Low-Income Market Initiatives Will Drive Mobile Banking

According to the recently published Yankee Group Report, Mobile Banking Lessons from International Low-Income Initiatives, there is a difference between the way m-banking solutions work overseas and in North America. In countries such as South Africa and the Philippines, m-banking keeps low-income consumers’ money safe; at the same time it reduces fees, which makes these services affordable. On the other hand, North American providers typically market m-banking to a more affluent and technologically advanced user as a convenience service. However, m-banking can also benefit low-income consumers in North America much as it has overseas.

“M-banking in North America is gaining traction, but it’s still far from becoming a reality,” said Patrick Monaghan, senior analyst, Yankee Group Consumer Research group. “Success in North America will be determined by overcoming the biggest issues in adopting m-banking; the cost of data plans by wireless carriers, security and consumer knowledge about it.”

In today’s Anywhere mobile environment, communications players are feeling pressure to identify new revenue streams as consumers gain greater control of their communication services and products. Monaghan’s report reveals how low-income initiatives overseas that tap the low-income consumer group (such as m-banking) aligns with the Anywhere Consumer’s expectations in the global economy, enabling communication players to get ahead of the global connectivity revolution.

Low-income consumers in North America make up 21% of all mobile phone consumers. But technology and price barriers continue to keep this segment of the population in North America from adopting m-banking services. Several key factors will drive m-banking success in North America:

• M-banking needs to be cheaper than traditional channels.
• Providers must target low-income segment to find early adopters of the service.
• Sales and marketing must address account eligibility, ease-of-use and cost. M-banking needs to be easy to use.
• Users will still need human interaction, so branch access or phone customer service should be part of any package.

A must-read for all players in the communications industry including wireless carriers, mobile phone manufacturers, banks and credit card companies, this Report is available at www.yankeegroup.com.