Kristin R. MoyerChristophe Uzureau and Stessa Cohen here. Along with the flurry of the Inauguration this week, the Obama administration also announced it’s economic stimulus proposal. This $825 billion package includes funds – some $6 billion – for the US broadband infrastructure – which includes wireless.
Is this the last hurdle to the success – at last – of mobile banking in the US? Is this all that is holding it back?
Not exactly.
You say your bank has a mobile banking application for iPhone already? Or you just deployed a great mobile alerts solution?
Point solutions or device-specific applications will not solve the chief problem facing mobile banking: that banks don’t have useful applications for banking and payment – that will in turn motivate consumers to use mobile devices for banking. A majority of consumers don’t see any value in current mobile banking and payment offerings in the US. They are currently interested in alert services, and solution that can improve the security of the transactions. Improving wireless broadband access will consequently not drive consumer usage on its own, nor increase ROI.
So what are the real opportunities that wireless broadband will bring?
A summary of the proposed spending plan released by House Democrats calls for the money to be used for “broadband and wireless grants in under-served areas to strengthen the economy and provide business and job opportunities in every section of America, with benefits to e-commerce, education, and health care. For every dollar invested in broadband, the economy sees a ten-fold return on that investment.”
One of the key drivers of the proposal is to reduce the digital divide. Banks doing business in the US can target underbanked consumers through mobile devices. How? By doing what banks in developing economies do: through near-zero account balance management and related payment services. This is not a fancy iPhone mobile banking application — but the ability to use wireless broadband to simplify the management of banking services by underbanked and to demonstrate to unbanked consumers the value of using banking services. Better wireless broadband access will provide an opportunity to market those services, but banks need first to ensure they develop relevant services for a target market where financial management has strong implications on their day-to-day life. This could take the form of a combination of a mobile phone banking service with a prepaid payment card to provide access to cash.
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