Smartphones Bring Banking at your Fingertips



In the last quarter of 2010, about 30 mn Americans used their mobile phones to access financial accounts, up 54% from the same time in the previous year. Bankers acknowledge that mobile banking has become an essential channel for acquiring new customers, especially those from the younger generation.

The above statements reflect the sweeping changes in consumer behavior and technology driving the popularity of mobile banking, tipped to become the primary channel of financial transaction in the future. With smartphones growing fastest among handheld devices, new possibilities are opening up to further improve the mobile banking experience.

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Currently, the functions under mobile banking either cater to an information or service request, or enable a transaction such as fund transfer or bill payment. A couple of innovations in the latter area could transform the way bills are paid and also catalyze the adoption of mobile banking.

Take the case of a ‘presentment bill’, that is, an invoice which is presented for an exact payment. Consumers might receive the bill either as a hard copy or electronic file, and similarly, pay using paper (cash or check) or through a variety of electronic channels including internet and mobile banking. A recent technology, the Quick Response (QR) Code, is set to compress the entire bill payment process into a couple of clicks, leveraging the native capabilities of a smartphone.

Here’s how it works. The QR Code is a 2-dimensional code, appearing as a square bar code, capable of encrypting virtually any type of content. If this code is printed on a bill (it does not matter whether it is on paper or electronic), a smartphone owner using a mobile banking service supporting QR codes can make the payment literally in a matter of 2 clicks. All he needs to do is point the camera on his mobile phone towards the code, after which a screen will pop up on the device with all the information required to make the payment, and a button to authorize it and the job is done.

The attractiveness of this innovation is in its simplicity and convenience of use, essential qualities for the success of mobile banking-in 1 stroke, or shall we say 2 clicks, it does away with the drudgery of tapping out multiple payment-related details on a tiny keypad.

But what about other kinds of payment, such as topups, which aren’t made against a bill? Currently, payments such as the recharge of a prepaid mobile account are made at a physical location, but going forward, they could happen automatically over a smartphone. A concept under exploration is the ‘intelligent’ mobile banking application which is programmed with business rules to act in a certain way. For example, it could be configured to automatically top up the prepaid account with a certain amount when the balance falls below a specified threshold. Besides adding to customer convenience, this innovation could change the way prepaid mobile currency is bought, serviced, and sold.

The higher capability of smartphones can also come into play in other ways. For instance, some smartphones have an indicator light which glows when a new message comes in. This feature could easily be extended to mobile banking, to put out a visual alert of the occurrence of a specific event, such as a credit above a certain amount.

Here is another example. Today, several banks ar