CHAPTER 1: LITERATURE FRAMEWORK ABOUT MOBILE BANKING 4
1.7 Model and business trends in electronic banking services via mobile in the world
Currently, to adopt mobile banking services in the world, partnership model can be divided into two major categories: Bank-led model and Non Bank-led model.
The common point of these two models are the involvement of bank, the network provider and/ or mobile commerce company to bring a service that allows users to access to financial services and banking services anytime, anywhere via a mobile phone. However, in each model, the role and responsibilities of the various parties will vary depending on the conditions of infrastructure, cultural policy, social, living habits, ... of each country.
1.7.1 Bank – led model
- Characteristic of market: Bank – led model are applied to developed countries where banking services were well developed, most people have bank accounts, or have regular access to banking services such as Europe, America, ...
- Management model: under this model, the relationship of cooperation supplying services between banks and network providers, banks play the role of providing content and services using telecommunications networks as a support tool
to help customers access to banking system.
- Evaluate strengths and weaknesses
+ Advantages: Banks have long years of experience in the banking and finance sector will design, supply services as well as perform billing management and risk management.
+ Disadvantages: This model forces customer in order to use the service must open a bank account. In addition, educational level must be high enough to have easy access to services. In developing countries, where most people are still loyal to cash consumption habits, most people do not have access to banking services, it is unlikely to implement this model on a large scale.
1.7.2 NonBank - led Model
Characteristics of market: Non bank – led model (possibly mobile company or a third independent party, often mobile commerce company), especially develops in markets with the following characteristics:
+ The majority of the population has no or little access to banking and financial services.
+ The custom of consumption is mainly cash, no payment habits by means of non-cash.
+ There is a large proportion of mobile service users in society.
+ The people demand payment, money transfer with small amount of value and volume.
- Management Model
+ Mobile company / independent 3rd party (not banks, telecom companies):
provide and operate technology infrastructure for the service , build entire features of the service, recruit and manage agents (for models with the participation of agents) .
+ Banks: manage cash flow, ensure security surplus funds, provide services, authorize agents to collect and make payment for customer using services (for the model with the participation of agents ) .
+ Agent (if any) be authorized to collect and make payment for the customer.
- Evaluate strengths and weaknesses + Advantages:
For the model with the leading participation of agent and / or company: To use the service, customers simply are mobile subscribers, no need for a bank account. In fact, the average level of bank account penetration in population worldwide is only 50 % (source: Demirguc - Kunt and Klapper 2012). Meanwhile, the coverage of mobile phones globally has amounted to an estimated 85 % of the population (in 2011 ) and is expected to increase to 90 % in 2014 . Therefore, this model is capable of deployment on a large scale, particularly in the sectors with difficult access to banking services. On the client side, the service is simple, convenient, time saving, ...
For model by independent 3rd party as the leading: Due to the face that service is managed and operated by an independent 3rd party, not a bank or a telecom company, Service can be deployed simultaneously to multiple banks and many different networks. This brings convenience to customers who have many different bank accounts.
Chart 1.1: Account penetration in the world by area
(Source: Demirguc – Kunt and Klapper 2012)
Chart 1.2: Proportion of mobile phone penetration in comparison with banking services
(Source: GSMA Mobile Money for the Unbanked , Cira , Citi GTS ) - Disadvantages:
In general, the model is not led by banks but it provides banking and financial services, which will result in difficulty in designing, building, adopting services.
Telecommunications companies cannot be fully experienced as much as banks in payment and risk management. Moreover, each country has a policy, specific regulations on payment, so the managers are still quite cautious when implementing this model.
In addition, for the model with the participation of agents: To be able to develop services, one important factor is the network of collecting cash and making cash payment - the extended arm of the bank. The investigation, selection, training agents also cost time and resources. Besides, after dealers start operating, there must be continuous inspection, monitoring everything to ensure compliance with regulations and avoid the arising risks.