Quite quickly, mobile will emerge as the channel of choice to meet certain control functions and for consumption of time-critical information. Over only a slightly longer time-horizon, it will change the financial services landscape. This article looks at the following questions:
- How to approach the development of mobile as a channel for corporate users?
- What technology should be deployed in offering mobile services?
- What does mobile technology mean for treasurers as a transformational technology?
The Mobile Channel
In considering how to develop a channel offering over mobile devices, one has to look at ‘best fit’ along two axes:
- In terms of matching the best use-case with the technology.
- In terms of selecting the technology used to deploy mobile services.
Mobile authorisation is clearly the winner in terms of the best fit between technology and use-case. Treasurers are often on the go – or simply away from their desks – at the critical moment in the day when they need to control the disbursement of funds. Being able to do this on a mobile device is a boon in terms of convenience. In some markets, mobile devices are also a better fit from a cultural perspective. Senior managers in some countries have seen use of a PC as a clerical activity – but they are perfectly comfortable using their mobile devices.
After mobile authorisation, the next most important services are informational in nature – whether it’s instantaneous access to balance information, alerts on significant fund or market movements, confirmation of important transaction events, or credit line availability.
While most significant players in the transaction banking space are offering services to cater to these needs, there are admitted challenges to the adoption of mobile among treasurers. Like any new technology, it must meet stringent security requirements. Many organisations are reluctant to be first adopters of a technology that involves the release of funds. Another barrier relates to banks sometimes deploying the technology in product silos instead of as part of a process. For example, for many banks, authorisation is available for cash transactions but not for trade. This is frustrating to potential users as it limits the applicability and only partly resolves their need to authorise transactions on the go.
Turning to look at the technology a bank chooses to use to deploy mobile services, the first consideration has to be user experience. Today, this still points to opting for an application-based service rather than a mobile browser-based service. Browsers are less expensive to deploy and maintain, but for now the user experience is still mixed. The rapid adoption of Apple’s iPhone is accelerating the use of mobile browsers, and the company’s iPad will do so even more. But if one is following a strategy of ‘best fit’ between use-case and technology, a mobile application is still the best way to optimise the experience for the selected functions one wants to offer over mobile devices. It is faster, requires fewer clicks, and offers a more reliably uniform experience.
Nonetheless, this approach presents its own challenges, as there are a large number of device and software platforms to support. But there are vendors that specialise in ensuring that applications work across multiple devices. This enables the bank to focus on what services to deploy, rather than the technology, and be able to ‘build once, deploy multiple times’.
Implications for Treasurers
The larger question for a treasurer is how mobile technology can be used to improve working capital efficiency. Before answering this, we need to look at the broader landscape. The picture of how mobile technology will drive change varies significantly depending on the current financial services infrastructure – particularly the percentage of people in an economy who hold bank accounts.
In those countries with already high levels of bank penetration, it is unlikely that the mobile phone will be truly transformational. Instead, it will primarily be a channel of increased convenience.
But in other markets, it can be game changing. Millions of people will gain access to financial services for the first time, moving directly from a cash or barter-based economy to electronic money.
There are now four billion mobile handsets in use globally, and in some countries – particularly in the developing world – this is providing a level of ubiquity that promises to alter the financial services landscape much more than the internet did. Looking at the statistics for some countries in Asia and Africa in particular, it’s easy to see the potential impact of mobile technology on financial services and transactions. In Indonesia, there are 3.4 people with mobile phones for every person with a bank account. In India, the ratio is 2.75 to 1, in the Philippines 2.18 to 1 and in Vietnam it’s a stunning eight mobile phones for every bank account. In Tanzania, only 5% of the population has a bank account, and 1% have access to the internet. Yet 40% of Tanzanians have a mobile phone. Enabling these millions to have a safe store of value and an efficient means for making payments will drive enormous economic value. It also provides the potential for a better way for these countries to receive inward remittance flows – one of the largest source of export earnings and foreign currency reserves for some.
How far-reaching change will be depends in part on the regulatory approach adopted by a country. Regulators naturally want to ensure that consumers are protected and that appropriate controls are in place. On the other hand, they need to balance these concerns with the desire to realise the economic benefits inherent in mobile money.
Moving to more practical concerns – what does this mean for a treasurer? Treasurers today are looking to mobile technology to improve their working capital efficiency. The mobile can provide a faster, lower-risk way to collect payments from their customers. In the fast moving consumer goods sector, where collections are often cash-based, the introduction of mobile collection could significantly accelerate the collection cycle and improve reconciliation, while also eliminating a significant element of risk.
Consumer convenience will also drive adoption of mobile payments – to the benefit of treasurers. As a practical example, consider how mobile technology could accelerate receivables for large billers in Singapore. Here, bill payment is frequently done at curbside kiosks that allow consumers to pay most of their bills by scanning the bar code on their bills and then using their debit cards. A smart-phone could easily put the entire functionality of that kiosk in a consumer’s pocket – and also deliver the invoice instantaneously, with its own impact on reducing the collection cycle time. Even if the invoice delivery remains paper-based, the barcode could be scanned in the comfort of one’s home and a payment authorised directly from the mobile phone as soon as the bill is opened. With this convenience, it’s likely that bills would be paid when they are received – driving significant value for a treasurer.
Yet regional treasurers in Asia, Africa and the Middle East will want a single solution that functions across national markets – not just country-specific solutions. Unfortunately, this is easier thought of than delivered. Significant barriers include the lack of standards, differences in regulatory environments, and the plethora of technology platforms. All these factors mean that the mobile ecosystems function at best as sub-national networks. They lack efficient connections between one another and between the larger potential world of mobile money and current banking infrastructures.
Banks, telecoms companies and other players in the ecosystems will need to cooperate to develop common solutions that meet the needs of treasurers within and across markets. SWIFT can also play a positive role in establishing standards and facilitating interoperability.
While mobile devices are more generally thought of in consumer terms, they also offer an excellent way for banks to support the informational and control needs of their corporate clients. Focusing on the areas where there is the strongest use-case, rather than on the breadth of service offering, is the best way to deploy mobile services for treasurers. Looking forward, banks will need to embrace the promise of mobile money, and build solutions working in partnership with other players in ecosystems rather than adopting a go-it-alone strategy. Particularly in those countries across Asia, Africa and the Middle East where banks do not penetrate the majority of the market, mobile phones can be expected to generate solutions that simultaneously deliver greater convenience to consumers and improve working capital efficiency for local and regional treasurers.
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