REACHING UNDERBANKED CONSUMERS THROUGH MOBILE SERVICES
REACHING UNDERBANKED CONSUMERSTHROUGH MOBILE SERVICESBy: Kate Marshall, Analyst, Innovation and Research, CFSIBart Narter, Senior Vice President, Banking Group, CelentRob Levy, Manager, Innovation and Research, CFSIThis report was written jointly by CFSI and Celent. 2011, Center for Financial Services Innovation1
INTRODUCTIONUnderbanked consumers need minute-to-minuteinformation about their finances, and mobile financialservices (MFS) are well suited to deliver it. Although theseconsumers often have insufficient access to financialservices, their access to mobile phones is fairly widespread.This disparity suggests a large opportunity exists forfinancial providers to effectively serve the underbankedpopulation using the mobile channel. Given the sheervolume of mobile phone usage in the United States,combined with ever-increasing mobile phone functionality,there is vast potential for a robust suite of mobile financialmanagement and transaction tools to strengthen thefinancial lives of underbanked consumers.Mobile financial services are conventionally broken intothree functional areas: information services, transactionservices, and payments (see Appendix A for more details).This framework is helpful in defining exactly what MFSis, but the Center for Financial Services Innovation (CFSI)proposes an alternative MFS framework that parses theopportunities for providers according to the potentialbenefits for financially underserved consumers. In the nearterm, MFS can help increase consumer financial capability,make key transactions more convenient, and makecustomer accounts more secure. In the future, mobilefinancial services could be used to convert cash-basedpayments to electronic payments, and could eventuallyhelp increase access to financial accounts for unbankedand underbanked consumers.This list of opportunities conspicuously omits the MFSfunction that has garnered the most attention, by far, inrecent months: mobile payments. In particular, mobilewallets and near-field communication (NFC) paymentshave generated a great deal of buzz. While these emergingpayments models offer some novelty appeal, they facesubstantial barriers to widespread adoption, includingissues related to the business model and revenue potential,customer ownership, infrastructure, the value propositionacross the payments ecosystem, and consumer psychology.Additional barriers exist for underbanked consumers,notably the fact that mobile wallets and NFC payments arecurrently structured to support existing accounts ratherthan new accounts.The financially underserved population in the United Statesincludes both unbanked and underbanked consumers.For the purposes of this paper, we refer primarily to theunderbanked— those who use a financial account of somekind but also rely on alternative financial services, suchas check cashers and payday lenders. Mobile financialservices in the United States today have little relevanceto unbanked consumers. Whereas mobile devices havecreated new access to financial services for unbankedconsumers in developing markets, MFS have emergedin the United States largely as add-on services for theconvenience of existing account holders. However,underbanked consumers have exposure to mobile financialservices through bank-based checking and savingsaccounts, and also general purpose reloadable prepaidaccounts, which can serve as bank account substitutes.In order for MFS to become truly revolutionary for the U.S.unbanked population, financial institutions would haveto begin to envision mobile devices as active channelsfor delivering accounts to consumers who otherwiselack access to financial services. Given the comfort andattachment that people feel with their mobile phones, andconsidering that many financially underserved consumersare uncomfortable with banks, mobile devices holdconsiderable promise to provide broad access to financialservices. A scenario in which mobile devices create newaccess to accounts and thus increase financial inclusionwould be the ultimate achievement for MFS. However,the benefits that are possible through the information andtransaction services of mobile banking, though seeminglymore modest, are also quite powerful and hold greatpotential to improve the lives of financially underservedconsumers today.2
THE MOBILE OPPORTUNITYPORTABLEMobile phones have severalattributes that make themsuitable for delivering financialUBIQUITOUSservices to consumers. Fourcore features—mobile phonesPERSONALIZEDare portable, ubiquitous,personalized, and multi-modal—enable financial providers to useMULTI-MODALthese devices to connect withtheir customers on a much deeper level than is possible withany other channel. These same features offer customersvastly improved access to their financial information.PortablePortability is the key attribute that makes mobile phonesideal for delivering financial information to consumers.This feature underlies all of the others that follow, as theportability of the mobile device is central to its utility toconsumers generally, and to underbanked consumersin particular. Because most cell phone users carry theirphones with them at all times, financial providers canuse mobile phones to deliver time-sensitive information,such as fraud alerts, low-balance warnings, and overdraftwarnings, and consumers can use them to get immediateaccount information at any time.UbiquitousMobile phone usage is ubiquitous in the United States.In 2010, wireless penetration reached 96 percent ofthe population.1 And people increasingly are relyingexclusively on wireless phones for their calls. In 