Financial services should invest in mobile banking, says Arthur D. Little

Arthur D. Little is a management consulting firm that works primarily with Fortune 500 companies. According to a report report released today by the company, mobile banking is an area that financial services worldwide should be investing in. Citing the growing maturity of the mobile Internet, and the need for more advanced services than just SMS for mobile banking, Arthur D. Little says that the area is a promising revenue stream.

What has changed?

According the the report, customers’ banking behavior has changed to the point where mobile banking is perfect for them. Far fewer people actually go to their bank branch these days, and there’s a significant growth in phone and on-line banking. On top of that, the report argues that there are four particular areas driving mobile banking - and that these areas require attention for the service to really take off:

Convergence – ok, so it’s a bad word to use. A lot of people turn off when they see the word “convergence”. What Little means here is that Internet usage in general is becoming more and more mobile, particularly in areas like India and China

Advanced handset technology – smartphones and MIDs are already integrating banking services with mobile apps.

Security concerns – banking being on a mobile creates much greater security concerns, which have to be addressed.

Near field communications – Little regards RFID and other techs that allow phones themselves to become Mobile Wallets as potentiall “revolutionary” for payments, authorization and location-based services.

From the release:

“The mobile phone has become one of the most indispensable devices the modern consumer carries with them each day. For banks to deliver on personalized service and an exceptional customer experience, offering sophisticated mobile banking solutions will be a key differentiator in the coming years,” said Dr. Gerrit Seidel, Managing Director and Global Head of Arthur D. Little’s Financial Services Practice. “There is clearly a great deal more banks can do to develop and upgrade their mobile banking offers in order to move beyond the SMS-based model. However, the most significant benefits will come to the banks that invest now and take the lead as early innovators in next generation mobile banking. With mobile internet at the precipice of mass adoption, the banks that will succeed in making the most of their mobile banking offers must act fast. Developing innovative technology solutions that are efficient, secure, and cost-effective while understanding the customer’s growing desire for personalization and real-time access are the dual tracks to successful Mobile Banking 2.0.”

What we think?

I’m inclined to agree with this report, surprise surprise. As an advocate of on-line and phone banking, I’m of the opinion that proper mobile Internet banking would be of huge benefit to the customer. It’s not just that, though - if banks were to get on the mobile web in a significant way, it would also help stabilise mobile payments in general. Once a company like PayPal or Western Union had a definite banking platform to work with, then mobile billing would become a done deal. However, whether or not banks will be willing to invest the necessary funds in the still uncertain mobile Internet industry is an entirely different question.