Internet service providers in Chile need to reduce their prices so more people can access the Internet. This country has one of the highest access costs in the OCDE [1]. Introducing new regulations may increase the competitiveness of the market and decrease prices. However, providers need to increment their hardware in order to offer more bandwidth and new services to their users.

Nevertheless the government should subsidize the infrastructure, especially the last mile, in order to improve the quality of the internet connections available. In the urban areas the cable companies compete with telephone providers, who still use ADSL as transmission technology. This means their clients will be limited to 10 Mbps at most. In order to prepare the country for the next twenty decades, the bandwidth will need to be increased dramatically to support the new media contents and applications.

Chile has the opportunity to lead the Internet development in Latin America. A competitive market and better infrastructure will enable our citizens to access new knowledge and foster innovation.

[1] http://www.slideshare.net/cnicchile/chile-en-la-sociedad-de-la-informacin-fortaleciendo-la-economa-digital-como-plataforma-para-aumentar-productividad

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/

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.

1. The ability to call restful webservices using a client which parsers JSON and XML answers directly, through SSL or HTTP Auth.
2. Core Data support, which means you can locally persist the data received.
3. Domain Data Object support is another killer feature. In other words, you can map JSON or XML answers to domain objects.

1. Grab the framework from my fork, and configure everything according the installation instructions.
2. Use it in your controllers or delegates, next there is an example.
1. OAuth 1 support:

   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;
   

2. OAuth 2 support:

   RKObjectManager* objectManager = [RKObjectManager sharedManager];
   objectManager.client.baseURL = @"YOUR API URL";
   objectManager.client.oAuth2AccessToken = @"YOUR ACCESS TOKEN";
   objectManager.client.forceOAuth2Use = YES;
   

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!

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

cc zingersb - flickr

Credit cards are a part of our daily life. We use them to pay dinners in restaurants, buy medical prescriptions and purchase the latest must-have gadget. A few months ago I started to think about the behavior behind different segments of credit cards (i.e. Gold, Platinum) and the motivations behind the users.

Source: “250 Mayores Bancos de la Región“. América Economía

Brokers? Give services to other banks!

En los años 90 cuando los cajeros automáticos eran parte del panorama, algunos bancos con mucho temor decidieron incursionar en el terreno de la Banca Internet. Es así como las sucursales virtuales comenzaron a aparecer. ¿Cual fue la estrategia utilizada? En gran parte tomar los menús de las transacciones disponibles en los terminales y llevarlos al contexto virtual. En otras palabras las transacciones Saldo y Cartola fueros portadas al nuevo soporte de tecnología sin considerar mayormente el contexto del espacio. Es así como estamos en la época de la web 2.0, conocida por sus redes sociales y la convergencia de dispositivos y los Bancos recién exploran en modelos de marketing online y fomentando sus botones de pago para fomentar los negocios en línea. Es como si aún estuvieran tratando de entender su rol en este nuevo contexto.

En medio de esta avalancha de cambios para los Bancos, aparece un nuevo factor que agrego más entropía aún a sus canales de servicios: Los Smartphones como iPhone o Android, y claro sus clientes querían usar estos dispositivos para revisar su saldo y cuentas bancarias ¿La respuesta a esta necesidad? Portar, ahora, las funcionalidades del canal Internet ahora al móvil.

¡Podrías usar tus súper lentes para capturarme!

Claro, exportar las funcionalidades del canal Internet al móvil no creo que este mal … pero podría ser mejor. Estos dispositivos además de ser teléfonos traen consigo capacidades de GPS, Acelerómetro y hasta cámara fotográfica! Con estos instrumentos se puede crear una mejor experiencia al usuario, pero más que eso, poner al Banco al frente de las vidas de las personas.

A diferencia de un computador, en donde el usuario es “estático” en su entorno, un teléfono móvil acompaña a su dueño a lo largo del día y la noche, en las distintas actividades que realiza, y si la banca esta presente en el, entonces podría transformarse más allá del “chanchito” o caja segura en donde pongo mi dinero. Explorar las oportunidades del móvil, más allá de la migración de canal, ofrece un nuevo mundo a los bancos respecto a la forma en las que actualmente conciben el negocio de personas y además ofrece el potencial de establecer un canal de comunicación permanente y contextual con el cliente.

