SECTOR REPORT The New Economics Of MiningPage 73

COUNTRY REPORTBrazil’s Surprising Move On RatesPage 47

SPECIAL REPORT Expanding Markets For Islamic FinancePage 39

SURVEY: STARS OF CHINA 2011

WORLD’S SAFEST BANKSMidyear Update: New Entrants Make Top 50Page 26

ADB MEETING: MANILAStrong Growth Forecast For Southeast AsiaPage 33

WORLD’S BEST INVESTMENT BANKS

MIDDLE EAST Shifting Sands: Evolving EconomiesSpecial Supplement

April 2012

RATING THE RATINGS AGENCIES

25T H A N N I V E R S A R Y

Policymakers Fight Back After Ratings Downgrades Page 22

20 | Global Finance | April 2012

Infosys Strategic Vision

Gaining Mobility In Consumer Banking

By Anjani Kumar, Principal Consultant, and Sahana Appaji, Senior Associate Consultant, Infosys’ Financial Services and Insurance Practice

BARRIERS TO OPTIMAL MOBILE BANKING ADOPTIONIn spite of the significant uptick, many banks have been unable to gain the desired level of mobile banking adoption and leverage its full potential.

Sub-optimal strategy: Mostly, banks lack a focused mobile bank-ing strategy because of funding constraints. They launch mobile solutions “just because” their com-petitors are offering this channel. Consequently, many banks have ended up just replicating their online channel without providing offerings that are unique to mobile banking. They don’t have systems in place to categorically measure the ben-efits of their mobile banking channel. They often start with technology considerations first, rather than with busi-ness objectives.

Security Concerns: Customers have limited knowledge of how their financial information is stored and accessed by the mobile devices. They are not sure of who controls the mobile financial transactions – whether it is nonfinancial players like Google, Apple in contactless mobile payment, or their bank. Examples like the Android operating system’s

security lapses have only added to customers’ security concerns.

Customers’ constraints: Most elderly customers are unfamiliar with smartphones and are reluc-tant to learn and adopt its usage. As a result, these customers con-tinue to leverage other traditional and more costly banking chan-nels. Since these customers are not yet convinced of the value of this channel, they see mobile banking as a simple duplication of a bank’s online channel.

Sub-optimal help and sup-port: Most banks’ mobile offer-

ings lack robust help functionality. Effective help, (e.g. FAQ documents, contextual and feature-specific support,) is missing from the mobile channels of many banks. Many others are unable to provide direct customer support.

RECOMMENDED SOLUTION FOR ENHANCING MOBILE BANKING ADOPTIONProactive actions to enable mass-market adoption of mobile banking can be taken. Exhibit 2 illustrates areas for banks to focus on to support mobile banking adoption.

Strategy: Mobile banking implementation should be

The idea of a ‘bank in your pocket’ has led to customers adopting mobile banking like wildfire. In the UK, Lloyds TSB’s banking apps were downloaded over 360,000 times in the month after its launch. Starbucks processed more than

20 million mobile payment transactions in the first 10 months of 2011. Not surprisingly, banks around the world are exploring mobile banking to bring P2P payments, mobile RDC, mobile marketing, customized applications and actionable alert services right into the palm of customers’ hands. Exhibit 1 showcases the key drivers of mobile banking growth:

Recent times have seen a surging demand for and adoption of mobile. Yet, many barriers prevent consumer banks from effectively adopting and fully leveraging this channel. Banks should implement a number of efforts to overcome barriers and capitalize on the immense potential of the mobile channel.

Exhibit 1 – Mobile banking growth drivers

Overview

April 2012 | Global Finance | 21

done as part of a bank’s overall channel strategy. Having a long-term mobile banking strategy, dedicated budgets, and definitive resources are critical. The first step is to identify customer-centric mobile banking objectives. Decisions about mobile technology should be made in the end. As part of their strategy, banks might consider solutions that have the capability to support future mobile functional-ities that are on their road map. Over a period of time, banks could also consider ways to monetize their mobile banking channel through premium feature bundling – e.g. services like a personal finance manager. Banks should effectively use mobile banking for upselling, cross-selling and inbound marketing.

Customer engagement and experience: Banks must provide a unique mobile banking value proposition. Institutions might consider opening mobile registration to all of their customers. In the same spirit, allow customers to choose the mobile modality (apps, web, text banking) they prefer. Focus on providing incentives like user-friendly apps, sophisticated mobile services, zero app download fees and mobile service fees. Efforts should be made to pro-vide methodical help and support to their mobile banking customers.

Security: Banks need to clearly describe the security measures they have undertaken to their customers. Robust security solutions like 128-bit encryption, common mul-tifactor authentication program for the mobile channel and additional one-time PINs and authentication for cer-tain mobile banking functions (e.g., fund transfers) are a must. Other good security practices include: not requiring the storage of personal account information on mobile devices, masking sensitive information during display, allowing customers to download the bank’s mobile apps only through a trusted source, and regular security alerts and audits.

Back-end systems integration: Mobile front-end and back-end systems should be well integrated and allow customers to seamlessly navigate the bank’s different sys-tems. For integration, it is recommended that banks follow

a middleware approach. It entails integrating the front-end system with a single, intermediary software layer – mid-dleware. This approach involves a single integration effort, requires lower costs and has smaller implementation time-frames. Banks can also look at dynamically linking relevant back-end systems with banks’ analytics, BI, CRM and direct marketing systems.

Basic features first, next-gen next: Initially, banks should focus on providing basic functionalities (e.g. one-way alerts, balance check, basic payments, fund transfers, etc). Then, banks can prioritize the customer needs and focus on advanced features including multi-account access, mobile RDC, advanced PFM apps, P2P payments, and NFC payments.

Leverage third party expertise: In order to imple-ment robust, customizable, scalable and capable mobile banking solutions, banks might be prudent in seeking third-party expertise. Leading solution providers can deliver accelerated services for best-in-class mobile solutions. They should have a proven project management track record, long-term financial viability and a good mobile banking implementation history. Where appropriate, banks should also collaborate with cellular service providers, payment gateways, utility companies and other financial services pro-viders.This will help create an ecosystem for transaction-based services like P2P payments, loyalty programs, etc.

CONCLUSIONMobile banking services are growing dramatically and have immense potential to be a great enabler for banks to provide low cost and high quality services in real-time, and tailored up-selling and cross-selling oppor-tunities. Additionally, mobile banking can lead to bet-ter brand building and differentiation, provide new and increased revenue sources and enhance customer loyalty. In order to capitalize on the immense potential of the mobile banking channel, banks must take note of the recommendations provided and work towards executing these flawlessly.

Exhibit 2 –Banks’ focus areas