Even though Apple Pay and Samsung Pay are the subject of high-profile commercials, and any bank worth its vaults has released a mobile app, more than 68 percent of consumers have yet to use mobile financial services. That number is changing as mobile broadband continues to roll out globally, and as carriers start to get involved. In fact, carriers will play a critical role in the next phase of adoption.
The research, from analyst and consultancy firm Ovum, found that for those using mobile finance, including payment solutions, money management and mobile banking, the benefits are clear.
"Consumers who have adopted mobile financial services appreciate the benefits these services can bring," said Eden Zoller, principal analyst with Ovum. "The ubiquity and convenience – the ability to use mobile financial services anytime, anywhere – was the overwhelming benefit cited by survey respondents in both emerging and mature markets. These are immediate, tangible benefits and a powerful riposte to those who say there is no value in mobile financial services.”
Driving Mobile Financials Forward
Ovum expects fresh, innovative solutions for savings, loans and insurance, and payment solutions for medical treatment and education services to drive the next level of growth in mobile financial services.
One quarter (25 percent) of respondents in emerging markets said they're likely to adopt advanced savings, loans, and insurance products in the next year, along with 16 percent in mature markets. And when it comes to making payments for medical treatment and education services, 22 percent in emerging markets and 15 percent in mature markets are likely to adopt in the next year.
In some mature markets, such as the UK and Sweden, the likelihood for adoption of all of these was much higher, ranging from 17 to 30 percent.
But, it’s important to remember that challenges remain.
“This represents positive progress but mobile financial services providers can't afford to be complacent as the research clearly shows that there are fundamental issues and challenges that still need to be addressed, ranging from security concerns and ease of use, to lack of awareness,” said Zoller.
Specifically, a lack of market awareness and misperceptions about mobile financial services are still key concerns. While 31 percent of respondents in emerging markets said that they were unaware of mobile payments or financial services, this figure was lower in mature markets (23 percent). But, about a third (34 percent) of respondents in emerging markets said that they were aware of, but had no plans to use the services, compared to 30 percent of respondents in mature markets.
Respondents who have downloaded the application or subscribed the service but still don't use it showed similar trends in mature (9 percent) and emerging (8 percent) markets.
Adoption factors will include security, transaction charges, ease of use, rewards for using the service and service ubiquity. Security remains the most important factor for driving adoption in both mature (40 percent) and emerging (39 percent) markets.
The preference for low transaction charges and fees show a similar trend in both mature and emerging markets (30 percent). What is perhaps more surprising is that almost a third of respondents in both mature (30 percent) and emerging (29 percent) markets would adopt the services if they were easier to use, demonstrating that ease of use is still an issue.
Meanwhile, one third of the mature market respondents (30 percent) would use mobile financial services if they were offered rewards, compared to 25 percent in emerging markets. A quarter of the respondents in both mature (24 percent) and emerging (25 percent) markets said they would use mobile financial services if they could use them anywhere, and at any time.
"Driving the next phase of growth is the biggest challenge, globally, for mobile financial service providers," said Patrick McGrory, division president for emerging offerings at Amdocs, which sponsored the study. "While the mature markets such as the US, Norway, and the UK need compelling value propositions, emerging markets such as Ghana, South Africa, Brazil, India, Philippines, and Mexico need innovative solutions that can deliver a range of affordable mobile financial services that are a viable alternative to traditional banking services.”
Mobile Finance and Carriers: A Symbiotic Relationship
In both emerging and mature markets, carriers can have a profound impact on market development. And the benefits flow back to them.
From a carrier perspective, in the ongoing quest to combat the threat of over-the-top (OTT) applications, network operators are looking for ways to distribute cloud-based and mobile content to consumers themselves, bundled with their broadband.
For instance, Sprint is exploring this approach with Sprint Money Express, which will enable Sprint customers to sign up for a Sprint-branded prepaid MasterCard and store it in a digital wallet. Users will also be able to store other card accounts in the wallet, manage their finances and budgets, take advantage of local offers and deals, and monitor their mobile phone activity. It’ll be available to Sprint's 57 million customers starting in January 2016.
"Its sleek and modern design with intuitive functionality sets it apart from other digital wallets in the marketplace," Richard Steggall, CEO and co-founder of Urban FT, which powers the offering behind the scenes. "I feel Sprint is the first of the wireless telcos to develop the right formula — one that successfully pairs customers' needs and wants with relevant and meaningful functionality."
The billing relationship that carriers have with customers is also a critical conduit for adoption of mobile finance and other services. By offering mobile finance integration and native support, carriers can further help address the ease of use issue and spur adoption.
It’s a move that pays off: Juniper Research has found that content paid for via carrier billing will provide operators with more than $14 billion in revenues over the next five years. That growth will be fueled by a dramatic rise in carrier billed payments made on connected devices and mobiles. Juniper also found that carrier billing integration resulted in an uplift in average transaction values as well as volume.
Direct carrier billing and mobile money services also give consumers in emerging markets the ability to participate in commerce without the need for traditional financial offerings such as checking accounts and credit cards. For the unbanked, carrier-led initiatives are their only option.
An example of this can be found in Mobile Accord, which has partnered with Ugandan mobile money aggregator Beyonic to bring its unifying mobile payment platform to 27 African countries. The mobile money aggregator allows businesses to make mobile payments to multiple carriers through a single online system. Until now, companies using mobile money for expenses had to connect individually to every mobile money system in every country they work in.
The partnership hinges on Mobile Accord’s connectivity with carriers throughout emerging markets, and will leverage these relationships to bring Beyonic’s platform across the African continent.
Aside from ease of use and distribution, mobile carriers can address security by providing managed connections to payment and other financial services. That’s what’s happening behind the scenes with the launch of TransferTo’s Mobile Money hub. This enables mobile operators and financial institutions to offer real-time money transfers to mobile money accounts, so consumers can send funds in real time to mobile money accounts in Africa, Asia and Latin America.
The company said the user's mobile phone number effectively becomes a bank account number, which they can use to make and receive payments quickly, easily and securely.
"At TransferTo, our goal is to connect every mobile money service so that people all over the world can send and receive money quickly and affordably," Eric Barbier, CEO of TransferTo. "With the launch of our Mobile Money Remittance hub, we're answering a very real need in developing countries for mobile money remittance services. Giving consumers more control over how, when, and where they access funds is a critical step towards greater financial inclusion worldwide. For consumers in developing markets, it's not only game-changing, it is truly life-changing."
Bottom line? Mobile finance has a ways to go in terms of adoption. But carriers will play a critical role in its continued rollout and availability—and will benefit from that position in the value chain.
“Communications service providers who take the lead in overcoming these challenges are set to reduce churn, improve customer stickiness, and tap new revenue streams,” Amdocs’ McGrory said.
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