2010,27 percent of U.S. households had only wireless phonesand no landline.2 Unlike internet access at home, mobileaccess is consistently high across demographic andsocioeconomic groups.3 In fact, segments of the U.S.population that overlap significantly with the1 “50 Wireless Quick Facts,” CTIA (June 2011), d/10323.2 Centers for Disease Control and Prevention, “Wireless Substitution: Early Release of Estimates From theNational Health Interview Survey, January-June 2010,” eless201012.htm.3 Mobile Access 2010, Pew Internet & American Life Project, (July 2010), http://www.pewinternet.org/ /media//Files/Reports/2010/PIP Mobile Access 2010.pdf.underbanked, such as Hispanics, African Americans, andyouth,4 are heavy users of text messages and data.5With so many U.S. consumers now using mobile phones,financial providers can be certain that mobile services willreach a large percentage of their current and potentialfuture customers.PersonalizedBecause the mobile phone is often the primary waypeople reach friends and family, users feel an emotionalconnection with their phones. Moreover, these deviceshouse a great deal of information about the people whouse them—location, purchasing behavior, interests,health, contact with friends and family, and muchmore.6 A MasterCard survey found that more than halfof consumers believe a person’s phone reveals moreabout them than their wallet.7 Similarly, many expertsnote anecdotally that consumers are quicker to miss alost phone than a lost wallet. This suggests that financialproviders can connect with their customers morepersonally through a mobile device than through otherchannels.Multi-modalIn addition to placing calls and sending text messages,people use mobile devices to take pictures, checkemail, manage appointments, access maps and trafficinformation, edit documents, and much more. With thesemulti-modal devices, people can download applicationsto maintain a budget, track diet and exercise, access socialmedia tools, play games, and complete a growing numberof other tasks. The increasing sophistication of mobilephones increases the possibilities for financial providersto use them to interact with their customers for morecomplex purposes, such as check depositing and frauddetection.4 FDIC, “National Household Survey: Results from the 2009 FDIC National Survey of Unbankedand Underbanked Households, www.economicinclusion.gov.5 “African-Americans, Women and Southerners Talk and Text The Most in the U.S,” Neilsen Wire(August 24, 2010), http://blog.nielsen.com/nielsenwire/online -and-text-the-wmost-in-the-u-s/.6 Robert Lee Hotz, “The Really Smart Phone,” Wall Street Journal (April 23, 2011), 47604576263261679848814.html?KEYWORDS really smart phone.7 “MasterCard Survey finds Consumers, Particularly Trend-Setting 18-34 Year-Olds, Have SightsSet on Mobile Phone Payments” (May 19, 2011), ne-payments/.3
continued, The Mobile OpportunityIt is worth acknowledging that smartphones offer muchdeeper functionality than feature phones. Some evidencesuggests that underbanked consumers are not far behindthe general population in smartphone use. With pricingfor both smartphones and data plans dropping, and withsmartphones becoming increasingly available throughprepaid wireless providers (who typically cater to alower-income customer base than post-pay carriers), theunderbanked have ever greater access to highly functionalsmartphones. In fact, Cricket, a leading prepaid wirelesscarrier, reported that 40 percent of its new handset salesin the first fiscal quarter of 2011 were smartphones.8 Thecompany also noted a continuing decline in purchases ofentry-level phones. Finally, many “non-smart,” featurephones offer at least basic access to the internet.According to the CTIA, more than 89 percent of handsetsoperating on carriers’ networks have internet browsingcapabilities.98 Cricket Wireless, First Quarter 2011 Financial Results and Earnings Presentation.9 “50 Wireless Quick Facts.”4
BENEFITS OF MOBILEFINANCIAL SERVICES FORTHE UNDERBANKEDTop opportunities for mobile financialservices and the underbankedMFS have the potential today to: Drive increased financial capability: Timely accessto account information through alerts, reminders,and more can empower consumers to make moreinformed choices about how and when they spend,borrow, and save. Offer greater convenience: One of the most significantbenefits of mobile financial services is the addedconvenience of using MFS tools. Lead to improved security and fraud protection:All consumers, but especially those who areunderbanked, may benefit if security advances leadto a higher level of trust between consumers andfinancial providers.As mobile financial services grow more sophisticated, thesetools may eventually: Transition consumers from cash to electronictransactions: Turning cash transactions into electronictransactions could benefit consumers with addedconvenience and potentially lower cost, while enablingproviders to generate additional fee revenue onelectronic transactions. Improve access to basic financial accounts: Mobiledevices may eventually become a distribution channelfor financial products, creating new access for theunderserved.Benefits of MFSfor the UnderbankedToday:MFS have the potential to: Drive increased financial capability Offer greater convenience Lead to improved security and fraudprotectionOn the horizon:As MFS grow more sophisticated,these tools may eventually: Transition customers from cash toelectronic transactions Improve access to basic financialaccounts5
