According to a new research report by Berg Insight, the worldwide number of users of mobile banking and related services is forecasted to grow from 55 million users in 2009 at a compound annual growth rate (CAGR) of 59.2 percent to reach 894 million users in 2015.
Over the past year many of the leading players in both the telecom industry and the financial sector have intensified their efforts to bring financial services to the world's unbanked population. Asia-Pacific is expected to become the most important regional market, accounting for more than half of the total user base. Mobile banking is also anticipated to play a key role in bringing financial services to people in the Middle East and Africa. In Europe and North America, the technology will mainly serve as an extension of existing online banks as mobile handsets become more widely used for Internet access. By 2015, Berg Insight forecasts that mobile banking will attract 115 million users in Europe and 86 million users in North America.
"The global number of mobile banking users more than doubled between 2008 and 2009, and is expected to almost double again in 2010. Mobile handsets are in an excellent position to become the primary digital channel for providers of banking and related financial services on emerging markets," said Marcus Persson, Telecom Analyst, Berg Insight. "People who sign up for their first mobile subscription today will likely open their first bank account in the coming years and thus join the modern financial system. Mobile operators can play a vital role in this development and will have the opportunity to take an active part in the creation of some of tomorrow's most important financial institutions based in Asia and Africa."
In addition to traditional retail banking, the report also identifies international money transfer as an important revenue source for mobile industry players. Berg Insight forecasts that 3-15 percent of the international money transfers currently handled by various formal or informal agent networks will be carried out using a mobile handset by 2015, generating US $1.2-6.2 billion in service revenues. Mobile financial services, including m-banking and money transfers; and mobile payment, including m-commerce and contactless payments "Mobile handsets are in an excellent position to become the primary digital channel for providers of banking and related financial services in emerging markets" - Berg Insight.
Mobile financial services (MFS) (m-banking, m-wallets, remittance/transfers etc) are growing fast: Berg Insight (April 2010) estimates that users of m-banking and related services (including money transfers) doubled between 2008 and 2009 to 55 million and will double again in 2010. In 2015 there will be 894 million users globally. Growth is being driven by efforts by operators and banks in developing countries (particularly in Asia) to bank the unbanked.
Global Industry Analysts (GIA) (February 2010) predicts the global customer base for m-banking will reach 1.1 billion by the year 2015. ABI Research (January 2009) forecasts that in 2013, there will be nearly half a billion customers of MFS, including m-banking, mobile domestic person-to-person payments (ie money transfers) and international person-to-person payments. Asia will be the key market for MFS, driven by initiatives to bank the unbanked and money transfers:
Berg Insight: More than half of global MFS customers will be in Asia Pacific - Middle East and Africa is also expected to be important market - as mobile operators drive initiatives to bank the unbanked. GIA: Asia-Pacific will emerge as the predominant MFS market in terms of customer base. In Middle East and Africa, the need to provide financial services to remote areas will be central to the growth of m-banking.
For more insight into MFS in developing nations, see: The insider's guide to banking the unbanked.
In developed nations m-banking will be driven by banks: GIA: In North America and Europe, m-banking is extension of online banking, as banks respond to growth of mobile Web. But in Europe, m-banking is in early stages, driven by convenience and value-add rather than revenue generation.
Berg Insight: Evolving from traditional/online banking; m-banking will attract 115 million users in Europe and 86 million users in North America, by 2015. ABI: Banking institutions will be the major promoters of MFS, as it helps to increase customer 'stickiness,' help banks cut costs and automate, and most importantly, to reach the unbanked. ABI: In the US, Bank of America is a leader of m-banking. Launched in May 2007 it now has 1.5 million subscribers.
Worldwide mobile payments (m-payments) are growing strongly, but will still only be worth 5 percent of ecommerce retail sales in 2014: N.B. definitions of m-payments may vary.
Portio Research (March 2010) estimates there were 81.3 million people worldwide using their mobile device to make payments (including in-app payments, mobile ticketing and mobile coupons) in 2009. By the end of 2014, this is forecasted to rise to nearly 490 million (8 percent of mobile subscribers). The volume of m-payments ie face value of purchases and transactions was US $68.7 billion in 2009, rising to US $633.4 billion by end-2014.
Juniper Research (April 2010) predicts that almost half of global mobile subscribers - both developed and developing nations - will pay by mobile for physical and digital goods and services (such as ticketing) by 2014. For example, in 2014, more than 500 million people will make m-payments on the Indian Sub Continent. The volume of m-payments (ie how much they spend) will be US $170 billion this year, growing to $630 billion by 2014. But this is only 5 percent of ecommerce retail sales.
But IDC (May 2010) believes that in EMEA, m-payments will take off slower than m-banking, forecasting that less than 13 percent of mobile subscribers will be registered to use m-payments and volume of m-payments will be no more than $125 billion. Thus m-payments will take off slower than many industry observers hope, due to the complexity and set-up costs for retailers. However, strong growth in m-banking will lay the foundations for growth in mobile payments.
While the rest of the world trial/dream of payment by mobile, in Japan it is already a way of life. ComScore (February 2011) research indicates that in December 2010 alone, 9.8 million or 10 percent of Japanese mobile subscribers used their mobile wallet to make a purchase. 7.6 million consumers made a purchase in a retail/convenience store; 3.2 million purchased from a vending machine; 2.7 million paid for public transport; 2.6 million purchased in a grocery stores; and 1.5 million paid a restaurant bill all using their mobile phone, instead of cash, card or check.
Top m-commerce retailers: In 2009, the top m-commerce retailer according to Altimeter Group (June 2010) was Taobao, (part of Chinese Web giant Alibaba Group) with an estimated $800 million in revenues.
In 2010, eBay consumers bought and sold over US $2 billion worth of merchandise on eBay via mobile, up from $600 million in 2009. According to Steve Yankovich, vice president mobile at eBay, this $2 billion in gross merchandise volume is derived 78 percent via its numerous mobile apps and 22 percent mobile web.
(The writer is Chief Operating Officer Innovative (Pvt) Ltd).