By Danielle Schaefers

Everyday new technology and the latest gadgets are being marketed and offered to the public, many of which are being made for fast, easy convenience; mobile banking is no different. With more cellular phones having Internet capabilities, smart phone use and applications, the market for mobile banking is expanding.

One of the clearest definitions for mobile banking is the "use of a mobile phone to send, receive, or facilitate financial transactions including loan disbursements, payments, money transfers, deposits, withdrawals, remittances and even payroll services." Mobile banking creates an option for those that are unbanked due to the facts that there are lower costs involved; it is able to increase efficiency, and improves transparency for both costumer and company.¹

In a study conducted by Juniper Research, it is believed that in developed markets phone subscribers who use mobile banking will reach 150 million by 2011.² According to Global Industry Analysts, Inc., by 2015 the customer base for mobile banking will reach 1.1 billion globally.³ At the moment, mobile banking services are most advanced in the Far East, but by 2011 it is predicted that 70% of users will be in the developed nations of North America, Western Europe and the Far East.⁴

The expansion and growth of mobile banking has become more popular due to the increase of internet capabilities on phones, through the use of applications, as well as the use of already existing SMS messaging services.⁵

"Mobile banking is emerging as a key electronic channel for the global banking and financial services industry. The ubiquitous nature of mobile devices and services, and the ability of mobile banking services to reduce overall operational costs, streamline operations and expand customer base are expected to boost prospects in the industry. Increasing adoption of mobile phones among general consumers, particularly among the younger generation (in the 18-34 years age group), and rapid rise in demand for mobile payments are expected fuel demand for mobile banking services."⁶

This has prompted the United States to become an active player in the mobile banking sector, with many American banking corporations investing large sums, such as Bank of America, JP Morgan Chase & Co., and ClairMail, in order to remain a presence in the market.⁷ "As mobile banking popularity and usage continues to increase, the need for financial institutions to offer compelling and convenient mobile banking and payments applications is vital to support a customer base that is managing more of their daily lives with mobile smart devices."⁸

With the success of mobile banking, companies such as ING Direct have created applications for devices such as the iPhone, Blackberry and Android that allow for easier access to mobile banking services.⁹

While the American population use of phones for banking has increased over the past few years, it has not expanded at the same veracity as compared to the rest of the world. A study by KPMG LLP has shown that 19 percent of American consumers have made banking transactions using a mobile device, but of those that have not partaken in mobile banking, 52 percent said that they had not done so because they were concerned with security and privacy issues. In addition to American concerns over the security of mobile banking, three quarters of the American respondents said they were unsure if their banks offered mobile banking services or their banks have yet to offer it. The U.S still is not as comfortable with mobile banking as the rest of the world, with one third of global consumers being comfortable with mobile banking.¹⁰

For example one country that has fully embraced mobile banking is Kenya where they have introduced a program called M-Peas that allows money-transfer services through cell-phone airtime time services. This has been expanded to offer M-Kesho, an interest bearing savings account that also allows for microloan and microinsurance. It has been found to be very effective, with nearly 10 million users in Kenya. Users of the service have reported that it is safer, "faster, more convenient, easier to use, and cheaper." Similar services have become increasingly popular, now with approximately 60 similar businesses worldwide, to service those who are unbanked and of low-income. Mobile banking has also been seen to significantly reduce corruption and fraud that has occurred within banking systems.¹¹

There are many reasons and benefits for the United States to further expand their mobile banking market. Mobile networks are cheaper to create and build than fixed-line networks, and does not require building a point of sale network. Other benefits include dial up payments that help create a cheaper network that allows a consumer to have a payment system where there were or are none in place.¹² Also, with many Americans owning cell phones, according to a Pew Research Center report 85 percent of adults, mobile banking is another fast and easy way for people to do their banking on the go with the touch of a couple of buttons.¹³ In a world that is becoming more technologically integrated in all aspects of life, mobile banking is another feature that makes life easier and more convenient for all. With the recently passed bill by President Obama, H.R 3101: the Twenty-first Century Communications and Video Accessibility Act of 2009, makes certain that people with disabilities have access to Internet Protocol based communication and video programming, making mobile banking a convenient option for people with disabilities. As people become more comfortable with mobile banking, and banks offer the services, people will use these services via their mobile devices.

Danielle Schaefers is a recent graduate and a WID intern with a passionate interest in international development and can be reached at dschaefers14@gmail.com.