How Big an Opportunity is "Mobile Banking?"

Is "mobile banking" a key revenue opportunity, or not? The answer is that "it depends" on what you mean by "mobile banking" and where those operations are conducted.


According to recently conducted survey by ACI Worldwide, 76 percent of Indian mobile respondents used their mobiles for mobile banking in last six months.

Comparatively, only 38 percent of  respondents from the United States, and 31 percent from the United Kingdom said they had used mobile banking in last six months. 


China, came in after India with 70 percent of users using mobile banking followed by South Africa (61 percent). The global average for Mobile Banking adoption rate stands at 35 percent of mobile users.


But there are key differences. Where both online banking using PCs, and branch bank infrastructure are highly developed, people tend to use mobile banking to check balances or move money between accounts. 


In regions where the banking infrastructure is undeveloped, and availability of PCs and Internet access is limited, people more often use mobile banking as a way to move money from one person to another, or from person to organization (to pay a utility or school bill, for example). 


As you would guess, the revenue opportunity for a "mobile banking" services supplier is greater, and more direct, in scenarios where peer to peer payments are involved. As people pay fees to Western Union to move money, so mobile banking in a P2P context represents per-transaction fees that are easy to measure.


That is not the case for "softer" mobile banking transactions conducted in regions where the banking infrastructure is highly developed. In Western Europe or North America, for example, mobile banking more often is used in place of an online session to check balances, rather than as a way to move money from person to person, or person to organization. 


That means "mobile banking" is a clearer revenue generating activity and business in developing region, than in developed regions.
In India, 64 percent  of ACI Worldwide survey respondents used their mobile phones to make payment at least once in last six months, while in China 66 percent said they had done so.

Only 30 percent of U.S. respondents and 23 percent of U.K. respondents reported they had made payments on mobile in last six months. Keep in mind that all the data includes content and virtual goods purchases (remote payments), as well as peer to peer money transfers or other mobile payments such as in-store purchases.


So it is likely that mobile banking activity in developed regions is "checking my balance," while mobile payments activity is "remote payments" (buying a game or app).

Some 25 per cent of U.K. mobile internet users now use mobile banking services, according to Antenna Technologies.  

Likewise, the mobile commerce market is expected to account for 24.4 percent of overall e-commerce revenues by the end of 2017. 


This represents the result of some spectacular growth in 2011, when the mobile online commerce market doubled in size to $65.6 billion, according to to ABI Research. If you assume that transaction fees amounted to 1.75 percent of the value of the transactions, then mobile payments provider revenue amounted to something like $1.1 billion in 2011.


The potential revenue is bigger if you assume an average of 2.75 percent transaction fees. In that case, the transaction fee revenue was about $1.8 billion in 2011.


But there are many other segments of the mobile commerce business, including hardware and software to support commerce, advertising, loyalty, marketing. In that sense, the mobile commerce opportunity is bigger, and affects more suppliers, than the mobile payments business.




According to the ACI Worldwide survey, the countries with highest levels of mobile payment adoption also display highest importance on mobile payments and money movement. Roughly two-thirds of Indian consumers consider making payments and moving money using their mobile phone in the next three years to be “very important” to them —in contrast only one in 10 French and Canadian consumers think mobile payment is “Very Important”.

In Brazil, for example, although 39 percent  of consumers consider mobile payment and money movement to be “very important,” 75 percent  would use their mobile phone to replace cards. That points up a key difference between “developed” and “developing” regions.

The ability to use a mobile phone as a payment channel is of clear value in settings where the banking structure is undeveloped. That function offers less value in markets where both online banking by PC and the branch banking infrastructure are highly developed.





The point is that "mobile banking" represents different opportunities in developed and developing regions. In the former markets, it is broader mobile commerce, including point of sale payments, where the revenue gains lie. In developing regions, it is peer to peer money transfers, for the most part.