New E-Monday rules coming out of Brussels - reported on the Register

Brussels bemoans low take-up of electronic cash

It's as if the people don't trust the financial system

By Joe Fay •

Posted in Government, 14th October 2008 12:28 GMT

The European Commission has launched a new legal framework to boost the use of "electronic money" within the EU, even as we all realise we had even less real money than we thought.

The Eurocrats have admitted that earlier utopian predictions that we’d all be loading cash on our mobile phones, travel cards or internet accounts have proved to be somewhat overblown. In part, it is blaming itself, saying current rules “have hindered the takeup of the electronic money market, hampering technological innovation”.

Translated, this means the foolish peasants (the rest of us) have refused to stop keeping anachronistic wads of notes and piles of coins in stupid places like pockets, in wallets, under mattresses, that sort of thing, when what they really should be doing is paying smart young things to take their money and convert it into cyber cash, loaded on trustworthy items like phones, Oyster cards, servers and deelie boppers.

So, in the interests of keeping the dream alive, Brussels has proposed a new framework for “issuing electronic money”. This will include a “technologically neutral and simpler definition”, ie that electronic money is “monetary value stored electronically on receipt of funds and which is used for making payment transactions". This will include e-cash stored on devices in the holders' possession or “remotely at a server.”

Brussels also promises a “new prudential regime”, which it promises will ensure “greater consistency between prudential requirements of electronic money institutions and payment institutions under the Payment Services Directive”.

This will include an initial capital of €125,000 “enabling market entrance for smaller players and a new formula to determine ongoing capital”.

If this sounds like a recipe for small fly-by-night operators to barge into the cyber economy, let’s just consider what a mess the old established financial players have made of the real economy over the last few months.

The Commission reckons these changes will give the market a shot in the arm, and “estimates show that this industry could reach a volume up to €10bn by 2012”.

The only thing missing? A reason why consumers – as opposed to financial institutions and other corporations - would actually want to move to electronic versions of cash. See if you can find one in the Commission’s working document here. ®

Stats & Research: Mobile Banking Becoming A Reality

Posted on 160 Characters Association

Submitted by Mike Grenville on Mon, 06 Oct 2008 12:47

A study earlier this year suggests that mobile banking is becoming more of a reality and that while consumer education remains key to widespread adoption there are a number of outdated misconceptions that the study by Sybase 365 tries to change.

The results of a survey completed in February 2008 (“Mobile Banking: The Second Wave. Global Mobile Banking Survey 2008”) commissioned by Sybase 365 showed that some 34% of banks offer mobile services to customers and an additional 32% plan to offer mobile services in the next 12-24 months.

Although there have been many attempts to bring the benefits of mobile to consumers, the response from the market so far has been measured at best. However the research conducted among 32 European banks, 30 US banks and 30 banks from the Asia-Pacific region concludes that the next two years will see a second wave of mobile banking provision and adoption taking the lead from early adopters in Europe and Asia.

Banks To Double

According to the survey, the number of banks offering mobile banking is set to double in the next two years and the number of customers using mobile banking services is also expected to increase significantly from existing levels. If respondent intentions play out, the number of banks that do not offer mobile banking will be in the minority by 2010, rather than the majority, as is the case today. “The potential of mobile banking has been discussed for quite some time,” said Matthew Talbot, vice president, mCommerce of Sybase 365. “While it has been slower to emerge in North America than elsewhere in the world, mobile banking is becoming more of a reality each day. This is largely due to technical issues around standards and interoperability being resolved and the availability of more robust technology platforms such as Sybase mBanking 365."

Dispelling The Myths

There are some myths around mobile banking that the report hopes to dispel. Some of these are:

• Mobile banking is not secure. Misconceptions around security stem from consumers’ lack of experience and geographical penetration of mobile banking services. The 2007 survey (Sybase 365, commissioned Consumer study: “Nano-economics: Mobile Opportunities for the Financial Sector”) revealed that 63% of European respondents; 83% of Australian respondents, and more than half of respondents from the Americas who use mobile banking services, state that mobile banking is secure or very secure.

  Clearly, a vital step in dispelling this myth lies in education, availability and usage. The 2008 survey found that 71% of banks are doing just that by using mobile alerts to help boost consumer confidence in mobile banking services. Customers’ mobiles devices can actually help improve security because they can be used as an alternative to PIN tokens for identification. Mobile alerts can also be set up to notify customers of fraudulent activity on an account, enabling a rapid response leading to increased confidence for mobile services.

• Little consumer demand for mobile banking solutions. In fact, one in three mobile users said they would like to be able to deal with their finances ‘on the move’. Almost one-quarter of consumers surveyed said they would consider switching banks if they were offered mobile banking services.

• Additional Charges. Some believe that mobile banking is just another way to charge customers for additional services. However some 87% of respondents to the 2008 survey cited the reason their bank implemented mobile banking services was to improve the overall customer experience.

• For financial institutions, mobile banking is only about cost savings. Certainly mobile banking can lead to cost savings. The 2008 survey revealed 65% of financial institutions who focus on growth from existing customers have introduced mobile banking services to reduce customer service costs. However many financial institutions are using mobile solutions as a way to extend customer services such as PIN reminders or dispute resolution and are recognizing mobile as a new channel to reach customers with marketing, promotions and related offers.

• It only means Balance Checks. It is another myth that when financial institutions talk about mobile banking they’re referring to the ability to check an account balance or stock prices via a mobile device. While that is a goo dplace to start, financial institutions are increasingly offering a wide-range of mobile services. In fact, nearly three-quarters of 2008 survey respondents said they provide customers with the ability to do money transfers and nearly 30% allow customers to do bill payment via a mobile device.

Untapped Potential

There is a great deal of potential ways that mobile can be used in the banking world. For example many bank customer call centers are burdened with rudimentary account enquiries that can easily be alleviated with SMS-based services. However the study only found that 15% of banks sent a statement by SMS following a telephone enquiry.

With those financial institutions currently offering mobile banking services seen as somewhat ahead of the curve in terms of provision, it is unfortunate that 58% of them agree that the CRM potential created by mobile data is not best utilized at present.

The report concludes that while the first wave of mobile banking services was a steep learning curve, the second wave is comprised of a more informed provider community and a more enthusiastic customer base, both of which suggest a promising two years ahead.

Download a free copy of the Sybase 365 mBanking Study here.