Mobile banking: SMS can provide marketing, security and services for finance

As smartphones have fuelled an incredible surge in applications, there has also been a retro-effect on older technologies. More and more institutions are seeing how the humble SMS can be used to provide very modern services. We spoke to Roland Foller, director of product management for mobile messaging at MACH, to find out the ways it’s using messaging to provide services for banks and financial institutions.

What kind of services does MACH provide?

RF: There are two real branches to our offering. We provide Person-To-Person messaging, like connecting operators and international SMS. We also provide Application-To-Person content-style applications. What’s important to note is that we provide these services to our enterprise and global corporate customers, but we don’t focus on creating applications ourselves. We are providing, transforming and supporting, but we’re not in the app creation business. We provide services globally, and 850 networks are reachable by our services. That’s where we’re coming from in this.

In terms of building bridges from SMS to mobile financial services, we are bundling all of our services and providing dedicated services for banks and financial institutes. This covers consumer information services, promotional services and, most importantly, anti-fraud services.

Let’s start with consumer information services. How deeply can you integrate with a bank’s systems? What level of data can you send out?

RF: It depends on the bank. We want institutes to send out messages to their audience. We are providing sophisticated systems that can pull data from the bank and send it to their customers. We can work with any third party provider and the IT structure of the bank itself to make any kind of information transferable by SMS. The content might range from straight forward announcements from the bank, or account status information.

What about the marketing side of things? Marketing SMS can easily be seen as spam

RF: What we’re talking more about is prospective customers registering to get more information – there has to be an opt-in mechanism and an opt-out mechanism.

You have to remember that what we’re looking at here is on a global scale here. In Europe, that kind of SMS would easily be interpreted as spam. But there is still a big ratio of mobile users who have no bank account in developing markets. For them, SMS transforms the handset to a gateway into the bank. The question is whether a bank will be necessary at all in time!

Does MACH have a large interest in “banking the unbanked”?

RF: Well, you have to differentiate between mobile payments and mobile banking here. We’re very active in mobile banking, rather than actual money transfer – we leave that to companies like Visa or Western Union. Our focus is on the connectivity side, providing the best connectivity to our financial clients. In each country we operate in, we partner with national financial institutions to provide their existing services through mobile. And we believe that mobile can have a massive effect on the use of financial services in developing countries.

Do you foresee any crossover into Western markets?

RF: We do see a potential for bringing some mobile payments to Europe – but really it’s the security elements that we feel will have a global impact. With our mobile number look-up service, we can cut out a lot of fraud by checking the current location of the mobile user. When you pay for something with a credit card, or use a cash machine, we can ensure your location is the same as the location of the transaction. The handset becomes a location checker – this isn’t just limited to mobile transactions. If you use your credit card, we can make sure you are in the same location as that transaction.

So if someone accidentally leaves their mobile at home, they could find their credit card doesn’t work anymore?

RF: If the service is working properly… then the answer is yes! But ask yourself “do I ever forget my phone and leave it at home?”

The other security feature we are providing is called the “one time password”. If you are using a payment method that requires an authorization – for example, paying on-line or using a cash machine – you can choose to get an SMS containing a unique code. You enter this “one time” code to authorize the transaction. This means there’s no permanent password that someone can steal and use to commit fraud. And when you combine the number look-up service with this authorization system, it makes it incredibly hard for somebody to fraudulently use your card.

Could that system be used to sidestep the need for a card? If all you need is the one time code, then you can just use your phone.

RF: Some service providers are already moving in this direction. Again, it really depends on how the bank is defining their strategy. They can stick with the card, but if they believe the one time code is good enough, then they can set it up so that a card is no longer necessary.