Mobile Financial Services (MFS): The Unrealized Potential


This trend currently is growing at a very fast rate and is said to reach 1 billion people by the end of year 2015. According to Berg Insight, an insight agency, in April 2010 estimated that users of m-banking and related services (including money transfers) almost doubled between 2008 and 2009 to 55 million, and also stated that it will double again in 2010.

In 2015 there will be 894 million users globally. This growth is mainly being driven by efforts of operators and banks in developing countries (particularly in the Asia region) to bank the unbanked. Global Industry Analysts (GIA) in February 2010 predicted the global customer base for m-banking will reach 1.1 billion by the year 2015 whilst ABI Research in January 2009 forecasted that in 2013, there will be nearly half a billion customers of MFS.


Mobile banking is an emerging convenient solution for customers with existing bank accounts to get connected to their bank or financial institution over the mobile network. This includes a standard banking that is to check summaries, transactions, balance, and credit as well as debit card management, and a whole new array of emerging conventional banking services

M-wallet on the other hand is of course a solution also adapted to unbanked customers. It provides the unbanked customers with an access to financial services via a mobile wallet (store value account).

Mobile payment enables customers to make credit card payments and bill payments any time anywhere, from either a bank account or a mobile wallet.

Mobile money in where transferring money through the usage of international or national remittance hubs from and/or to a real bank account or a mobile wallet (e.g. peer-to-peer).

Banking the unbanked

According to Pavola and Nokia, with more than 4.6 billion people globally already using a mobile phone and less than 2 billion people having a bank account (out of a world population of 6.8 billion), it's clear that a larger populations is left without bank accounts mostly being in developing economies. Being able to do transactions in a secured way, as well as from anywhere in the world, is a key part for people's life as it enables them to build and grow their own life and business.

This is where mobile wallets (m-wallets) come into play as it meets the needs of cellular customer who don't have a bank account for themselves. In Indonesia for instance, there are only 40 million banking customers but there are 160 million mobile-phone subscribers. Of all mobile financial services (MFS), the one with the biggest potential is remittance services, particularly the sending of cash from abroad according to statistics of Putra and Indosat

Mobile will play a significant part in the quest to provide banking or banking-like services to those at the bottom of the pyramid. Mobile is fairly simple to understand and roll out; it's also cheaper and more accessible to everyone according to Avendano/GXI

Realizing the potential

Banks and other financial institutions throughout the globe are now realizing the added values, improved customer convenience, speed of information availability and cost savings resulting from mobile integration of consumer and enterprise services.

These simple notifications services which are available to customers not only improves customer satisfaction levels but also results in savings for banks as customers do not call centers or walk into bank branches for such routine information thus saving the traffic by minimizing it - be green, be responsible. It's almost the moment to cut as much as things possible that is confusing the customers - it's much better to be simple.

As stated by Abraham Punnoose, vice president at Roamware, San Jose, CA "The trends are about empowering customers with real-time advisory notifications about transactions on their financial services and the capability of transacting their accounts on the move".

"For example, the ability of paying a utility bill via a mobile connecting using one's mobile banking service provides customers the ability of being in control even while on the move without Internet access," he said.

Security and threats

Along with the increasing usage of mobile financial services, there is an increase in mobile fraud. Customers are reluctant, and are worried about carrying out transactions over the mobile - this is the challenge that the mobile network operators (MNOs) need to work out closely with the financial institutions. Despite this, organizations such as Gemalto, a world leader in digital security has developed the most secure and comprehensive Mobile Financial solutions in the market.

Benefits to the banking and financial institutions

This will strengthen customer loyalty by offering new and better services by attracting new customers to one-on-one bank-customer relationship, expanding the institution's brand presence in the marketplace, extend the bank's reach by turning cell phones into ATMs, increasing market presence using new, flexible and ubiquitous channels, reducing the cost of direct teller interactions while maintaining the level of high quality service, increasing usage through availability, providing 24/7 services, creating direct marketing channels and also creating new revenue sources by offering new transaction.

Benefits to Mobile Network Operators (MNO's)
These increases the provider's brand presence attracting new customers and churn by strengthening customer loyalty levels through better service offerings, increases ARPU (Average revenue per user) by opening up new revenue streams and boosting the usage levels of the network, widens the provider's services portfolio, providing subscribers with instant access to airtime purchase. This also increases the cost-benefit ratio by reducing per-service costs, and overall it allows Mobile Network Operators in playing a leading role in the convergence of services and breakthrough technology


Asia-Pacific is by far expected to become the most important regional market, accounting for more than half of the total user base. Furthermore by 2015, Berg Insight forecasts that mobile banking will attract 115 million users in Europe and 86 million users in North America. "The global number of mobile banking users more than doubled between 2008 and 2009, and is expected to almost double again in 2010. Mobile handsets are in an excellent position to become the primary digital channel for providers of banking and related financial services on emerging markets," said Marcus Persson, Telecom Analyst at Berg Insight. It's time up for marketers across banking and financial services, telecommunication sector as well as mobile payment entities to realize the potential it holds and leverage this opportunity before it's too late.