Tal como dirían los niños que jugaban hoy en la mañana, pues no tan solo vale tener los súper lentes sino que también usarlos para capturar a tus clientes.

Al analizar este ranking aparecen cuatro grupos financieros de nivel mundial: Grupo Santander, BBVA, HSBC y Citi Group. Estas instituciones se ven enfrentadas a importantes desafíos a la hora de atender mercados locales, desde comprender la cultura de sus clientes hasta adoptar estrategias comerciales que logren capitalizar las inversiones realizadas. Además un desafío permanente es mantener la calidad de servicio y un seguimiento permanente a las necesidades de sus clientes, desde personas naturales hasta grandes empresas, pero no siempre tienen éxito en esta misión.

Debido a estas situaciones es que lentamente estan apareciendo en distintos países bancos de segmento: pequeños instituciones, con un grupo de clientes bien definido a los cuales  le entregan  una oferta de productos acotada, enfocados totalmente en la calidad de servicio.

A primera vista, estos pequeños bancos pueden ser vistos como competencia de las corporaciones que describí anteriormente, pero sus modelos de negocios pueden ser totalmente complementarios.

¿Brokers? ¡Prestando servicios a otros bancos!

Los bancos  cuentan con una infraestructura que les permite entregar distintos servicios a sus clientes, pero que se traduce además en una estructura de costos que les impide concentrarse en como entregar un mejor servicio. En este sentido, podríamos pensar en que estas instituciones podrían transformarse en Bancos Corporativos que prestan servicios a otros bancos de segmento, tal como se muestra a continuación:

En estos Bancos Corporativos sus principales ingresos provienen de los cobros de comisión por servicio a Bancos de Segmento, enfocándose en hacer más eficiente la ejecución de procesos.

En cambio, los Bancos de Segmento su foco esta en la creación de valor para sus clientes, entregándoles un servicio personalizado a cambio de comisiones conocidas en base al comportamiento de uso de sus servicios.

Los clientes lentamente comienzan a buscar en sus bancos no tan solo una tarjeta de crédito o una cuenta corriente, sino que tambíen un socio proactivo que les ayude a definir de mejor manera como invertir/gastar su dinero. El negocio de recibir depositos y luego entregarlos en prestamo esta cada vez más acotado en cuanto a crecimiento, debido principalmente por la competencia del mercado. En este sentido la invitación a la Banca es a repensarse a si misma y buscar nuevos modelos de negocio que les permita estar más cerca de sus clientes, conocer mejor sus necesidades y desarrollar nuevos instrumentos financieros para ellos.

It has being almost 20 years and while there have been some aesthetic changes to bank branches the experience of “physical” banking hasn’t changed.  While banks claim that the internet channel is just as important I still see longlines at the end of the month or people rushing to the banks prior to closing time to finish one last transaction.

“No fees and the best customer service”

Talking a few days ago with friends I inquired what services they would want from a perfect bank?  Everyone’s response was the same: “No fees and solid customer service.” This is not new, but after pondering this I think the biggest challenge that banks are facing related their clients is maximizing their value offer and reducing their direct cost related with customer care systems.

Regarding banks fees there are interesting debates about which is the best business model to make competitive systems. In this case, it is valid to ask how to improve customer service.

“The social networks are for gen-y”

In the States I observe many large banks that employ social networks as a channel for customer service. A subset of generation Y actively reject acquiring debts through the use of prepad credit cards instead of checking or savings accounts.

From this point of view, BankSimple and CapitalOne introduce interesting business models and use of social media that provide excellent examples of how financial institutions can apply the Internet to innovate not only in costs, but also in quality of service.

And so the question is this:  Will clients be willing to have a smaller investment interest rate or a set monthly fee for all transactions in exchange for solid customer service interactions through technological channels?

Suggestions to continue reading:

- About the UnderBanked Space

- BankSimple: The Best Bank in the US

-Wikipedia: First Bank of the United States