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The other day, out of sheer curiosity, I Googled the words "mobile payments." The search turned up "About 34,100,000 results." Wow, I thought. Then I searched the same term in the Google News section. "About 69,700 results." Hmmm. Interesting.
Then I typed "mobile banking" into the Web search box. "About 86,000,000 results." Wow, that’s really a lot, like nearly three times the results for mobile payments. What about News? “About 664,000 results”. Yikes! That’s nearly 10 times the results for mobile payments!
So that got me thinking, “Maybe Mobile Banking really is bigger than Mobile Payments?”
I mean, I’ve been thinking that to myself for years, but I don’t really share that kind of heresy with anyone, since it’s kind of mobile sacrilege. After all, the venture world has funded far more mobile payments companies than mobile banking companies, and they can’t be wrong, right?
But those Google numbers weren’t lying. They were right there in black and white: Mobile Banking has more web and news hits than Mobile Payments. And, using my own tortured, self-serving logic, I postulated that it just has to be true.
So I decided to dig a bit deeper, albeit with my jaded, non-objective bank-loving lens.
Where's the money?
Let’s start with the basics. Card issuers are, for the most part, banks. That means they are getting paid whenever you use your debit, credit, or prepaid card. If you decide to buy lemonade from an enterprising 10-year-old with a Square account, then the bank makes money there too. (Not sure about Square, but the bank wins for sure!)
Now, let’s move that card into a murky new world of NFC and smartphones. Same transaction, new form factor. Any new revenue there for the bank? Nope, not that I see. There are, however, a couple of new players in the mix, like carriers, trusted service managers, handset manufacturers, et al. I’m pretty sure they’re not working for free, so the bank’s best-case scenario is parity with the past, and the very real possibility of diminished returns for banks.
Any net-new transactions from mobile? Probably not. If there are, they certainly aren’t going to move the needle in any meaningful way.
I suppose that someone could develop something new that completely disintermediates the issuer. That would be bad for the bank.
So, looking at mobile payments, there’s very little net-new revenue, and the likelihood of a reduced position in the market. Well, that’s not very good is it?
And don’t try the line, “We’ll make even more money off of offers.” That is what most of the mobile payments players are now pursuing since they figured out they can’t make any real money from mobile payments.
OK, so, in my myopic world, mobile payments ain’t grand for banks.
So what about mobile banking?
Well, that’s a different story.
The Next Big Cha-Ching
We already know that mobile banking delivers the following benefits:
Add all these up and mobile banking is more than paying for itself.
But wait, there’s more…
As we ready the launch of our new extensible mobile banking platform, named Fin.X, we are beginning the process of turbo-charging mobile banking.
Our new solution extends our platform to a curated network of third-party service providers who deliver new features better and faster than any bank or credit union could hope to do on its own.
This means more new features and services than any other platform, and, more importantly, a far greater opportunity for financial institutions to earn more revenue from mobile banking. It also means more opportunity to innovate rapidly and to continually differentiate your institution.
With a starting network of more than 30 companies in its Service Provider Network, mFoundry will extend its platform in coming months to deliver services from the following categories:
Each of these categories delivers top-line revenue or cost savings. Exactly how much can institutions make? In total, there is currently at least $100 of incremental annual per-user revenue that can be earned by our clients.
Will every one of our clients take every feature? Probably not. But they will each take a few, and that will create more revenue opportunities for their financial institution.
The bottom line: The near-term opportunity for issuers will be far richer with mobile banking than with mobile payments. Of course it’s important to ensure that our clients can defend their card portfolio in mobile, which is why mFoundry supports, and will continue to support, all forms of mobile payment.
But, ultimately our clients need to drive more revenue today.
And for that job, the best tool is clearly mobile banking.
There’s a chance I may be a bit biased, so please don’t shoot the messenger.
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