The hot trend of mobile banking: forfeiting safety for convenience?
By Hu Xiaocen |
October 15, 2012, Monday
|
Print Edition
Print Edition
TECHNOLOGY is rapidly changing the face of consumer banking, especially among the young who live a fast-paced life in the electronic age in a metropolis like Shanghai.
"I can't even remember the last time I queued up in a bank branch," said Ruby Yuan, 28, a white-collar worker employed in the financial district of Lujiazui. "I'm surrounded by banks in this area, and I have accounts with several of them. But I don't go to their branches for regular transactions such as money transfers or paying credit card bills. That's all done on my mobile phone while I'm on my way home from work in a taxi."
The most immediate benefit of electronic banking is that it spares busy consumers the irritation of standing in line for service, said Ericson Chan, chief information officer at Standard Chartered Bank China.
"In general, customers in foreign countries have experienced the evolution of consumer banking through stages -- going from traditional branch service to telephone banking, to online banking and then to mobile banking," Chan said. "But in China," he continued, "many customers are leapfrogging directly from branch service to online banking or even mobile banking. It's a unique phenomenon here. The number of mobile banking users globally will hit 1 billion by 2015, with transactions of more than US$1 trillion."
Real-time access
Given the dynamics of China's banking industry and public demand for convenient, real-time access to financial services, mobile banking will become a key platform for competition among banks in coming years, according to a report issued last month by advisory firm KPMG China.
"Their tremendous number of outlets will always be an advantage of Chinese banks, but the development of electronic banking may moderate that dominance," Chan said.
China had more than one billion mobile phone users at the end of February - double the combined number of users in the United States and Japan, according to the Ministry of Industry and Information Technology.
However, the ministry said, only about 14 percent of users have third-generation (3G) phones, which leaves exponential growth potential for mobile banking users in China.
Mobile Internet usage is already surpassing traditional desktop connections in a number of Chinese provinces, KPMG said.
The number of mobile Internet users topped 430 million in China in 2011 and is expected to surpass 700 million, while mobile payment transactions are forecast to quadruple next year to 200 billion yuan (US$31.8 billion). The trend is driven by the younger generation of consumers who have been at the forefront of innovative mobile use, China e-Business Research Center said in its latest survey.
The top four foreign lenders in China - HSBC, Bank of East Asia, Standard Chartered Bank and Citibank - are confronting the opportunities and challenges from the shift in consumer behavior. All except Hong Kong-based Bank of East Asia have developed mobile banking applications for Chinese mainland customers with smart phones or tablet devices.
The applications are all rather similar and simple. They provide remote access to a customer's bank account information and service functions such as money transfers and purchase of foreign currencies.
According to Standard Chartered Bank, mobile banking users access their accounts and make account inquiries much more frequently than non-mobile customers. Therefore, mobile banking gives lenders more opportunities to approach the customers for service promotion.
"Transactions through electronic channels tripled this year among our customers," Chan said. "Mobile banking will develop at a faster pace as older models of mobile phones phase out."
Industrial and Commercial Bank of China and China Construction Bank, the two biggest mainland lenders, have combined mobile banking customers of more than 100 million. Bank of China, the country's biggest foreign-exchange bank, almost doubled the number of mobile banking customers from last year to 33 million this year, while transaction volume soared 461 percent, according to the lenders' mid-year reports.
KPMG said mobile banking has developed so quickly because it's a value-added customer service and saves banks money in the long run through simpler, more consolidated payment processing.
Identity theft
There is a risk, however, lurking in the new trend. Recent media attention has focused on Internet hacking and identity theft, highlighting concerns about security and privacy related to mobile banking. Some media reports said users are worried that banks won't take responsibility for potential security breaches.
KPMG said the situation poses a dilemma for banks because ensuring consumer protection and reducing security risks raises costs and complicates transaction processes, which flies in the face of promotions for mobile banking services.
"Some of my friends think online banking is already good enough for them," said Yuan.
