Financial services are getting more popular on mobile, or even becoming “just” mobile recently. The reasons are quite obvious. Almost everyone has a mobile device -or a smartphone- to be more exact- and this means easy access and penetration. It’s easier and cost effective to offer financial services over mobile devices compared to opening up multiple branches penetrate a region. On the other hand, the convenience and ease of use for customers are undeniable.
Since the trend is dominantly going towards mobile, it is important to specify what mobile financial services, their definitions and their scopes are.
Mobile banking encompasses any banking service offered to clients over the means of a mobile device instead of a branch or access to a computer. In this sense, all the services conducted by SMS, mobile web or smartphone application (iOS or Android apps) are considered as mobile banking services.
Banks have been using the SMS function for much longer than the rest of the mobile banking services for informational, marketing, security or account management purposes. While SMS can be considered the oldest and simplest of mobile banking technologies, it’s useful, convenient and provides obvious added value for the client nonetheless.
Mobile web and iOS-Android application methods are fundamentally the same. They offer access to the client’s account and the possibility to handle almost all operations offered by the bank. The difference between them is mobile apps provide a better and more refined user experience through device optimizations, better device compatibility, better speed more personalization and higher security. Today mobile application and SMS technologies can be used in combination with the purpose of increasing security (or to create multiple security layers) to account access.
Mobile banking is very convenient for both sides. It’s very cost effective for banks and provides convenience, 24/7 service and ease of access for the clients.
Mobile payment (also referred to as mobile money) includes payments conducted over a handheld device such as a tablet, smartphone or even some wearables such as mobile watches. Money transfers to another person or a 3rd party are also included in the mobile payments category.
It is also possible to make payments via the QR code technology where a mobile app on a client’s device creates a QR code and deducts the authorized amount from the client’s amount when scanned. QR codes are also very convenient for money transfer purposes. Users can send money to a person that doesn’t even have an account in the same bank. The security and withdrawal authorization is acquired via a QR code.
Some banks even use mobile technology for check deposit capabilities. In this method, the check is photographed or “scanned” via the camera of the mobile device and then validated and processed with the app provided by the bank.
Mobile money can be described as a financial innovation that has clearly seen rapid adoption in emerging economies. Mobile payment systems are sometimes referred to as mobile wallets and they are under strict regulations even though they are provided by a non-bank service provider. In some examples, GSM operators or a company that specializes in mobile wallet services can also provide the service without the presence of a bank involved.
Mobile Microfinance Services:
Mobile microfinance services include all mobile financial services that are provided by an MFI (Microfinance Institution) which are organizations that offer financial services in low-income populations or regions. In this sense, any financial service provided by one of these organizations can be considered a microfinance service.
Microfinance services provide loans, insurance and many other services that the banks provide but they take advantage of mobile technology to reach unbanked populations and wider reach. In most countries, they are also strictly regulated according to the nature of the services that they provide. For the same reasons, Microfinance Institutions are considered as an effective method in reducing poverty by providing easier access to financial services in low-income areas. They also have a significant role in bridging the gap between the formal financial institutions and the rural poor.
Digital money is the main element in all of the mobile financial services. Considering the experts estimating only 8% of all the currency in the world exists in physical cash, digital money and mobile services appear to become more important and widespread as the time progresses.