Mobile banking: Money in the cloud

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On a recent trip overseas, while paying for my taxi fare with a mobile app, I took a second to appreciate the simplicity of digital money. Thanks to the global financial framework that enables mobile payments, prevents fraud, and provides reassurance to travelers, I was able to quickly and simply pay for a service. Surely those among you who have lost any cash (or even traveler’s checks) will agree that digital money is the way to go!

Mobile banking in the cloudBut this convenience is not available to over 2.5 billion adults, most of whom live in developing countries, who do not have access to a bank account. While local mobile money platforms have started providing greater access to funds for these individuals, there is much more to do to increase financial inclusion and help social and economic development worldwide.

The convergence of cloud computing and mobile technologies is an engine for digital finance.  It  provides a cheaper and more secure avenue for delivery of these services to consumers.

Mobile banking by the numbers

The case for mobile money solutions is a compelling one in both the developed and developing worlds. There are about 60 million active mobile money customer accounts in developing countries around the world (source downloadable here). The use of mobile money accounts still has vast potential for growth. For example, the percentage of active mobile money accounts in South Asia is less than 30 percent of the total registered users (nearly 25 million accounts).

The sheer number of mobile devices and their capabilities, even with basic SMS, makes them an attractive and accessible vehicle for the delivery of financial services.

Cloud computing for mobile banking

Cloud computing greatly benefits mobile banking transformations, as technology leaders in the industry are under pressure to reduce IT spending by migrating the majority of their transactions to the cloud. In fact, by 2016, it is expected that more than 60 percent of banks worldwide will process the majority of their transactions in the cloud.

While trusted mobile payment solutions such as Google Wallet, Amazon Payments, PayPal and Apple Pay are already available and in use in developed countries, the vast majority of the transactions in the developing countries remain SMS driven. The net value of these transactions is quite significant. Just in Kenya alone, M-Pesa, owned by mobile provider Safaricom, handles US $18 billion in transactions annually, the equivalent of 43 percent of Kenya’s economic output. In Bangladesh, bKash, a mobile banking provider has gone from its launch in 2011 to over 13 million registered accounts and nearly US $8 billion in annual transactions.

With the growing availability of smartphones and 4G networks, there are even newer opportunities to enrich the customer experience and further enhance the convenience and security of mobile banking. As a result of increasing demand for computing power, advanced applications, and the cost effective, flexible delivery of infrastructure as a service (IaaS) and platform as a service (PaaS), cloud computing will be critical in the next evolution of mobile banking.

In addition, cloud-based mobile application development facilitated by PaaS (such as IBM Bluemix) can enable rapid integration of advanced solutions to customer delivery. As mobile applications continue to increase in sophistication, the cloud will be at the center of what Gartner terms “the Nexus of Forces.”

It’ll be a while yet, but maybe that cashless society won’t be a myth for much longer and song lines like “Money, get back. I’m alright Jack keep your hands off my stack” from Pink Floyd will eventually draw puzzled looks and an online search from the listener.

Meanwhile, I’d love to read your happy (or sad) mobile transaction stories! Let’s keep the conversation going here or find me on Twitter @GigaManz.

IBM Cloud, Middleware Labs

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