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- 2007 /
- January-March 07 /
News Archive
You can bank on your mobile
In tech-savvy South Korea, consumers use their mobile devices to check bank accounts, get notification of credit-card purchases, and even travel on the subway by flashing their phones at the turnstiles. This is made possible by cooperation between banks, mobile operators and equipment suppliers who are ensuring that security and ease of use make mobile banking attractive to consumers.
January 4, 2007
The enabling technology is a combination of SMS, secure encryption, and near-field communication chips for point-of-sale transactions. With an estimated 1 billion mobile devices in the world, financial institutions and innovators are using wireless networks as conduits for faster and more fluid transactions. For example, loan officers can expedite home purchases by checking credit and approving loans without customers having to visit their banks.
But the real winners of mobile banking will be in the developing world, where many consumers and entrepreneurs are underserved by the traditional banking sector. Innovative mobile services providers, such as Wizzit in South Africa, offer banking services where none existed previously.
More than half the adults in South Africa have no bank account, yet nearly a third of them have mobile phones. The Economist magazine reports that half a million South Africans already use mobile banking services to send money to family and friends, and to pay for goods and services.
By using their pre-paid mobile airtime to transfer money, consumers in developing countries do away with cash and its inherent security risks. In Kenya, a pilot program call M-Pesa even issues micro-loans via mobiles.
Cingular Wireless will launch its mobile banking service in the US early this year, allowing customers to check their account balances, transfer money and pay bills on their mobile devices. The operator will also conduct a trial in New York City of NFC-enabled phones with MasterCard PayPass™ contactless payment capability.
The potential to do away with cash and credit cards - and to stimulate economic activity - is making mobile banking one of the most important developments in today's banking sector.
