What are the implications of growing mobile technology on the financial industry?
Smartphones have revolutionised the world in ways which were unthinkable till just about a decade ago. With overone billion users worldwide and more than 2.5 million apps, smartphones have become an integral part of our day-to-day lives. It is no longer a device for merely keeping in touch with people; with increasing capabilities, users have begun exploring their mobile devices for banking, work related purposes, local searches, as a travel aid and more. A study by Facebook indicates that more than 100 million of Facebook’s 500 million users are using mobile phones to manage their account. Essentially, mobile devices have now become highly personalised minicomputers that occupy lesser space than a paperback and has dramatically changed how we interact with each other.
There is perhaps no doubt of the increasing reach of smartphones. In fact, India is the second largest smartphone market globally. According to a study by networking solutions giantCisco, the number of smartphones in the country will swell to over 650 million in the next four years.
From a business perspective, the smartphone revolution has created tremendous opportunity for several industries like retail, healthcare, manufacturing, energy, government bodies and financial services. From a consumer perspective, mobiles have eased out complex activities and simplified everyday tasks. Due to the interactive nature of mobile technology, sharing information and feedback has become effortless. Customers can share their thoughts, ideas and grievances with businesses, who act immediately due to the volatile nature of the mobile ecosystem.
Changing landscape of financial industry
Banking and financial industry has witnessed a real revolution due to the fast growth of mobile technology. Long protected by complex regulations and high barriers to entry, the financial services industry is seeing a complete disruption. Paperless and cashless transactions are replacing the queues at bank branches. The use of e-wallets or the exchange of money electronically using mobile phones as verification, called m-commerce,is opening up new vistas for financial services.
In addition to this, emerging fintech companies are simplifying online and electronic transactions. Broader choices and increased levels of flexibility have empoweredconsumers, greatly. Be it paying bills, transferring money or even making investments, all can be done with a tap on the smartphone. However, despite this massive growth in technology, adoption of these services remain low. Perhaps the next step should be that of spreading awareness and educating consumers about the benefits and use of these services.
Will mobile technology change banking for India?
In India, large portions of the population do not have access to financial services. Physical bank branches are difficult and expensive to maintain. However, mobility has the potential to streamline the distribution chain of financial services and enable access to formerly excluded customers. Smartphones and internet allow digital transactions, anywhere. Consequently, banks and finance companiesare creating and promotingmobile-based solutions to increase the adoption of banking. Mobile banking facilities are now allowing people to transfer funds, take loans and make investments with just a tap.
In more advanced markets, transaction-based services havegrabbedhigh momentum. The mobile phone is thus becoming a trusted personal device,which is increasingly capable of handling transaction-based functions in the physical and online worlds.
Future of financial technology
In the current scenario, mobile-based services are no longer extensions of the online offering, but work as a channel in themselves.A key utility of the mobile channel is the ability to view information in real time. Fintech applications have the expertise to deliver targeted advertising through push notifications and deepen customer relationships. Banks and financial companies too, can derive insights into customer behaviour through analytics and provide customised offerings to each of them.
Having said that, too many mobile apps are not just crowding the market, but also cluttering users’ smartphones. Imagine a scenario where a person has accounts or cards of five different banks. It is needless to say that using one app is a better alternative than managing five apps for each of them. As consumers, people do not wish to maintain an array of applications on their smartphone.
In such a scenario, it is imperative for banks to adopta collaborative approach towards the mobile channel rather than focus on their own platform. This will help themconcentrate on product conceptualisation and innovation, and also reduce marketingefforts. More importantly, it is essential for banks to create a ubiquitous framework for accessingand managing their offerings.
The current approach of banks and financial industry is one of fragmenting the market instead of consolidating it. If banks want to establish lasting relationships with their customers, they need to provide services to their customersthe way they want it, without any restriction on the mode of access. Moreover, banks have to be present where their customers are, rather than bringing customers to their products. In other words, a synergetic approach towards delivering services will shape the future of mobile app ecosystem.
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