THE pace of change in technology development is truly amazing. And the trend seems to be to provide consumers with what they need when they want it, wherever they want it. Back in the day, we had to rent VHS and Betamax tapes from the local video store to watch movies in the comfort of our home. Now, we can access on-demand digitally-delivered videos with just a few clicks of your mouse.
And not too long ago, we had to endure long queues at our banks simply to update our bank balance, to transfer funds or to withdraw cash. So many changes have happened to the banking industry in terms of technology that we have to wonder what’s next.
As the Internet moves from desktops to mobile phones, useful mobile banking (not just SMS banking) will truly take off. Rich mobile banking applications will be developed to harness the capabilities of the newest mobile phones, and the continuously improving speed and bandwidth of mobile Internet access will facilitate the change. Soon, any transaction that can be made with or through a bank—particularly between different banks—should be available from a mobile phone.
The major telcos in the Philippines are already performing quasi-banking functions as money transfer agents. They are making significant inroads in the OFW remittance and money transfer business. Some retail establishments also now accept payments through these telcos, creating debit card-like transactions that match what some banks currently offer.
Considering this, allow me now to make a fearless forecast: In less than a decade, telcos today will be our consumer banks. Access to your bank accounts will just be a pocket away, the entire day—even during holidays. Financial institutions will scramble to acquire mobile-communication infrastructure in much the same way that banks today acquire other banks to expand their branch network. Some of the functions of the National Telecommunications Commission and the Bangko Sentral ng Pilipinas will merge for the purpose of improving the regulation of digital money. If I were a bank, I would seriously consider investing in or controlling a telco in the next 10 years before my float business disappears.
The possibilities are endless. Imagine a future where interbank transfers through mobile phone applications, will be as easy as interbranch transfers, through internet banking services today, when all establishments can accept wireless mobile payments in addition to cash, debit and credit cards, and when it will no longer be necessary to go to a bank branch or even an ATM. Imagine telcos expanding their current digital-cash offerings—banking regulations willing—to the point where they can support seamless direct transfers to or from traditional bank accounts, grant credit and sell investment products.
Think of your phone functioning as an all-in-one debit/credit card. The point of sale terminals of various establishments can communicate wirelessly with your mobile phone to determine whether to debit your digital-cash account—if it has funds—or to provide credit—if your digital-cash account is running low.
Envision your phone allowing you to transfer digital cash to a mutual fund or other investment account managed by your cash-heavy telco’s Trust department. Essentially, your phone will become your wallet. It will be just like having your bank in your pocket.
Obviously, some work needs to be done for this vision to become a reality. Better mobile identity management and know-your-customer practices and foolproof wireless transaction security are keys to this future.
Reliable interoperability standards for transferring cash between different telco digital cash and old-school bank accounts will also be necessary although we can say that this has already been addressed in principle by the major ATM switching networks.
Current regulations on e-banking and electronic money may need to be reviewed to ensure that safeguards and remedies for consumers and providers of mobile-banking services are ready for the future. Banks will also need to accept that in time, more and more consumers will come to expect instant transfers. If this vision becomes real, demand for non-corporate checking accounts will become extinct and float income will be replaced by transfer fees.
As for us consumers, can we trust our mobile phones for our monetary transactions?
Clearly, there are some barriers that need to be overcome. But as sure as analog theater has evolved to digital media, consumer banking will have a pervasive presence in our mobile phones. I eagerly await that time.
(The author is the chief information officer and a partner with the Advisory Services Division of audit, tax and advisory firm Punongbayan & Araullo. For comments or questions, e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it .)
