Why are banks investing in Mobile financial services technology?
2018 is the year of partnerships between banks and FinTech firms. This year mobile technology will play a significant role in building an “inclusive cashless society” A few years ago, most of the banks would scoff when they were proposed a mobile financial services technology solution to reinvent their business - however, today things have changed.
The reason behind this shift is the availability of secured and robust technology solutions. Mature application of FinTech solutions, strong API built architecture and use of blockchain technology, have changed the dynamics and led to a higher rollout of mobile financial services by banks.
Some reasons that have compelled Banks to take the digital route are:
Mobile convergence: The immense adoption/usage of internet and mobile phones, and the convergence of mobile with highly secured and robust technology solutions for mobile banking have boosted the confidence of both banks and their customers alike. As a result, 2018 will see a boost in mobile banking in emerging markets.
Ease of banking at minimum OPEX: Access to Mobile financial services reduces the dependency of customers on Banks/bank staff for banking activities. Also, banking processes become less time consuming and paperless. Transaction costs drop down drastically when they shift from traditional to digital. According to PwC, a traditional bank transaction costs around $4, when this is done digitally an online transaction costs 9 cents and mobile transaction costs 19 cents.
Hybrid model business strategy: While some banks go completely branchless, banks in emerging markets prefer a hybrid business strategy. Technology platforms that allow easy and secure customer onboarding, mobile wallet, mobile banking, agent banking and the facility to make merchant payments address all the needs of customers. Besides, interactive, fast and an efficient digital experience is supplemented by personal bank interaction for complex products and services, thus customers get the best of both models.
Blockchain technology: Blockchain is not just a technology that reduces the cost of transactions. It makes each transaction highly secure and eliminates the need for payment processors, custodians and reconciliation bodies. It keeps cybercriminals at bay and makes data manipulation impossible.
API’s are pushing the boundaries: Strong APIs have fuelled the creation of highly digitized banking experience. Building APIs that support real-time payments is a top priority today. A strong API architecture allows banking services across various channels, thus add value to services.
Mature application of FinTech: Today's consumer is well-informed and demanding. Banks are under pressure to provide banking at fingertips to this millennial customer. Mature application of FinTech, combined with the government support for digitization in both emerged and emerging markets has led to the culture of Digital first for both banks and their customers.
Technology partner advantage
All the above reasons have led banks to adopt Mobile financial services model and go digital. However, the best part is that banks do not need to develop this technology themselves. They can simply partner with a mobile financial service technology provider and bring their bank to the customer on a mobile phone.