Banks Beware: Competition Looms From... Mobile Service Providers?

Mae : Wireless Mobility Blog
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Banks Beware: Competition Looms From... Mobile Service Providers?

I happened across an opinion piece today about cell phones and banks, by Financial Express columnist Janmejaya Sinha, which brought an arresting thought to my mind: I’m part of a generation that can’t recall a time before ATM machines at banks, but some future generation won’t be able to recall a time before banking was performed using mobile phones.
In his column, Sinha references a recent Economist article about mobile money (I believe he’s referring to “The end of the cash era,” Feb. 15, 2007) that explored how people may in the future use their mobile phones for financial transactions. He argues that banks may face competition from telecom companies for some types of money-related services, like transferring funds.
Sinha suggests that, in the future, consumers will be able to use their mobile phones for managing funds.
“Given that balance enquiries, payments instructions, direct debits, bill payments and viewing statements can all be done easier on the mobile handset, the only function remaining would be cash withdrawals through ATMs,” Sinha argues. “Here, mobile phone technology can just as easily be used as the debit card at an ATM. Thus telecom companies can join an ATM network and provide cash dispensation facilities.”
If this scenario comes to pass, “An important revenue source for banks, the savings accounts, will then be at serious risk,” Sinha writes.
I admit that, geek though I am, the idea that someday I might do all my banking on a mobile phone is a very odd one. The first question that comes to mind is: What about security? Sinha has an answer for that, too: “Security issues on a mobile phone will also be easier to manage as a phone can be deactivated remotely; it can also have multiple layers of passwords to protect the owner.”
So what’s the lesson in all this? For banks, it’s that a new competitor is looming: the mobile phone services provider. For consumers, it’s that someday knowing how to use a mobile phone for banking will be a necessary skill.
What do you think—is the future of banking the mobile phone?

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1 Comment

Obviously, I don't think the WHOLE future of banking is the mobile phone but it will certainly play a big part in banking. Heck, it will play a big part in a lot of things – including entertainment and many forms of business. I come from a time when the mobile phone just arrived, and can't even remember how I survived without it! Now, I can't even remember how I survived without the internet – and without internet banking (which is mobile.) These things HAVE truly made our lives a LOT easier, and better, if you ask me!