The time is right for services such as banking, money transfers and on-line payments to make the move to mobile handsets and services, claims IMS Research in a new report. Improved coverage, greater uptake of feature phones and smartphones, higher mobile penetration and service availability have all contributed to this and, as much as anything, greater demand from consumers, operators and financial stakeholders has seen the number of application developers and platform providers all multiply in numbers in recent years, says IMS.
"There has been a marked increase in the level of activity of key players in the market, from both the mobile and the financial companies in the past 12 months", stated John Devlin, lead analyst for the report entitled "The Mobile Wallet: How? What? Where? And When?" "In regions such as North America, Japan and South Korea strong partnerships are being formed between mobile operators and banks. In regions where banking infrastructure is much more limited in availability, battle lines are being drawn between the different stakeholders, with operators well positioned and less restricted in providing financial services to their subscribers".
According to the report, there are a number of technologies and features that could positively or negatively affect the uptake of mobile financial services. These include SMS, MMS, WAP, e-mail and Bluetooth penetration and usage, all of which are reviewed in detail in the report. Growth in the cellular installed user base, handset shipments and replacement rates were also considered important.
"To illustrate the forecast level of growth for mobile financial services, we are forecasting the number of cellular users to grow by 32% over the next four years; a significant number given the size of the market. By comparison the number of active users of mobile banking and payment services is estimated to grow by 662% over the same timeframe, demonstrating the high growth potential that we see for mobile financial services", adds Devlin.
This is not to say that making money mobile will not be without barriers, says the report. Whilst the technology is there, the biggest concern, particularly in more mature markets, will be security. In these regions, the driver is convenience and mobile services are competing with a number of other means of banking access, such as telephone, Internet and in-person - as opposed to emerging markets where mobile may be the only means of accessing personal financial services. In regions such as Europe and North America awareness and security are much higher on the agenda for consumers and it will take time to educate them and overcome concerns, reassuring them that their mobile phone is a secure access device.
"This will initially affect user behaviour and the type of financial services that they utilise on their mobile phones. In these markets people will have a much greater tendency to test the water with quick, low risk uses, such as checking account balances and topping up pre-paid cards. In the developing markets, where there are fewer alternative means, users will be much quicker to start transferring money and making payments for goods and services in the early days of adoption", concludes Devlin.