The Rise of Mobile Banking

From the Economist

SOME 35% of consumers use a mobile phone for making payments, and 45% use one for banking, according to a recent survey of 14 countries by ACI Worldwide, a payment systems company, and Aite Group, a research firm. A group labelled “smartphonatics”—those who change their shopping, financial and payment behaviour as a result of owning a smartphone—are said to be driving demand for mobile financial services. Smartphonatics are most common in developing countries (India and China), probably because of the lack of access to traditional financial services. In India, where only 35% of adults have an account at a formal financial institution and less than 2% have a credit card, 60% are smartphonatics. In Canada, where nearly everyone has a bank account and most people own a credit card, only 7% are smartphonatics. One of the main reasons people gave for not making payments with their phone was the lack of capability. But in seven of the countries surveyed, over two-thirds of consumers said they would like to replace payment cards with their mobile phone.

“Lack of access to traditional financial services” have been a common feature for nations with a large share of informal economy, like the Philippines. Much of these has been due to stringent Anti Money Laundering based regulations for opening of an account on traditional financial platforms.

On the other hand, with a large penetration level of mobile phones, transfers and payments made on the mobile platform seems to be a lot more convenient, and perhaps less regulated yet, and may have contributed to the increasing use of mobile banking.

Notes the McKinsey Quarterly,

In the Philippines, for example, mobile-subscriber penetration is almost 80 percent, but banking penetration is only around 35 percent, leaving 21 million mobile subscribers with no bank account (Exhibit 1). If operators in the Philippines could bring mobile-money penetration rates among the unbanked into line with those achieved by best-practice operators elsewhere, they could acquire four million to five million new customers and add two to three percentage points of growth to their revenues. And these numbers don’t include earnings on loans and deposits, which we conservatively estimate could be a further $60 million to $80 million. Introductory mobile-money services also set the stage for additional cross-selling and up-selling in the future. In addition, eight million unbanked people in the Philippines don’t have mobile phones, and mobile money could make phone subscriptions more attractive to this segment.

I also think that the “lack of capability” in developed economies represents a temporary hurdle which will likely be resolved by the explosion of the use of tablet computers with mobile connectivity features.

Yet with surveys saying that “over two-thirds of consumers said they would like to replace payment cards with their mobile phone”, this should serve as further evidence that mobile banking is a global sunrise industry, which also represents part of the massive lifestyle and commercial changes that is being brought about by the deepening of the information age.

Sunshine Industry: Video Games Media

One of the likely fastest growing applications of the information age would probably the video game industry.

From the Economist, (emphasis added)

OVER the past two decades the video-games business has gone from a cottage industry selling to a few niche customers to a fully grown branch of the entertainment industry. According to PricewaterhouseCoopers (PwC), a consulting firm, the global video-game market was worth around $56 billion last year, and has grown by over 60% since 2006, when the Nintendo Wii console was launched. The gaming industry is more than twice the size of the recorded-music industry, nearly a quarter more than the magazine business and about three-fifths the size of the film industry. PwC predicts that video games will be the fastest-growing form of media over the next few years, with sales rising to $82 billion by 2015. The biggest market is America, whose consumers this year are expected to spend $14.1 billion on games, mostly on the console variety. Consoles also dominate in Britain, the fifth-largest gaming market. In other parts of Europe, and particularly Germany, PC games are more popular. China has overtaken Japan to become the second-biggest market, and is one of the fastest-growing, with sales rising by 20% last year.

How will the growth of video games be facilitated?

Again from the same article, (bold emphasis mine)

Now the ever-increasing computing power of mobile phones has put the means of playing games into the pockets of people who would never think of spending hundreds of dollars on a dedicated console or a PC. The simple games that came pre-loaded onto the mobile handsets of a decade ago have evolved into a subset of the industry in its own right, appealing to a more casual crowd who play them on trains, in airport departure lounges or while waiting for the washing to finish. Today’s smartphones pack far more computing power than the original PlayStation, and games are a big part of their appeal: the two most popular kinds of software on Apple’s App Store are games and entertainment.

The internet has played a crucial part in the rise of video games, enabling developers to get their products into their customers’ hands without the need for traditional shops or publishers. That has allowed small, independent developers to compete with the big firms who might spend tens of millions of dollars on developing a single title and as much again on marketing it. As a result the industry is becoming increasingly fragmented as its markets become more differentiated.

The internet has also become a games platform in its own right, making the hobby truly sociable by electronically linking gamers the world over. Millions of people spend many hours each week playing and working (sometimes the distinction is not clear) in virtual places such as “World of Warcraft” and “EVE Online”. Hundreds of millions more play free, simple, sociable games on Facebook, such as “Lexulous”, which is a bit like Scrabble, and “FarmVille”, a game with an agricultural setting. Increasingly the games themselves are free, but the virtual goods available in these online worlds—a stable for one’s electronic horses, say, or a particularly pretty shirt for one’s digital alter ego to wear—cost real money.

The internet will likely remain a hub for the introduction of many innovative applications due to its largely free market setting.

And video games, mobile commerce, mobile banking and digital healthcare or telemedicine are likely major growth application areas for consumers that will be powered by the rapidly exploding mobile internet platform as manifested by tablet sales.

Exploding Global Tablet Shipments: More Signs of The Third Wave

More signs of the evolving technology advances that should influence our lives.

From the Economist,

APPLE is due to launch a new version of its popular iPad on March 2nd. The company sold some 15m iPads in 2010, the year in which the device was launched, and according to one forecast it could sell more than 40m of them in 2011. But other tablet computers, in particular those based on Google's Android operating system, are expected to erode its share of a fast-growing market. In 2010 iPads accounted for about 80% of total tablet sales; by 2015 Apple's market share could fall below 40%.

Outside the context of the providers and their market shares, if you look at the forecasts, in 4 years tablet shipments are about to explode by nearly 5 times with the gist of the growth coming from tablets based on mobile technology (as we dealt with here)

The internet based “third wave” knowledge revolution is indeed accelerating.