Mobile banking picks up in Asia

Mobile banking uptake in the Asia-Pacific region has "strong potential" to scale; banks that have not yet taken advantage of this additional customer engagement channel stand to lose, according to an analyst based in the region.

Shawn Yip, market analyst at IDC-owned Financial Insights Asia-Pacific, told ZDNet Asia that mobile banking could represent the primary customer touchpoint in "significant unbanked or underbanked populations such as India and Indonesia", as well as provide added convenience to users in more developed markets such as Hong Kong and Singapore.

"There is certainly strong potential in the Asia-Pacific region for mobile banking to scale up in terms of usage," he said. "Banks--as well as telco providers--have pointed this out as an important untapped growth area, although their ambitious expansion plans have been somewhat sidelined as they firefight through the global financial crisis."

Not all banks have been deterred by the crisis, however. Citibank launched its mobile banking service, Citi Mobile, in Hong Kong during the last quarter of 2008. The bank brought the initiative to the Philippines in early 2009, followed up with a rollout in Singapore earlier this month, and is targeting China over the next few weeks.

Rajesh Yohannan, Asia-Pacific head of e-business at Citibank, said in a phone interview that the bank found the time right, given the development in device and mobile banking application technologies, to allow customers to perform banking transactions using their handsets. The concept of mobile banking, he shared, is not new to the bank--Citi had "its fair share of experiments" several years earlier, which "were not that successful".

"This time, we really believe that while [mobile banking is] not going to be wildly popular--it's not going to replace Internet banking--the time is right for us to actually build a platform and a capability that we can leverage over the coming few years," said Yohannan. "We can't really wait till everyone has started using the Internet on their mobile before we start building a platform; we want to be ahead of the curve."

An online banking portal optimized for customers using their mobile phones to conduct banking transactions, Citi Mobile ensures the bank's Web site fits handheld devices, and delivers one-time passwords (OTPs) required for financial transactions such as fund transfers via flash SMS so that users view the OTP as a layer on top of their browser screens without having to go into their inboxes.

Yohannan said he is targeting for mobile banking customers to make up 50 percent of Citibank's Internet banking population over the next two years. In most of Citibank's markets across the region, the number of Internet banking users doubles every two years.

Dennis Khoo, Standard Chartered Bank's general manager for retail banking products in Singapore and Malaysia, reported that the bank's mobile banking customer base in Singapore had more than doubled between January, when it launched the service, and July.

Within the region, Standard Chartered also offers mobile banking in Malaysia, Thailand and the United Arab Emirates.

The bank, Khoo added in an e-mail, sees a 33 percent year-on-year increase in its Internet banking users. The number of online banking transactions has also doubled year-on-year.

OCBC Bank, which introduced mobile banking in Singapore in 2006, believes mobile banking has gone "mainstream". According to Patrick Chew, head of delivery at OCBC Bank, the number of mobile banking customers has grown more than 1,300 percent since its inception, while transaction volume and value via this channel have grown 1,400 percent and 2,200 percent, respectively.

"When it was first launched in 2006, mobile banking appealed to a specific group of PMEBs (professionals, managers, executives and businessmen) who enjoyed the instant factor and convenience for their banking needs," he noted in an e-mail. "We now see a shift in demographics of our users to a wider user group--our youngest customer is 17 years old and the oldest is 67."

IDC's Yip pointed out that the risk of losing customers would be "very certain" for banks that are not currently offering mobile banking or looking into offering such a service. With the current technology, it would not be difficult to replicate Internet banking services on the mobile platform, he noted, adding that the lack of a mobile banking avenue equates to the loss of a "key channel" for customer engagement.

Despite many banks in the Asia-Pacific region already offering some form of mobile banking service, mobile banking offerings and uptake in the region is "still pretty nascent", he added. Hurdles still exist for mobile banking to truly take off in a big way.

"There has been a broad trend of convergence of Internet and mobile banking, which has been driven by the advent of smartphones," noted Yip. "However, the mobile ecosystem is still not mature, especially as the market participants--banks, telco providers, handset manufacturers, mobile payment and application providers [as well as] regulators--have not reached consensus in a number of areas. For instance, interoperability of handsets remains an issue, with different models having different limitations or restrictions."

"Also, while there may be regulatory consensus upon the liability of customer data protection--[which] generally, this falls on the banks--end-to-end security requires the involvement of telcos, payments services providers and security firms," he added.