"They feel that mobile banking has higher risks. I'm also concerned about the security and privacy issues of mobile banking, but I won't go back to the traditional way of banking. Saving time is all that matters to me in the end."
"I can't even remember the last time I queued up in a bank branch," said Ruby Yuan, 28, a white-collar worker employed in the financial district of Lujiazui. "I'm surrounded by banks in this area, and I have accounts with several of them. But I don't go to their branches for regular transactions such as money transfers or paying credit card bills. That's all done on my mobile phone while I'm on my way home from work in a taxi."
The most immediate benefit of electronic banking is that it spares busy consumers the irritation of standing in line for service, said Ericson Chan, chief information officer at Standard Chartered Bank China.
"In general, customers in foreign countries have experienced the evolution of consumer banking through stages -- going from traditional branch service to telephone banking, to online banking and then to mobile banking," Chan said. "But in China," he continued, "many customers are leapfrogging directly from branch service to online banking or even mobile banking. It's a unique phenomenon here. The number of mobile banking users globally will hit 1 billion by 2015, with transactions of more than US$1 trillion."
Real-time access
Given the dynamics of China's banking industry and public demand for convenient, real-time access to financial services, mobile banking will become a key platform for competition among banks in coming years, according to a report issued last month by advisory firm KPMG China.
"Their tremendous number of outlets will always be an advantage of Chinese banks, but the development of electronic banking may moderate that dominance," Chan said.
China had more than one billion mobile phone users at the end of February - double the combined number of users in the United States and Japan, according to the Ministry of Industry and Information Technology.
However, the ministry said, only about 14 percent of users have third-generation (3G) phones, which leaves exponential growth potential for mobile banking users in China.
Mobile Internet usage is already surpassing traditional desktop connections in a number of Chinese provinces, KPMG said.
The number of mobile Internet users topped 430 million in China in 2011 and is expected to surpass 700 million, while mobile payment transactions are forecast to quadruple next year to 200 billion yuan (US$31.8 billion). The trend is driven by the younger generation of consumers who have been at the forefront of innovative mobile use, China e-Business Research Center said in its latest survey.
The top four foreign lenders in China - HSBC, Bank of East Asia, Standard Chartered Bank and Citibank - are confronting the opportunities and challenges from the shift in consumer behavior. All except Hong Kong-based Bank of East Asia have developed mobile banking applications for Chinese mainland customers with smart phones or tablet devices.
The applications are all rather similar and simple. They provide remote access to a customer's bank account information and service functions such as money transfers and purchase of foreign currencies.
According to Standard Chartered Bank, mobile banking users access their accounts and make account inquiries much more frequently than non-mobile customers. Therefore, mobile banking gives lenders more opportunities to approach the customers for service promotion.
"Transactions through electronic channels tripled this year among our customers," Chan said. "Mobile banking will develop at a faster pace as older models of mobile phones phase out."
Industrial and Commercial Bank of China and China Construction Bank, the two biggest mainland lenders, have combined mobile banking customers of more than 100 million. Bank of China, the country's biggest foreign-exchange bank, almost doubled the number of mobile banking customers from last year to 33 million this year, while transaction volume soared 461 percent, according to the lenders' mid-year reports.
KPMG said mobile banking has developed so quickly because it's a value-added customer service and saves banks money in the long run through simpler, more consolidated payment processing.
Identity theft
There is a risk, however, lurking in the new trend. Recent media attention has focused on Internet hacking and identity theft, highlighting concerns about security and privacy related to mobile banking. Some media reports said users are worried that banks won't take responsibility for potential security breaches.
KPMG said the situation poses a dilemma for banks because ensuring consumer protection and reducing security risks raises costs and complicates transaction processes, which flies in the face of promotions for mobile banking services.
"Some of my friends think online banking is already good enough for them," said Yuan.
"They feel that mobile banking has higher risks. I'm also concerned about the security and privacy issues of mobile banking, but I won't go back to the traditional way of banking. Saving time is all that matters to me in the end."
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