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Sun and desert! at Géisers del Tatio – View on Path.
Beautiful desert! with Sarah at San Pedro de Atacama – View on Path.
Working with great people building the Digital Plan for Chile.
Mobile Banking in Latin America
Latin America has a big challenge to decrease the population of people without a bank account. In this part of the world approximately less than 20% of population have access to financial products[1], which is a huge opportunity risk for banks. This issue can be addressed in different directions and using mobile technology can be one of the ways to do it.
The adoption rate of mobile phones in Latin America on average is close to the 90%[2], and is dominated by non-smartphones which are used together with prepaid cards. This market sets the rules for a potential financial solution: support for basic banking operations (i.e. account balance, money transfer, etc…) with an easy to use and simple user interface.
Why would people use it?
The only competitor for a banking solution in this context is the cash usage and the culture of the people. They feel safer keeping their money at home instead of a bank and bringing defined amounts of cash with them every day. So why would they stop doing that and start to pay for mobile banking?
The new service of the Colombian Davivienda Bank called DaviPlata is a good approach. They partnered with Tigo and ComCel, two Colombian cell phone providers, to add functionality to the SIM cards for their customers to send and receive money and make withdrawals from their cellphones at no cost … yeah, no cost!
The service is simple: You can only add money to your cellphone from a Davivienda account or an other cellphone which uses the DaviPlata service. Then you can pay public services, make money transfers to other cellphones in the DaviPlata network or withdrawals using Davivienda ATMs.
From where the business comes them? I think this is great way to capture new clients. Imagine this in the context of a family: a parent opens an account in Davivienda to be able to send money out to his sons cellphone account using DaviPlata or to pay government taxes with it.
As I said in my previous post, mobile banking will be a driver to promote a new wave of customers in low-income areas and as we see in the case of DaviPlata, this business model is the key.
References.
[1] Más allá de las sucursales: Banca móvil en América Latina. Business News Americas Marzo 2011.
[2] GSMA Deployment Tracker: http://www.wirelessintelligence.com/mobile-money/
NFC and Mobile Payments
The future of mobile payments and banking has become a hot topic of research and study. This can be seen in the huge change in banking customer service to plastic credit cards being replaced with mobile applications. However, I believe there are risks about near field communication (NFC) business services and the resulting customer behaviors.
NFC Adoption
Near Field Communication (NFC) is a key technology for the development of mobile banking. There are many mentions of it including rumors of the iPhone 5 with NFC capabilities or Google Wallet. However, is there really a business for card processors?
It is not hard to imagine how much money MasterCard or Visa makes for payments processing fees all over the world. With mobile payments this revenue model becomes more difficult, because technology providers become the new intermediaries adding an extra cost to the business plan.
Merchant adoptions is another weak point in this strategy. Imagine tiny shops trying to operate sophisticated NFC readers, or low-tech users trying to deal with the applications in their phones. While any revolution in technology is disruptive, this can become more disruptive because of the number of players, regulations and behaviors in the market. Thus it makes it very difficult to think there will be a massive adoption of this technology in the short time.
So what about Square, the mobile credit card payment system?
In my opinion Square is doing very well because of their product design: An easy mobile application for merchants or people to receive payments with credit cards. With Square, the only change is on the merchant side as opposed to other solutions (credit card holder + merchant). Also the technology they use to develop their service is easy (just plug in the credit card reader into the audio jacket of your iPhone). This ease of use makes makes the product a viable solution for low income economies.
Future Next Steps
So far the models mentioned here base their business strategy and product design adding complexity to their solutions:
- More players sharing in the revenue stream
- Assuming the high-tech population will use their product
- Adding complexity by creating double behavior changes: merchants + credit card holders
- Solutions that do not converge into a single point of operation (e.g. Google Digital Wallet, Visa Digital Wallet Project)
- Technology lock-in
I think that the winning solution will reduce the number of touch points to make the digital wallet concept easily accessible. Companies like Square and Kuapay are working on the right path to the success of this revenue model and I’m looking forward to see what the future holds.
