M-banking poised for explosive growth in UK

One-third of UK consumers expect to be using smartphones to do all their banking by 2020, while two-thirds of banks expect everyone to be using mobile banking in some capacity by 2017, according to a report released by business technology provider Avanade this week.

Based on a survey of 30 customer service managers from UK banks and 2,000 UK consumers carried out in spring 2012, the report’s findings suggest that significant market opportunities await banks that embrace mobile payment technology – but that customers would quickly become dissatisfied with those that did not step up to the mark.

A quarter of those surveyed said that they want their primary retail bank to manage all of their financial services, even those that were lodged with other financial institutions. One in six consumers said they would pay their bank to manage all of their utilities payments, according to the report, The Clock is Ticking: Why banks need to act now to avoid running out of credit with mobile customers.

“The way banks provide financial services is changing,” said Nic Merriman, UK CTO at Avanade. “Customers are looking for personal financial management on their mobile devices. Multi-channel banking is coming, and the mobile will be the dominant form. Banks that can provide a customer-centric model that links their services together effectively will be the ones to come out on top.”

Tools already available or in development include voice payment, in which authentication and payment instructions are spoken into the phone, and self-pay, in which mobile NFC technology combined with 4G connectivity would end the need for tills and queuing for retail transactions.

Peter Aycliffe, chief executive at Visa, recently commented in an interview with CNN International that the future of banking lies in cashless payments via smartphones. By 2020, he estimates that more than half of all transactions will be made using mobile technology.

Regulatory change is also helping to drive a more competitive market. The Payments Council is driving banks to implement account switching services in 2013, increasing the pressure to provide more sophisticated services to retain customers.

Merriman likens the push towards mobile banking to the rise of internet banking within the last ten years. Pointing out that new entrants such as Tesco Bank and Metro Bank had seen an opportunity to use technology to move into the sector, he suggested that mobile banking services would also likely see new providers enter the market in the near future.

“Mobile will continue to grow,” he said. “The mobile wallet is developing – already firms such as Barclays are developing tags that help customers to track their spending on mobile devices. Voice technology is increasing the opportunities for customers to interact with the services they use. Customers will demand mobile services and banks need to be ready for that.”

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