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Some 35% of mobile users in Latin America will perform mobile banking transactions in 2014, predicts consultancy Signals Telecoms Consulting.
Though the future of mobile banking is expected to involve consumers using their mobile terminals to carry out all sorts of transactions, removing the need to carry cash, cards and other means of payment, Signals market research director Carlos Blanco claims that the mobile banking concept encompasses a broader range of areas, including the categories of remote payments, authentication processes, bank account maintenance and payment orders.
"Many of those things already exist in several countries of the region [Latin America], with different degrees of complexity, and they are promoted by different players in the value chain," Blanco said in a report by the consultancy.
Mobile banking requires collaboration between the mobile operator and the financial world. Some services are simply an extension of traditional or online services to the mobile space, whereas others are designed specifically for the mobile world, he said.
The industry's challenges include building up a registry of clients' personal details to meet requirements to have a bank account in the first place, Blanco said. This is a big task given that Latin America has a large prepaid base that is not always required to give home addresses or other details, unlike postpaid subscribers.
As operators and banks build closer relationships with clients, CRM applications can be used to advise customers when their accounts are getting close to zero and target marketing can be used to increase their spending, Blanco told BNamericas.
The low level of penetration of traditional bank accounts in Latin America would drive the move to mobile banking, the analyst said, adding that he expects SMS to continue to be the main means of carrying out different banking duties, given that SMS is universal to all mobile phones.
However, more sophisticated methods will eventually be introduced as 3G technology becomes more widespread and LTE arrives in the next few years.
"Currently there are only isolated tests with more sophisticated recognition systems for payments. We see these variants becoming important in the future, but they will require greater investment in infrastructure," Blanco said.