Mobile Banking: Mobile Security and the Future of Banking Profitability.
Author: Eric Everson, MBA, MSIT-SE
Let there be no mistake about it, we as a global community have a certain lingering bitterness in our mouths for the financial sector. After all, in the end much of this global economic crisis is directly linked to poor management at some of the world’s largest banking institutions. Why then do I care about introducing an out-of-the-box model for generating new revenue structures for these very banks?
As you’ll see, my strategy while delivering a proven model for future banking revenue channels is better anchored to your mobile security.
What does mobile security and banking have in common? Very little at the moment as nearly every mobile banking platform available is either a home grown mobile application (app) or has been developed via a third-party mobile software developer that is likely more concerned with its own profitability than your handset-level security. The harsh reality however is that the banking industry has essentially “given the farm away” over the past 20 years through offering so many free services that the once profitable business of banking now has some of the most razor thin profit margins in history. I’ve enjoyed a lifetime of free banking services from free checking, to free transfers, to free checks, only to witness the freefall of the banking industry.
As much as we hate to admit this from our spoiled lives of free financial services, we have backed our banking industry into a corner from which they have no choice but to reinstitute textbook models of fee-based banking. As consumers of this industry, we have to swallow that jagged pill of once again paying for services that in all honesty we were lucky to get free for so many years. As the reintroduction of fees are inevitable to the future of the banking business, it is through mobile security that I believe that every bank in the world can return value added services associated with such fees.
In 2005 me and my team launched a mobile security solution that defied the industry, MyMobiSafe. What was remarkable about our platform wasn’t just that we’d introduced a Java-based mobile security solution like no other in history, but it is that we were able to bring this technology to market for a low monthly fee of just $3.99. While everyone else in the mobile security industry was selling robust mobile security solutions with exorbitant upfront fees, we defied that market norm and made handset-level security affordable for any budget.
As fate would have it, in response to the contraction in security spending felt throughout the industry, we removed MyMobiSafe software from the market after meeting our breakeven point. One thing we figured out along the way however was a shared profit model wherein a third party (i.e. the banking industry) could supply such a mobile security solution in tandem with their mobile banking apps and could introduce a new model of profitability.
Using a 60/40 model wherein the bank keeps 60% of the fee based profit per monthly subscription, everyone was satisfied. The mobile security company (that was us) made money by improving subscriber volume (even if at a discount), the bank was able to charge a mobile security fee for mobile banking customers (thus generating innovative revenue streams), and finally the consumer not only got improved mobile banking security, but also top of the line handset level security for their handset. For the consumer they might pay a monthly mobile banking security fee of $2.99-$3.99 but it gave them a full mobile security suite in addition to much more secure access to their mobile banking platform as well. It really is a model wherein everyone wins.
Though we have now focused the business model at MyMobiSafe.com to verified services for app developers and mobile security consulting, we realize that what we uncovered in the banking industry is a model that stands to redefine the future of value added fee structures throughout the banking industry. The future of banking as a profitable business model hangs in the balance; a balance which in the end must make the tough decision towards the fee-based model that so many of us have skirted for so many years.
Let our success in introducing a value added solution into this equation create a new model for the future of banking, a model based on introducing fees that touch the lives of banking consumers beyond their financial transactions. Modify the traditional model of something such as transfer fees toward a model that allows banking consumers to appreciate the value that such fees introduce. Whether your bank helps you improve your mobile security or pre-allocates a percentage of your fees toward an escrow account designed to help you mitigate your rising utility bills, there is a significant opportunity for banking to embrace the future with innovative value added profitability in mind.
-Eric Everson, MBA, MSIT-SE
Eric Everson is a leader in mobile technologies and is the founder of the U.S.-based MyMobiSafe.com. If you would like to contact Eric Everson for interview or with consulting related inquiries contact him directly at EricEverson@Hotmail.com.