Friday, October 15, 2010

Mobile Finance

The world is going mobile, and we are all part of it, as we continually rely on mobile devices for daily task management. A new addition to the realm of mobile services is financial services mgt. Freedom to connect with finance any time anywhere.

Currently available services include, (SMS based)txt msg banking, the use of specialised applications to facilitate bill payments & account transfers and account browsing features (through a web browser)  like account(s) mini-statement, balance inquiry, alters & triggers, card manegement, to mention but afew.

Due to the increasing ubiquity of the Internet, more services and products are now being offered and paid for on-line. The increasing competition and improved delivery efficiency, has allowed for increasingly reduced charges. While credit cards have literary taken over the world of payments, the 'service' fees are inexplicably still too high for micro-payments. The use of mobile devices (phones) and related services has allowed for seamless service delivery and management of these payments, for a fraction of the cost of other payment platforms.

Mobile Payment Solutions
Based on highly regulated systems and platforms, mobile payment solution providers allow consumers and sellers to securely handle their financial transactions, by providing an 'electronic wallet' that can be used just like any other payment method on-line. There are a number of service providers currently offering businesses and individuals the opportunity to use mobile devices as a convenient means of payment. An interface is provided from within which the user can register, send, receive and manage other related services. 

Money Transfers
As an add-on feature users interacting with mobile (financial) service providers, may transfer (send/receive) funds to/from their accounts. The majority of  service providers have set-up systems to allow users to directly interact with the traditional money transfer systems. Direct bank account, credit-card and mobile-money agents  can all be leveraged by the user. This allows for increased usage of the mobile environment for service delivery.

(Utility) Bills Payments
Once funds have been loaded onto an account, the account holder has the option to integrate with local utility service providers. Utility bills are usually constant and/or predetermined and as such can be set-up to be paid at  pre-set intervals.  Bill payments (Water, Electricity, Cable/TV, Tax ...) can be included, once the utility company offers the service and integrates with the mobile solution service provider and the account holder links  to their respective account with each utility service.

Financial Institutions
In most economies, only regulated institutions (commercial banks) are allowed to directly interact with financial transactions. The mobile service solution provider has no need, nor the means to offer financial services directly to the consumer. The provider just sets up the interface and through an affiliate financial institutions enables the management of funds already controlled by interacting parties. The mobile financial solution can get integrated with the financial institution's other service deliver channels like the Automated teller Machine (ATM), to allow for increased interactivity with one's funds.

Financial institutions therefore have a critical role to play in the smooth operation of this environment. since their core mandate is financial service delivery, they too can not directly offer mobile services to their customers and have to rely on the mobile solutions service providers.

Mobile Carriers
Most of these services are currently being offered by mobile carriers or in direct affiliation. There are however increasing solutions providers offering these services, who are not fully fledged mobile carriers. This allows them to concentrate on the effective delivery of the selected mobile financial solution, while the mobile interactivity and financial service management is handled by other affiliate parties. Such a set-up allows the service to have increased efficiency and redundancy, as the best-fit partners interact without limitations (competitors, red tape, service fragmentation ...) imposed on traditional mobile carriers , whose core competencies lie in the delivery of mobile voice and/or data services.

In conjunction with the above basic services, most mobile financial solutions service providers are testing and offering the following services;
  • P2P Payments
  • International remittances
  • Near-Field Communications
  • Couponing
  • Loyalty/Rewards Programs
Security
Security is of paramount importance whenever funds interactions occur. Reliance and leveraging of current industry best practises and platforms provides mobile financial solutions, the required level of security for all interactions. Mobile devices should never directly use / require  or store  the users' PIN. Client-based (mobile) applications should be digitally signed to the phone; which the user registered at sign-up. Bank-grade security, including high-level encryption security certificates should be used for all (financial) interactions.

Conclusion
The mobile financial services industry is quickly evolving with peoples need to continue enjoying the similar services on their mobile devices, like they do in the real world with other tradition service providers. The technology exists and is being utilised to provide comparable and increasingly more efficient and effective financial services in the mobile environment. 

Users are however still cautioned to be ever vigilant and careful, when transacting business in the mobile environment, due to the increasing number of electronic frauds being perpetrated on-line. The need to backup and secure private data before, during and after financial transactions should never be under-estimated.

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