US: Move to mobile banking slow

The Yankee Group'sMobile Banking Lessons from International Low-Income Initiatives report says that takeup of mobile banking in the US will not increase significantly until it becomes "available to a majority of mobile users including prepaid and low-income consumers."

The company says in a report published recently that the reason that it is gaining traction in the North American market, but slowly, is that "there is a difference between the way m-banking solutions work overseas and in North America. In countries such as South Africa and the Philippines, m-banking keeps low-income consumers' money safe; at the same time it reduces fees, which makes these services affordable. On the other hand, North American providers typically market m-banking to a more affluent and technologically advanced user as a convenience service. However, m-banking can also benefit low-income consumers in North America much as it has overseas."

Analysts at The Anti Money Laundering Network who have studied payment mechanisms in South Africa and in the Philippines say that those markets have particular characteristics that are different to the USA. "In both South Africa and The Philippines, a significant proporation of banking services are in fact some form of money transmission from the urban worker to his rural family. Availability of banks is low in remote communities. Historically, money transfer or cash courier services - including informal services such as packages carried by the drivers of long distance buses - have been used but they have, in some cases, proved unreliable. Mobile banking has facilitated reliable rapid and cheap transfers between accounts and obviated the need for long-distance travel to a bank or ATM. In the USA, it is the poor who have the most need of these services but mobile banking services are rarely provided for international transfers and it is foreign workers that most have the need for such transfer services to, for example, Mexico and India."

The Yankee Group report says "low-income consumers in North America make up 21% of all mobile phone consumers. But technology and price barriers continue to keep this segment of the population in North America from adopting m-banking services. Several key factors will drive m-banking success in North America:

• M-banking needs to be cheaper than traditional channels.
• Providers must target low-income segment to find early adopters of the service.
• Sales and marketing must address account eligibility, ease-of-use and cost.
• M-banking needs to be easy to use.
• Users will still need human interaction, so branch access or phone customer service should be part of any package."