Will mobile technology replace your bank account? In much of the emerging world, it’s not so much that punters are migrating to mobile banking… it’s a fact that this is the only form of banking available. Mobile phones are used in virtual payment systems because a normal banking doesn’t exist. In China today you can pick up a paper, swipe the barcode with your phone, and it’s immediately paid for.
So who are mBank? It’s not a single company but a collective of smaller companies acting together to facilitate m-commerce. Of course, the traditional banks are angry as hell but never the less every major bank is working with them.
What could be easier? Chinese internet giants Alibaba and Tencent have both launched online savings funds that work exactly like bank accounts and allow for mobile payments, doing away with the need for debit cards. And given that much of the Chinese banking system is owned by the government, there have been crackdowns. But the government knows that a slicker banking system is great for the economy. As they say, resistance is futile. And so a new and better system emerges. Banking is an industry that’s well protected. Banking is hard to break into… and it’s also very lucrative. I mean, just consider your boring old debit card. It seems like a straightforward payments system… but it’s actually a huge money spinner for the banks. Every time you use your debit, or credit card, the retailer is charged a fee. Just think about that. It’s like a private tax system, delivering a proportion of all spending directly to the banks. It’s little wonder they’re so keen to move away from cash and cheques, instead offering direct debit cards to anyone that’ll take them. Credit cards in particular are extremely rewarding.
So of course the banks are trying their best to keep a stranglehold on payments systems. Barclays has launched new functionality allowing mobile payments to India through its Pingit mobile payments service in the UK, opening it up to the largest remittance market between the UK and another country. The Indian market is the market with the highest volume of remittance from the UK, worth over £2.5billion. There are 1.5 million British Indians and 1 million students and visitors who currently live in the UK, many of whom regularly send international payments to loved ones and contacts in India.
Trying to prevent mobile phone payment systems will prove impossible. The mobile phone companies are completely at liberty to expand their billing systems to everyday transactions. This is something you’ll soon be hearing a lot about… the iPhone 6 is due to be unveiled next week, and it’s widely expected to include a “mobile wallet” which would allow users to pay for things using their phone. Google has Google Wallet so as I said, the leap towards m-banking in the emerging world has already happened.
But what’s really exciting are the new payment platforms that are cropping up. I like eBay and its exposure through subsidiary PayPal. PayPal provides a crossover between traditional banking, and the whole new world of direct payments with mobile phone apps. Why don’t banks rush to crush the upstarts? A few years from now the banking and payments system will look considerably different. In due course there’ll be no need for you to even have a bank account… at least, not one with any of the traditional high street banks. The banks have had it too good for far too long. They have got it coming in my opinion.
Based in part fon an original article by The Rightside/Money Week