Drive Increased Financial CapabilityMobile phones allow for two-way communicationbetween financial providers and underbankedconsumers. These communications can play a valuablerole in increasing consumer financial capability. Bygiving consumers access to timely information abouttheir accounts, MFS can empower them to make moreinformed choices about how and when they spend,borrow and save.The theory of financial capability differs from traditionalfinancial education in that it emphasizes behavior changeover knowledge gains, and consumer outcomes overprovider outputs. The most effective financial capabilityinterventions, CFSI has found, are relevant, timely,actionable, and ongoing.10 Given the attributes of mobilephones (portable, ubiquitous, personalized, multi-modal)discussed above, these devices are particularly wellsuited to aid in financial capability interventions.While the services listed in the table above can benefitbanked and underbanked consumers alike, they areparticularly relevant for people who closely managetheir account balances day to day. For example, amessage alerting a consumer to a low account balancecould avert a costly overdraft. On the other hand, atext alert can also empower consumers to choose tooverdraft an account if that is the best option availableto them at a certain time. In May 2011, Bank of Americaannounced plans to test a new service that allowsconsumers to decide whether to incur an overdraft inorder to execute a particular transaction. A customerwho attempts a purchase that will trigger an overdraftreceives a text message asking whether or not toapprove the transaction. Then, if the customer approvesthe overdraft, he or she can avoid the overdraft fee byadding funds to the account by the end of that day.Timely messaging or reminders have proved effective inMobile phones can be used to transmit several types ofhelping consumers reduce avoidable account usage fees.information to consumers, such as account balances,For example, in the spring of 2010, CFSI partnered withreminders, and the location of the nearest ATM. Theseprepaid program manager Ready Credit Corporation tofunctions can generally be accessed using SMS or textexamine behavior change spurred by email messagesmessage communications, although smartphone userscontaining tips about how to avoid or reduce fees.11may also use downloadable applications. The fact thatBy providing targeted advice to its highest fee-payingmany basic mobile communication functions can becustomers, Ready Credit observed an 11 averageconducted using a feature phone is important for servingmonthly reduction in fees assessed. Ready Credit usedthe largest possible number of consumers.email messages rather than text messages for the studybecause of opt-in rules for text messages, but theChart 1: Financial Capability Features on the Phonefindings could beapplied to textMobile Service Descriptionmessages as well. InAccount AlertsCustomers can set up alerts that are triggered when the account reaches a certainfact, research suggeststhreshold balance; the financial provider then pushes this information out to theconsumer automatically.that text messagesBalance Inquiries Account holders can request various types of information, including transactionmay be even morehistory, by texting codes to the financial institution.effective than emailsfor such customerMessaging/Mobile phones can be used to transmit information to consumers about, forcommunications:Remindersexample, how to reduce certain costs (e.g. the fees assessed at foreign ATMs), orto remind a customer about a pre-defined savings goal.According to mobilemarketing firm iLoopBill Pay/Although bill pay is not generally available via text message, reminders aboutMobile, 90 percentBill Pay Alertsbills coming due soon can be issued automatically through text messages.of text messages areopened, comparedATM Location Text message codes can be used to request information about the nearest ATM,with 10 percent ofand about the nearest ATM with the most favorable fee structure.email messages. Bill10 Joshua Sledge, Jennifer Tescher and Sarah Gordon, From Financial Education to Financial Capability,11 Can Email Alerts Change Behavior? An Experiment by Ready Credit Corporation, CFSI (June 2010),CFSI,(March 2010), ovation.com/sites/default/files/inbrief ReadyCredit june2010.pdf.6
continued, Drive Increased Financial Capabilitypay alerts—timely reminders that a bill is due soon—also are relevant to underbanked consumers, who mayhave a need to hold onto their funds until the last possiblemoment to preserve their cash flow.Piggymojo provides another example of the use ofmobile messaging to contribute to financial capability.Piggymojo is a platform for establishing savings goals andmaking progress toward those goals by choosing to saverather than spend on various transactions throughoutthe day. When tempted to spend money on a nonessential purchase, users can save instead by sending atext message to Piggymojo. Piggymojo tracks the unspentmoney and counts it toward the savings goal. The systemalso includes a social component. People can sign up foran account with a partner, and when one partner choosesto save rather than spend, the other is alerted via textmessage, reinforcing the motivation to save.Although many financial institutions and other innovatorsare working to make mobile payments viable, the abilityto make payments using a mobile phone is not widelyavailable today. When mobile payments become morewidespread, however, underbanked consumers maybenefit from the pairing of payments with financialcapability tools. Within a mobile wallet containingmultiple payment types—such as debit cards and creditcards—the mobile device could indicate which paymenttype