OAuth support in iOS
- The ability to call restful webservices using a client which parsers JSON and XML answers directly, through SSL or HTTP Auth.
- Core Data support, which means you can locally persist the data received.
- Domain Data Object support is another killer feature. In other words, you can map JSON or XML answers to domain objects.
- Grab the framework from my fork, and configure everything according the installation instructions.
- Use it in your controllers or delegates, next there is an example.
- OAuth 1 support:[c language=”++”]
RKObjectManager* objectManager = [RKObjectManager sharedManager];
objectManager.client.baseURL = @”https://api.twitter.com”;
objectManager.client.consumerKey = @”YOUR CONSUMER KEY HERE”;
objectManager.client.consumerSecret = @”YOUR CONSUMER SECRET HERE”;
objectManager.client.accessToken = @”YOUR ACCESS TOKEN HERE”;
objectManager.client.accessTokenSecret = @”YOUR ACCESS TOKEN SECRET HERE”;
objectManager.client.forceOAuthUse = YES;
[/c] - OAuth 2 support:
[c language=”++”]
RKObjectManager* objectManager = [RKObjectManager sharedManager];
objectManager.client.baseURL = @”YOUR API URL”;
objectManager.client.oAuth2AccessToken = @”YOUR ACCESS TOKEN”;
objectManager.client.forceOAuth2Use = YES;
[/c]
- OAuth 1 support:[c language=”++”]
As you see, I still need to develop the code for the handshaking process, but in the meantime you can start to consume webservices and enjoy the domain data support of this framework. Comments and improvements to the code are always welcome!
Promoting Financial Access through Mobile Banking
Banks in United States are in an exciting technological time: The eruption of mobile as a platform for payments and its transformation into a new place of banking services in their customer’s hands. But, what is happening outside of the United States?
There is still a large population in Latin America, which doesn’t have access to financial products. The percentage of households with a deposit account - in a formal financial institution - border around 40% [1] , which brings the question on how banks can increase the number of deposit accounts to the table. There are many approaches and proposals as a possible answer, but the approach I want to propose is based in Mobile Banking.
Mobile, Banking and Commerce: Triggers for the Economical development
There is no magic or rocket science behind the relationship between banking and commerce. This close connection starts to become weaker in the lower social-economical segments: less people have access for deposits accounts and tiny shops use very basic hardware to serve their business. At first glance the gap can be split between a business model design challenge (from the bank perspective) and access to cheap hardware. In this context, I believe a mobile banking solution can help to promote access to financial solutions.
From the perspective of small shops owners, the access to a mobile phone is not a problem at all. In fact the region has a 90% [2] of penetration of this technology, and is still growing. This shows that the problem can be, probably, a business design. Normally I hear complaints from shops owners that banks take a high percentage out of a purchase as a commission fee. However, shop owners do recognize this method is safer than cash, and very easy to handle. Perhaps the problem is a sense of cost and benefit.
Banks normally say that depending on the amount of transactions, setting up infrastructure to serve this segment can be a positive or negative investment. But if they use mobile solutions to foster the number of shops with point of sales systems (POS) to process electronic payments while offering very low commission rates the possibility exists to find a new revenue stream due the volume of the transactions. We can see this illustrated in the business model design below:
For the users, the main benefit would be access to a non-fee deposit account model, where they can use it to make withdrawals and electronic payments anywhere. Since the tiny shops could implement solutions of mobile payments, they will not need to withdraw money to pay their goods. This could be one of the drivers to incentivize them to deposit money into their account. The main revenue stream for the bank can come from the cross-selling offers as small loans or other instruments as is shown below:
Mobile Banking is not only a platform to promote new ways to serve the banking population, it also can be a driver to promote a new wave of customers in low-income areas for banks. I truly believe the key will be the business model, which is used to implement these solutions.
[1] Financial Access 2010 Report, “The State of Financial Inclusion Through the Crisis”
[2] Latin America enjoys mobile telephone boom
Post image: cc @mauricekoop
