By Heather McLean

Common Sense Advisory is an independent, Massachusetts, US-based market research company. It helps companies grow their international businesses and gain access to new markets and new customers. Its focus is on assisting clients to benchmark, optimise, and innovate industry best practices in translation, localisation, globalisation, and internationalisation.

Rebecca Ray, senior analyst at Common Sense Advisory, comments here on the development of mobile banking in Asia and Africa.

MMX: How is the development of mobile banking in Asia and Africa different from that in Europe and the US? What is making it move forward, and what technologies are being used?

RR: We see three drivers that continue to push the adoption of mobile banking in Asia and Africa. The first is rising incomes, the second is the lack of easily accessible and secure banking alternatives, especially in Africa, and the third is the very high level of competition among service providers to attract new customers.

Even at much lower price points in Africa and certain parts of Asia, mobile phones still represent a considerable investment for the majority of buyers. The more areas of their lives that a phone touches, the more apt a person is to find the cash or the credit to purchase one.

What is more valuable than being able to use it to earn and manage one’s livelihood to help support oneself and one’s family?

MMX: Looking at Asia, are more developed countries, such as Japan, or developing countries such as India, leading the way? Is the contrast between the likes of Japan and India the same as that of Europe and Africa, where one uses high end smartphones and NFC, and the other is focused on low end devices and systems based on USSD, etc?

RR: At present, it’s not so much a question of who is leading the way, but who is figuring out how (potential) customers can leverage mobility more and more in their daily lives. The life of a ‘typical’ Indian is much different than that of a ‘typical’ Japanese. Obviously, at least for now due to disparate income levels, the preferred applications on their mobiles will also vary.

However, there is one issue that Japan does not have to deal with in a big way, but India does, and Nokia has certainly led the way in this area. That is the issue of enabling mobile applications to meet local language, cultural, and socioeconomic requirements.

There are literally hundreds of languages to be considered in India, along with the fact that literacy levels vary greatly from one linguistic community to another, accompanied by high rates of illiteracy. This means that companies won’t get very far in India (or in most of the rest of Asia or Africa) unless they address localisation issues, including language.

Our research has shown that if a website is not available in a person’s language, they will probably abandon it; the same applies to mobile applications. Translating just the opening screen is not enough; operators will have to think in terms of the entire user experience.

It may mean that they need to build applications that are specific for certain markets. They will certainly have to develop some technical terminology for many of the languages in this region. And last, but certainly not least, they will need to deal with non-Latin scripts (e.g., languages that are not written with Roman letters, as English is).

To make this journey much easier and more cost efficient, operators will need to learn how to build world-ready applications that are based on internationalised software code. World-ready software is a question of architecture, not retro-fitting. Our data shows that the inclusion of internationalisation during the upfront design stage means lower costs overall for software developers.

MMX: What sort of problems are regulators in Africa and Asia making for the roll out of mobile banking services?

RR: In sub-Saharan Africa, banking systems still often suffer from a weak competitive environment, not enough access to automated payments and settlements, and a lack of foreign trade financing instruments. Therefore, the focus for regulators should not be on enforcing out of date rules, but in working to figure out how to make both branchless and mobile banking a reality.

According to the World Bank, this includes expanding points of service, eliminating the need to prove legal residence, and reducing reporting requirements for small, cross-border financial transactions. Banks can also join forces with telcos, small retail businesses, and organisations like the World Bank to run pilots and to adapt what has already worked in countries like Brazil and the Philippines.

It all depends on how forward-looking the banking players want to be. In the case of India, for example, there is anecdotal evidence that the Reserve Bank of India (RBI) would like to dominate the mobile banking market. This is one of the reasons that they have made PayPal’s road, for example, rather difficult over the past few years.

MMX: Where is this region heading, in terms of mobile banking?

RR: We expect mobile banking to continue on its growth trajectory for now, since demand continues to expand. Just as people in countries where the landline infrastructure never grew to meet demand leap-frogged to mobile phones, we see the same happening in the financial services arena, where banking services are even less available in many countries than landlines.

Parts of the region are being held back by the lack of broadband capacity, along with state-owned monopolies in both the telecommunications and banking sectors. However, the opportunity is too great, and the demand too large, for these problems not to be resolved sooner rather than later.

We expect there to be various permutations of partners – banks, telcos, small retail businesses, maybe even the larger multilateral investment funds – depending on local business rules and regulations, who will band together to make it happen.