Future of Mobile Banking. Telecom Service Providers need to grab the opportunity now.

Telecom industry is at cross roads again. What ails telecom business now?

--With growth of wireless telephony, land line volume is diminishing.

--With SMS and advent of Data service, Voice call revenue is dwindling.

--Various E-businesses move revenue from Telecom to Content providers and SMEs.  Refer my posting "Telecom & Multi-media ----" http://toostep.com/insight/telecom-multi-media-business

--VOIP and other INTERNET based telephony bye pass Telecom systems.

--With 3G and Multi-media business, Telecom will face revenue moving out of it to external service providers and Content providers. --New technologies in Telecom, demand higher CAPEX with no scope of matching ROI.

ARPU is shrinking across the Industry:

--Price wars to somehow gain business volume, hamper income and business viability.

--Stake holders are compelled to follow market in pricing, in order to retain market share.

--Redundant work force and increasing wage bill tell upon the profit margin. (BSNL story)

Cardinal rules of Telephony, that the competition seem to ignore.

Rule 1. Incidence of Telephone traffic happens in a ‘Pure Chance’ manner. Reduction in ‘Cost of Owning’ and ‘Cost of Usage’ adds Customer Volume; butincrease in user volume cause reduction in usage and therefore, in reduced ARPU.

Rule 2. The Telephony based ‘Statistical Equilibrium’ in a given eco system remain constant. Reduction in ‘Cost of Usage’ does not cause significant increase in usage.  But, reduction in Cost of Usage directly impact ARPU and hence also Return on Investment. The rule also implies that efforts to improve ARPU with Telphony related VAS is mostly futile.

Rule 3. Adaptation of ‘Standard Charging Method’ across the industry is a must.Only about 20% calls being revenue earners, deviation from standard charging method is harmful to Industry as a whole.

Charging of a unit charge as ‘Answer Fee’ is a mechanism in “Carlson’s Revised Charging Method” to compensate for predominantly non-revenue generating traffic. Doing it away, had caused severe downfall of ARPU.

Considering all these, diversification of business into Mobile Banking is a great option readily available to Telecom Service Providers. 

Ref: my article "Money through Mobile" Public URL: http://www.peerpower.com/AbrahamTimes/7560/2010/10/21

-The customer base, the technology and access to MTM System depends on Mobile phones, Mobile systems and its Networks.

--The technology & method of working is same as prepaid, that is already in use.

--With UUID implementation and government's plans to give out various welfare related payments and money for food in liue of PDS, direct to the the beneficieries, the amuount of money involved is huge.

--The  business mainly run on e-transaction and most of the real money remain within the system and the surplus liquidity can be used profitably in banking products.

--Banking being a non-telephony related VAS has great revenue potential.

It is time for the Telecom Service Providers to foray into mobile banking instead being mere onlookers while banking industry is hijacking the opportunity and that too, at the cost of Telecom service providers.

To avoid multiple systems and conflict of interest, Mobile Banking system can be setup and owned by consortium of Telecom Service providers.