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Mobile Banking - The Next Breaking Wave?

Banks and other financial institutions are rushing to enter partnerships with mobile operators (wireless carriers) to offer a new breed of integrated financial products, all controlled from the convenience of your mobile phone (cell phone).

These new products integrate a traditional bank account with a mobile tariff package (rate or minute plan) and innovatively give you secure control over your finances from this mobile phone.

Competition amongst financial institutions for consumer’s current account business is intense, and differentiation by any means other than price is very desirable; hence the attraction of an integrated proposition to financial institutions. Mobile operators, keen to reduce churn (where consumers move between networks to gain a new handset or lower tariffs), see financial institutions as having developed longer lasting relationships with their customers.

When considering constructing an integrated banking and telecommunications proposition a financial institution (for example Barclays, HSBC, Natwest or Lloyds) needs to decide the depth of relationship that they require with the mobile operator. Will a simple co-marketing arrangement suffice? This is easy to construct but brings no long term customer loyalty benefits. Or, do you require a much deeper relationship such as a Mobile Virtual Network Operator (MVNO) agreement. This allows the financial institution to provide a customised customer experience and enhanced end to end security.

If the financial institution opts for a Mobile Virtual Network Operator (MVNO) agreement then the importance of ensuring one has competitive terms and conditions from the host mobile operator can not be over stressed. Piran Partners (www.piranpartners.com) advises the creation of a detailed model to stress check the targeted consumer’s behaviour, calling patterns and your wholesale costs.

In many respects, financial institutions are ideally positioned to become successful and profitable providers of mobile telecommunication services; boosting their revenues by circa £400 per customer. Perhaps this is why so many financial institutions are considering this option? International copyright Piran Partners LLP, 2007.

Andrew White is a founding member of Piran Partners LLP - http://www.piranpartners.com - a leading provider of professional services to the european mobile telecommunications industry, based in London, England. Piran Partners assists both third parties gain MVNO agreements and also wholesale teams within mobile network operators to better support MVNOs.

Andrew has negotiated over 10 MVNO agreements across Europe in his five years on the front line of the MVNO business. Andrew’s end-user market expertise spans large multinational corporations through to consumer. Andrew has over 20 years experience in the telecoms industry.

Andrew has held senior executive positions with: Motorola, Inktomi, RACAL (Vodafone) and DotDash.

Tags: banking, financial instituion, mobile, mobile banking, MVNO, MVNO consultants