking? Possible options include third party banking agents, ATM terminals and banking branches. I wonder if customers prefer in particular any one of these access points? My guess is that clients prefer the face to face contact of loan officers.

In terms of the benefits MB to MFIs, the paper notes that MFIs can increase market penetration, sell additional services to exisiting customers, retain the most valuable customers, and reducing the cost of service provision.

Summarizing the first part, the paper concludes that a bank has three choices for possible MB scenarios: Cool value add, easy bank and a virtual bank. I think that the decision for an MFI to choose one of these scenarios depends upon the MFI's goals. Therefore any MB platform created has to be adaptable enought to fit any one of these situations.

The more I investigate the subject, some questions that keep on popping up are who are the major players currently in the field? What is the cost of implementing a MB program? What is the monetary value of MB to an MFI? Why hasn't MB gained wider acceptance? How would a MFI identify and setup a relationship with a third party banking agent?

All these and much much more as I continue my research.....