We talk a lot about the threat of mobile carriers and telecom firms moving into banking and eating our lunch.
We cite examples such as NTT DoCoMo buying a credit card firm or Safaricom becoming the biggest financial transactor in Kenya, and what that will mean to banking in the future.
We see O2 and others launching mobile wallets and fear for the worst.
We worry about Vodafone, Telefonica and China Mobile moving into core banking.
It’s all complete claptrap of course.
Just scaremongering amongst ourselves by whispering the worst.
Mobile carriers just aren’t cut out for banking because they are just like banks.
They carry transactional services, and monitor minutes and seconds on the network at a price point of a fraction of a cent.
These are bank-like activities.
They issue monthly statements with detailed breakdown of every second you’ve been texting, talking and transacting.
These are bank-like activities.
They offer global, standardised, interoperable infrastructures to ensure that you can work worldwide with a single device.
These are bank-like activities.
And they are licensed and work together to ensure pricing, tariffs and products compete on a rate churn basis.
These are bank-like activities.
In fact, the most bank-like activity of the telco industry is their customer service which is typically awful.
You call a Vodafone, Virgin Media, O2 and ask about why their billing is so high that month, and get fobbed off with excuses.
You ask for a better price plan, and they mumble and kick their feet, saying you have the best they can do (when you know it is not).
And you wonder why they charge such high rates for overseas calls when voice over internet is free, and they have no answer.
Yet they spend millions on heavily advertising their brand and products via sponsorships of stadiums and motor racing.
It’s a dire industry and one that is not fit to compete in the banking world, because they are just like banks.
Like banks, customers resent their charges, see their detailed price plans as customer punitive and hate their roaming and data usage fees.
Like banks, customers do not understand how mobile carriers calculate their statements and why one month can see a bill balloon to three times the normal rate, purely for receiving a couple of calls abroad.
And like banks, customers hate the lengthy periods of sitting on the phone waiting for a call centre agent to pickup, only to find it’s the wrong call centre agent.
What we need to shake up banking, if anything, is not more bank-like operators but different ones.
Ones that have vision, customer-centricity, differentiation and a different business model.
Not firms that offer the same service cheaper and worse.
This is why, when scouting around the world of competition, the Apples, Amazons, Googles and Facebooks stand out as far more interesting potential competition than the AT&Ts, Verizons or T-Mobiles.
The internet based service providers are data leveraged organisations with vision, customer-centricity, differentiation and a different business model.
This does not mean that they have different business goals to the mobile carriers and the banks - these are, after all, shareholder proprietary organisations - but they work from the data rather than from the price.
That’s why they’ll win … if they want to.
Postnote: SWIFT has just produced a white paper on how banks can win in the mobile space. Take note!
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
