In a previous post, we talked about the bigtech and their intention to start offering financial services. But if the bigtech have enough information to start doing it, the telephone operators also know a lot about their customers. Last year, the DBK sector observatory gave an encouraging figure for the Fintech sector: in three years, the financing operations had gone from 35 million euros in 2014 to 205 million euros in 2017. In the summer of 2017 the Spanish Association of Fintech and Insurtech —where Arturo González Mac Dowell, CEO of Eurobits, is a member of vertical of infrastructures— inaugurated a vertical incorporating neobanks, challenger banks, and banks as service. Banks as a service is one of the initiatives that will end up bringing together all the alternatives and new business models, many of which have made a clear commitment to what is called mobile only.
The mobile phone is no longer a device only used to make and receive phone calls. In addition to the many uses we give it on a daily basis, the mobile has become a banking digitizer. It has managed to provide banking access to people who were out of the financial circuit without the need to open branches reducing the logistics risks associated with operating with cash. It is enough to see what is happening in certain areas to realize the impact that this entails. In Africa, Mpesa began as an electronic purse and currently has more than 15 million customers who offer a series of services such as transfer money, enter it and pay bills from your mobile.
And it is perhaps in less developed countries in terms of banking, such as Africa, where telecommunications companies will have more opportunities. It is in these countries that banks could feel threatened. Now, will the same thing happen in Europe, the United States, or Latin America? Will telephony operators be the banks of the future? To answer these question, we have to return to the importance of the mobile in our days. If Google answers all our doubts, social networks keep us updated of what happens in the day to day and Amazon provides us with all the products we need, as a result, we all depend on our devices, tablets, phones or computer to keep on with our daily routines. In all cases, you need a telephone company. And many of those interactions are linked to our bank.
The situation in Spain
The first attempt that Banks and Telcos made to take advantage of synergies and cobranding was in 2001 with the launch of Mobipay. A platform and company, with the same name, owned by the main banks and telcos in Spain, whose service was based on the association of debit and credit cards with the mobile phone to carry out transactions on the mobile phone. Its objective was mainly to solve the problem of micropayments. The communication was made through interactive USSD messages between the mobile and the Mobipay node and through SMS messaging. But this adventure ended in 2009 because the technology was not the most appropriate and no doubt because a clear business model was not elucidated, due to the diversity of the shareholders, which could lead Mobipay to become a market standard.
In recent years we are seeing our own initiatives and strategies based on agreements and alliances between Telcos and Banks, such as those listed below:
Data is the new money
In our days the information seems to be the new money. Personal data is key for the digital banking model. This data processing is essential for all this to work. And that is precisely the main strength of telecommunications companies: their enormous capacity for data analysis that gives the companies some advantages, such as:
The possibility of carrying out a better risk analysis of potential clients
Establish better communication with clients.
Create and deliver content directly to the screen of clients' mobile phone
With the entry into force of the PSD2, the doors to enter the world of banking seems to be open. It is only a matter of time. And there must be several factors that would be considered to make the jump or not:
Lower benefits than usual in the industry
Regulation to which they would be subject
Structural costs that do not seem attractive in the short term.
But in any case, we will realize the change in the exact moment when we start providing a phone number instead of a bank account details. At that moment everything will have changed.