is most favorable for a particular purchase. And witha credit card purchase, the mobile device could indicatewhat a purchase might cost over time, including interestpayments.Diversity of Regions RepresentedMany of the functions outlined above simply offer aversion of online banking toolsaccessiblethroughtheGeographicScopeof Proposalsmobile phone. But because underbanked consumers areless likely than the general population to have consistentaccess to the internet they may have access to these typesof services only through the mobile channel. In 2010, 77%of the U.S. population had access to the internet.12 Accessis correlated with income level and other demographicfactors, suggesting significant overlap between theunderbanked and those who are not regular users of theinternet. As such, for underbanked consumers, who maynot have access to the internet except via a mobile phone,12 Internet World Stats, Usage and Population Statistics, http://www.internetworldstats.com/am/these types of services are newly accessible through themobile channel.The use of mobile devices to contribute to consumerfinancial capability is the most fertile and promising areafor improving the financial lives of the underbanked today.Many of the services discussed above are offered broadlyby banks and prepaid providers alike. Account alerts,mini-statements, and other informational services that aredelivered through mobile devices are quickly becominga commodity, rather than value-added differentiatorsoffered by a select few providers. Still, these features willremain valuable in driving increased customer loyalty andretention.Offer Greater ConvenienceOne of the most significant benefits of mobile financialservices—for all consumers, and particularly for theunderserved—is the added convenience of MFS tools.Many underbanked consumers hold multiple jobs inorder to make ends meet and are often especially timeconstrained. Further, transportation is often difficult andexpensive for them. For these consumers, being able toconduct basic transactions using a mobile phone can makelife easier. Consider, for example, the convenience of beingable to purchase prepaid mobile minutes over the phonewithout having to stop by a retail outlet (possibly duringwork hours); being able to pay bills without having topurchase a money order; being able to send money to arelative in another country without having to visit a moneytransfer office; or being able to deposit a check withouthaving to visit a check casher, ATM, or branch location.Many prepaid program managers are deepening theirmobile financial services offerings, and because prepaidcompanies have experience serv
financial lives of underbanked consumers. Mobile financial services are conventionally broken into three functional areas: information services, transaction services, and payments (see Appendix A for more details). This framework is helpful in defining exactly what MFS is, but the Center for Financial Services Innovation (CFSI)
have access to a mobile phone and 49 percent of these are smartphones. Among the underbanked, 88 percent have a mobile phone, 64 percent of which are smartphones. The underbanked population makes substantial use of mobile banking. Almost 39 percent of the under-banked with mobile phones report using mobile banking in the past 12 months, while .
Strategy 6: Mobile Workload Mobile devices are increasingly driving mainframe workloads April 2014: Mobile Workload Pricing – 60% reduction in mobile workload CPU to R4HA peak MUST be from mobile device MUST show connection to mobile device – Mobile Safari good – Desktop Safari not good Mobile to mainframe is .
the mobile marketing activities performed by retailers are the creation of mobile websites and development of mobile shopping applications, mobile customer service, communication through mobile email and messaging, mobile advertising and mobile couponing (Thakur, 2016). The fashion industry is globally worth more than 2 trillion (McKinsey, 2020).
Mobile Marketing Association (MMA) in 2009: mobile marketing refers to a se-ries of marketing practices based on positioning, carried out through mobile de-vices or networks, and through the form of personalized and customized inte-raction with consumers, so that enterprises and consumers can communicate with each other [4].
Consumers Health Forum of Australia Web: www.chf.org.au Phone: 02 6273 5444 Health Care Consumers' Association of the ACT Web: www.hcca.org.au Phone: 02 6230 7800 Health Consumers NSW Web: www.hcnsw.org.au Phone: 02 9986 1082 Health Consumers QLD Web: www.hcq.org.au Phone: 07 3012 9090 Health Consumers Alliance of SA Web: www.hcasa.asn.au
Mobile Communication Services . Offerings Detail Samsung SDS America Public Sector Capabilities Mobile ERP Health IT Mobile Groupware SAP Mobile BI Dashboard Oracle/Siebel Mobile CRM for Pharmaceutical Sales Mobile Device Management Mobile Applications (Android OS) . Android Mobile App & UI. 10 Offerings Detail Conceptual .
Mobile 3G/4G, pushing wireless boundaries to enable the best mobile experiences 2 Mobile connectivity is an amazing technical achievement, 4 critical to the mobile experience Wireless fundamentals are the foundation to mobile powered by Mobile 3G/4G technologies Appreciating the magic of mobile requires un
Description Logic: A Formal Foundation for Ontology Languages and Tools Ian Horrocks Information Systems Group Oxford University Computing Laboratory Part 1: Languages . Contents Motivation Brief review of (first order) logic Description Logics as fragments of FOL Description Logic syntax and semantics Brief review of relevant complexity .
