Mobile Banking Innovations

Achim Hebestreit

Mobile Banking InnovationsIn 2006 Muhammad Yunus received the Nobel Peace Prize for his achievement with Grameen Bank. It gives microcredits to people too poor to qualify for traditional bank loans and the bank made a signficant profit with this business model.

If the Nobel  Committee was composed of international CEOs you can be sure Mr. Yunus would probably have  received the Nobel Prize for Economics as well. He was able to create business opportunity where it was mostly overlooked or deemed impossible. He did that by offering new services and out-of-the-box thinking.

You can find that kind of innovation when you take a look at Wanda Movil. Telefonica offered the mobile money service to their clients in twelve Latin American countries. A lot of them are unbanked — they had been refused a bank account because they had no permanent residence, no fixed income or no steady employment. However, they do have a mobile phone!

Telefonica’s Movistar alone has 87 million clients in the region. For them, Wanda Movil  makes payments far more convenient. And not just for those with a smartphone, but for every mobile phone user.   So, even though Telefonica and its partners are not directly aiming for a Nobel Peace Prize, they still empower their customers with payment possibilities not previously available to them because of their lack of a bank account.

That’s truly innovative thinking for an industry which has taken a breating for sleeping while the internet revolutionized business.  But examples like Wanda Movil or Vodafone’s mpesa in Africa prove that  these companies are willing to invest in new ideas and unlikely places.

After considerable rigidity during the past “internet decade” telcos are becoming a driving power behind innovation in a  mobile age. At least they are much more forward-thinking than some other industries.  For instance, the banking industry made little use of their market position (with a few exceptions like the Standard Bank in South Africa) and missed all of the mobile money clients they might have had. Fortunately, those potential customers were mobile phone users.

But for telcos the mobile wallet is double-edged and not in all respects the best publicity for telco innovation. While “mobile money” solutions like Wanda Movil proves that telcos are willing to push the mobile wallet and want to own this game-changing technology,  the industry is hesitant when it comes to “mobile payment.” And that’s for the wrong reasons.

Most restraints on the industry are due to the lack of a standardized method of payment using Near Field Communications (NFC). But just to be clear: NFC does not equal mobile payment. There is NFC without mobile payment (for example, when you get in the car and your on-board computer synchronizes with your mobile phone) and there is mobile payment without NFC.

Anyone who has ever wanted to park a car in Vienna knows this. There are no parking meters –you pay for parking with your mobile phone. It is, in fact, quite convenient. You get an SMS some time before your parking ticket expires. So, if you are in the middle of dinner or  you have still not found jeans that fit you can extend the ticket at the push of a button. And NFC is not involved at all. White it is certain that NFC would make mpayemt easier, it is a fact that the Iphone 5 does not have NFC.  But even on an iPhone, mobile payment is very much alive.

The mobile wallet has huge potential. There are a number of industries trying to get a foothold here. If you wonder if it is a hype or not, telcos are among those who can give a good answer. If they embrace the mobile wallet as whole – that is to take mobile payment seriously as mobile money – they have the possibility to make it a complete service with real added value. For that  innovation and investment is necessary.

But sometimes even little investments in great ideas can pay off big. Ask Mr. Yunus.


About Achim Hebestreit

Achim Hebestreit is the Global Lead of New Digital Businesses for Telecommunications within the Global Solution Management team at SAP. He joined SAP and the IBU Telecommunications in 1999 and was instrumental in the definition and creation of SAP's Network Life-cycle Management solution, which he was globally responsible for during a number of years.