Mobility is no longer a concept whose potential can be defined merely by enumerating handsets shipped, connections created, apps launched or data consumed. It is a phenomenon that is estimated to have generated a total economic value of almost US$ 10 trillion last year, which makes it the third largest economy in the world after the U.S. and China. I should also probably mention the 11 million jobs that it was directly responsible for creating around the globe.So, how has the mobile phenomenon changed banking and other financial service verticals?
Let’s start with mobile payments, expected to touch US$ 1 trillion this year and then double by 2018. A record 193 payment startups received VC funding in 2013, the same year that saw the launch of more than 40 mobile money services. Now with Apple Pay in the fray, there’s the promise of nothing but heady times.
In commerce, Single’s Day in China netted Alibaba record sales of US$ 9.3 billion, with 42.6 percent of that coming from mobile devices. Alibaba also managed to galvanize the fund management space when its affiliate payment service, Alipay, emerged as the world’s third largest money market fund, a position it wrangled in a mere 10 months.
Now I really need to go back and rephrase the previous question: how must banking and other financial services verticals change in the light of the mobile phenomenon?
Banks and financial institutions need to begin with a two-pronged strategy of New & Renew: Which existing systems and processes need to be renewed to enhance performance and efficiency? What new systems and processes need to be introduced to augment existing systems as well as harness new opportunities and drive profitable growth? This strategy needs to be applied at every layer of the IT stack, from infrastructure to platforms to applications.
The next strategic focus has to be on changing the traditional approach to defining problems and creating solutions. Banks have to harness the potential of the as yet esoteric concept of design thinking to create solutions that not only tick the boxes of user desirability and commercial profitability, but are also feasible from a technology, ecosystem, resource availability and regulatory perspective.
To sum up, mobility is clearly a powerful phenomenon bringing its own impetus to global economic growth. What must traditional banks do in order to become an integral part of the still emerging mobile economy?