The Bank In Your Pocket
While there is much interest around mobile being used as a tool for ‘banking the unbanked’ in the developing world, it also has much untapped potential in developed markets. Today, a number of messaging enablers allow banks to offer their customers greater freedom and increased control over their services through a diverse range of SMS services. In future, it is likely that mobile phones will become even more integral to the banking process, opening up a new range of services, and allowing institutions to strengthen their brand.
Of the services currently available to banks, some of the most popular are based around SMS as a means of improving the overall customer experience. Working with Ericsson IPX, Swedish banks are delivering PIN access for internet banking via text. Customers can register their mobile number and then request single-use PIN codes which are delivered to their handset in a text message, and can be used to securely access online banking facilities. Half a million messages a month are already being delivered as part of this service. Advanced services such as Country Lookup and SIM Card Binding can further improve anti-fraud measures to ensure that consumer confidence in your services is maintained.
A much wider range of SMS services are available for banks. In addition to one-time passwords for accessing account information, credit and debit card companies allow customers to request their account balance. Registration is completed using SMS, with the customer choosing which of their cards they wish the service to be available for. From here, any time the customer wishes to know their account balance they text the word ‘BALANCE” and in return receive a message stating their current balance. One bank’s customers are currently using this service to request their account balances up to 200,000 times a month.
Through this service, customers can access banking services and in turn, the bank receives a permanent presence in their customers’ pockets, whilst lowering customer service costs. By choosing to take advantage of the services a global connectivity enabler provides, banks are able to extend these kinds of messaging services simply and efficiently to the majority of their customers.
A number of banks are also taking advantage of mobile as a marketing medium, alerting their customers to new services. In markets where competition between providers of banking services is particularly fierce, taking advantage of the strong relationship consumers have with their mobile phones by sending information on new deals and rates can make a big difference.
However, mobile has much greater utility for banking than just account verification, balance checking and fraud management. The next logical step is to use the mobile phone for payments, in lieu of bank cards. A recent study by MasterCard found that over 60 per cent of US mobile phone users would be open to using their device for purchasing goods and services. Today, in some markets, Premium-SMS is being used for financial transactions, but it is expected that in the future, Near Field Communications (NFC) will be central to mobile payments in all regions.
Banking groups will be able to rent space on an operator’s SIM card, placing a customer’s debit and credit cards directly on their NFC-enabled phone. The customer will then be able to simply touch their phone to a contactless payment reader - in much the same way that Oyster Card users touch in on the London Underground - to pay for goods and services. Transactions will be charged to the user’s card balance, just as if they had used their card in a chip-and-pin reader. For the consumer, this process is quick, simple and requires almost no effort.
Before NFC becomes mainstream, a robust ecosystem to support the technology needs to be developed. This is already underway, with Nokia committing to the inclusion of NFC in more of its future handsets, and Google including it in the latest version of its Android operating system, not to mention investment in infrastructure ahead of next year’s Olympic Games.
For financial institutions looking to take advantage of the benefits of NFC, utilising a Trusted Service Manager (TSM) will allow distribution and management of NFC applications remotely and securely to a range of devices over mobile networks. A Trusted Service Manager also acts as a broker for NFC transactions, providing authentication, authorisation and settlement.
Mobile phones have made our lives more convenient in many ways, and if embraced fully by banks, they can do much more. Banks are currently utilising consumers’ personal relationships with their phones to increase engagement with their customers and give them greater access to their accounts. The next step is to enable quick and simple access to their money and cards through their phones.
With NFC, banks can go one step further than they ever could with regular Internet banking, giving consumers the capacity to make payments for real world goods on the move, at the point of sale. If exploited properly, mobile phones will help banks increase and improve interactions with their customers, by giving them greater control over their accounts, whether at home or on the move.
Tobias Johnsson is head of business development at Ericsson IPX