Andrew Bud: How the world is banking on mobile

MEF Global Chair Andrew Bud takes a closer look at the data uncovered by MEF’s research on mobile banking globally, and draws some interesting conclusions.

MEF’s Global Consumer Survey of nearly 10,000 mobile users in 10 countries is proving to be an inexhaustible source of insight into the changing world of mobile content and commerce.  Recently we were reviewing the detailed data regarding mobile banking worldwide in 2012, and some fascinating patterns became apparent. I recently spoke to Finextra, the website for the worldwide financial technology community, who wanted to get some detailed insight into the results of the survey. You can watch the interview below, but it’s worth taking a deeper dive into such a key growth area for our industry.

Mobile banking can be classified as covering a range of activities, but I was most interested in the most mainstream of interactions – checking your bank balance, applying for a loan or paying a bill.  In these categories the world clearly divides into three areas.

There is the developed world of large, slow-growth economies such as the US and the UK.  Here, such banking interactions have boomed, with balance checking rising from 23% and 36% respectively in 2011 to 41% and 44% respectively in 2012.  Today, it appears that nearly half of consumers in the transatlantic anglophone societies are checking their financial status online, and that number is growing very fast.  A similar picture emerges regarding loan applications – growth from single digit participation to 17% in the US.  There is no great surprise in these numbers.  These economies have highly developed banking industries with very high consumer participation and high penetrations of smartphones. It would be strange if they were not leaders in the shift to mobile engagement.

GCS

A more striking group consists of the high growth economy stars. In China, 47% of consumers surveyed had checked their bank balance on their phone.  In South Africa 50% said they did so.  In Saudi Arabia, over 30% say they do so, and 14% say they have applied for a loan, about the same as South Africa.  In these countries, 20%-30% have paid a bill via their mobile.

What explains these high levels?

In South Africa, home to MEF Special Recognition Award winner Hannes van Rensburg who founded mobile banking pioneer Fundamo in 2000, there is a long tradition of mobile banking, so the growth there from 29% in 2011 is unlikely to arise from a jump in consumer awareness.  Some of this is clearly driven by smartphone penetration, which makes the  mobile banking user experience of so much smoother. Sophisticated banks, a benign regulatory environment and consumer familiarity with banks are also clearly drivers.

This is reinforced by the situation in India, where bank balance checking behaviour has exploded from 8% in 2011 to 28% in 2012.  In India, smartphone penetration is lower and bank account ownership is still expanding out from the metropolitan middle classes.  The Indian regulators are sophisticated and cautious, but regulatory friction is not yet visible in these and other survey numbers.

A third group includes countries like Brazil and Indonesia, which have seen stellar take-up of a range of other mobile content and commerce offerings.  Here, balance checking penetration seems to have plateaued at around 20%, though loan applications are rising fast from very low bases.  According to MEF research, these countries are still dominated by feature phones, so it can only be a matter of time – and not much time – before these “mobile first” or “mobile only” economies become hives of mobile banking, enabled by the switch-over of their consumers to smartphones.

So we are seeing a world in which consumers tumble to engage with their banks via mobile, limited only by the capabilities of their mobile devices and the ingenuity of their banks to support such engagement.  Behind this take-up we will see competitive differentiation based on the user experience and upon consumer trust.  In another part of MEF’s Global Consumer Survey, 35% of consumers said that lack of trust was holding back their engagement via mobile.  But that is for another post…

Andrew Bud is the Global Chairman of MEF and you can follow him on twitter here. The MEF Global Consumer Survey is available to download from the MEF website free to MEF members or you can download the free Executive Summary.

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