Mobile business to business banking (B2B) is a new battleground for customer ownership and extends not just to banking by customers with their banks, but also to businesses transacting directly with each other, a.k.a. disintermediation.
The world of B2B mobile banking, along with the issues surrounding it and its future, look like this.
The Current State of Play
- Mobile banking rides on the current banking and telecommunications systems and infrastructure and must comply with those standards for payments and messaging formats. These systems however still need to communicate with core banking legacy systems.
- Multifunction smartphone apps with built-in security dominate the developed world.
- However, much business is conducted in the third world with simple analogue or 2G digital phones using M-Pesa and an extensive infrastructure of agents for the unbanked. M-Pesa now has 18 million users in 13 countries, with millions more come with launches in Europe, India and more African countries.
- Security, privacy and trust are essential to banking; mobile adds to these challenges.
- B2B mobile apps look very like their consumer equivalents, which raises the question of what additional business features are on offer.
- Legal issues, disputes, repudiation and liability can be more complex than B2C banking, e.g. mobile instructions not executed. Authorisation and mandates are more complex in the corporate world.
- Mobile B2B could play a part in corporate disaster and resilience plans
|Non-Mobile Banking||Mobile B2B|
|Payments BACS/SWIFT/CHAPS||yes||yes||Are consumers ahead of business? No, the apps look alike|
|Procurement||yes||no||Many online catalogues|
|Settlements||yes||yes||E.g. trading platform end-of-day sweep from/to bank account|
|Cheques||yes||yes||Photo/Scan & submit|
|eB2B||yes||yes||Mobile is an adjunct to the central function|
|Treasury||yes||no||Too specialised? Likely to remain a central function|
|Trading||yes||yes||Many apps on propriety platforms covering multiple domains|
|Reconciliation||yes||no||Maybe. Likely to remain a central function|
|Audit||yes||no||Maybe. Likely to remain a central function|
|Corporate credit card||yes||yes||Greater control by the company|
|Payment Authorisation||no||yes||Can now be per transaction in real-time, rather than by general mandates. May replace credit card.|
These would be generally additional rather than replacements.
The Future of mobile banking
- The battle for dominance:
- Disintermediation and disaggregation. Banks’ integrated business models are threatened by other essential players, i.e. telco’s, platforms, IT suppliers and third party services, e.g. Monetise. Even PayPal could be demoted to being just a conduit and banks to simple cash repositories. The dilemma is that banks cannot stay in this game without these partners.
- It may not be long before the phone statement becomes the bank statement.
- Some end-user businesses deal direct, using banks only for end of day reconciliation and Telco’s merely as conduits and repositories, e.g. trading systems.
- Telco’s may need to hold banking licences and be responsible for KYC and AML.
- M-Pesa is planning an API and a smartphone app by the end of 2014. This could mean a new threat to the developed world where smartphones dominate.
- Tracking. Your bank cashier will be able to ‘recognise’ you as you enter the branch.
- Increased use of blockchain technology, currently best known for underpinning virtual currencies, but which has much wider potential, e.g. storing both the transaction and the documentation together in an inviolate form.
- Increased bank competition, e.g. discounted transaction fees.
- Emergence of more specialised virtual proprietary currencies
- Mobile Apps linked and reconciling to corporate systems.
- Risk. We can look forward to ever more malware etc.
- Competition for banks‘ own-brand apps from independent universal apps, e.g. Zap.
- Increased links to social media.
- Data, its acquisition and control, is key to all the players.
- 5G on the horizon for 2020 promising higher speed, lower latency and larger capacity.