Issues in Mobile Banking 1: Implementation Choices

This briefing note studies various considerations for the effective implementation of mobile banking. It states that:

• Mobile phones can offer a cost effective and simple means of making financial transactions to the poor;
• Since mobile banking is still a relatively new technology solution in the field of banking, the experience of early initiatives may provide some guidelines as to the choices in this area.

The paper lists the following key issues that financial institutions need to consider:

• Market potential: The operator needs to decide on its market entry strategy;
• Substitute or supplement: Operators need to decide whether they want to supplement or substitute other banking services with mobile banking ones;
• Operational alliances: If the instigator is a telecommunications company (telco), it may wish to ensure that the platform can be used by a variety of banks. On the other hand, a bank may wish to offer its clients the ability to access their accounts using any of the 'telcos' in the country;
• Customer hardware: Options around the technology that can be used will depend on the level of accessibility of the required handsets to a broad enough market;
• Systems chosen need to be appropriate to the banking environment;
• Financial models will have to consider operational profitability and fixed costs.

The note concludes that since mobile banking is a new concept for most banking clients, successful implementation requires significant expenditure on marketing and education.